London, UK: Liv-ex has released a special report on Burgundy - entitled Burgundy: A Journey of Discovery. The report provides wine companies with a unique analysis of the region's performance in the secondary market. In the report, Liv-ex examines the secondary market for Burgundy wines in the context of the global epidemic, US tariffs and this year's En Primeur campaign.
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Burgundy wines lost their share of the total market value in 2020 due to falling prices. However; steady sales and an increase in the number of wines traded reflect undiminished enthusiasm for the region.
Burgundy"s top wines have become the most expensive wine region to enter the premium wine market, and the wine region has been the best price performer since 2003. However, Burgundy has been the worst performer on the Liv-ex over the past two years, down 8% and 1.5% for 2019 and 2020 respectively; this is due to a combination of Covid-19, US import duties, and the large number of 2018 vintages released last year.
Despite the decline, Burgundy still outperformed the FTSE FTSE 100 and the Hang Seng in 2020; but lagged the tech-led S&P 500 and the German DAX; the latter grew particularly well in the final quarter.
The Burgundy market in the middle of a wide range
The extraordinary performance of top legendary Burgundy wines over the past decade has encouraged collectors to explore the region more deeply in search of affordable wines, allowing the smaller domains of the region to shine. Appellation names that were rarely seen on the secondary market in the past are popping up, and buyers continue to look for affordable options in the region's diverse range of wines.
The number of independent wines traded (different wines and different vintages, LWIN11) and different labels traded (LWIN7) increased by 28% and 40% respectively in FY2020. More lower-priced wines are entering the secondary market. The number of active (real-time bids or offers) wines is up 34% and 79% over FY2019 and FY2018, respectively.
Distribution of Liv-ex transactions
In 2020, Burgundy's transactions on the secondary market were dominated by the most recent vintages: 2017 (22%), 2018 (15%) and 2016 (9%). The top and highest priced estates such as Domaine Romanee Conti, Armand Rousseau and Le Birch Leroy are leading in terms of total value of transactions.
Among Burgundy's premium Cru, Romanee Conti (8.8%), Le Chambertin (6.3%), Musigny (4.5%) and Montrachet (4.3%) account for the largest share of transactions in the region. However, Batard-Montrachet, Clos de Vougeot, Chevalier-Montrachet, Clos de la Roche and several top Chablis vineyards are also emerging alongside each other.
Domaine de la Romanee-Conti Romanee-Conti Grand Cru 2016 was the Burgundy wine with the highest total value traded on Liv-ex in 2020; while the highest number of transactions was for Etienne Sauzet Bourgogne Blanc 2015.
Historically, Burgundy's red wines have tended to outperform white wines in terms of price. Over the past five years, red and white wines have increased in price by 6 percent and 28.9 percent, respectively. In 2020, the average red Burgundy wine traded at twice the price of a white wine on Liv-ex.
The impact of Covid-19 and this year's en primeur En Primeu event
The shift to online due to the global embargo has caused vintners to rethink the type of products and the way they offer them to their customers. Automation has made it easier than ever for vintners to offer a more diverse range of wines to a wider range of customers; automated transactions in Burgundy accounted for up to 36% of transactions in the region in FY2020.
Despite the increase in prices over last year, the vintners who have released their Burgundy en primeur offers so far are reporting a good response. While most prices have remained the same, there have been some significant price increases (mainly due to lower production). Overall, most of the vintners suggest that the 2019 vintage is a worthwhile purchase.
Burgundy is expected to face new challenges in the coming year amidst ongoing closures, travel restrictions and hotel and restaurant closures. However, secondary market trends from FY2020 reveal that for many buyers, Burgundy's journey of discovery has only just begun.