Analyzing the Increase in Red Burgundy Wine Prices: Should You Invest?

Red Burgundy Wine Prices

Liv-ex noted an increase in red Burgundy wine prices in 2017, which means that these wines may become even more profitable in the near future.

 Danish author Isak Dinesen famously wrote, “There are many ways to the recognition of truth, and Burgundy is one of them.” The Burgundy region crafts some of the greatest bottles of Pinot Noir in the world, full of rich flavors that often grow more complex and beautiful with age. But over the past decade, Burgundy’s red wines have been overshadowed somewhat by Bordeaux. In the mid-2000s, as Bordeaux’s value skyrocketed (especially in countries like China), Burgundy’s value remained more steady. This caused some serious collectors to question whether Burgundian wine was worth the investment, or if Bordeaux would be a wiser choice.

 
Now, however, Burgundy investments are once again proving fruitful. Red Burgundy wine prices are increasing at a steady pace, and this trend is expected to continue into the future. Moreover, the superb quality of recent vintages (like the 2015)  has piqued collectors’ interest, and many of these bottles are expected to age wonderfully over the next 50, and perhaps even 100, years. If you’ve always wanted to invest in red Burgundy or you want to expand on an existing portfolio, now is the best time to buy Burgundy’s top wines.

Why Are Red Burgundy Wine Prices Increasing?

In the annual Liv-ex Power 100 report, Liv-ex calls 2017 “Burgundy’s year.” That’s because red Burgundy wine prices are on the rise (white Burgundy prices are rising as well), yet the bottles aren’t too overpriced; the quality-to-price ratio is still very healthy. For instance, bottles of Georges Roumier increased in price by 34 percent between 2016 and 2017, and the quality of modern Roumier vintages is well-matched to this price hike. Allen Meadows gave the 2015 Musigny vintage a nearly perfect score, and one year later, the 2016 vintage also made Decanter’s list of top Burgundy. The excellent quality of these vintages can help explain some of the renewed interest in red Burgundy on the secondary market. Liv-ex found that Burgundy is currently at its highest secondary market share in recent history. The region has grown by more than seven percent on the secondary market since 2016, and this number is expected to increase even further by the end of 2018. By comparison, Bordeaux actually dropped in secondary market value by six percent this year.

However, higher quality vintages aren’t solely responsible for the increase in red Burgundy wine prices and value. Liv-ex director Justin Gibbs points out that collectors are buying a wide range of older Burgundy wines, in addition to investing in some of these recent high-quality releases. The likely cause of this increase in market value is greater demand for these wines among Chinese collectors. In the mid-2000s, during the Bordeaux market bubble, Chinese investors bought up thousands of bottles from top producers like Margaux. But today, owning  premier cru Bordeaux in China is no longer seen as the most fashionable choice among collectors. Instead, wines from top Burgundian producers like Domaine de la Romanée-Conti (DRC), Rousseau, or Leroy are seen as more sophisticated investments. Time will tell whether Chinese investors will continue to take an interest in red Burgundy, but for now, the demand is steadily driving up prices. We likely won’t see another massive pricing bubble as we did with Bordeaux, but this increasing demand overseas is one factor to keep in mind as you invest in Burgundy this year.

Producers That Significantly Increased in Value

It may come as no surprise that DRC was the top-performing Burgundy producer on the 2017 Liv-ex Power 100 list. The estate’s wines are consistently among the finest made in the region, even in years when other producers struggled to create high-quality vintages. This consistency, combined with a predictable rate of increase in value on the secondary market, makes DRC one of the best all-around choices for collectors looking to turn a profit by investing in Burgundy. However, DRC is far from the only producer that you should consider this year. Georges Roumier displayed the greatest increase in value in 2017. Additionally, 22 of the top 50 price performers come from Burgundy’s Côte d’Or. Investing in grand cru and premier cru wine from Côte d’Or, such as Louis Latour and Dugat-Py, may be a wise investment choice. As with any wine investment, you should carefully research each vintage in advance and choose only those wines that received top scores to store long-term. Many red Burgundy vintages are excellent drunk young, so keep this in mind as well.

How to Invest in Red Burgundy in the Future

In general, buying the top age-worthy vintages (those that received an average score of 95 or greater) from areas like the Côte d’Or should offer you the greatest return on investment. However, the wines you ultimately choose will depend on your goals. If you’re looking for wines that are likely to age well over the next few decades, then you may find the 2005 and 2015 vintages most appealing, as wines from these years showed prominent tannins and excellent ripeness. To make a significant profit on these bottles, you should buy them as soon as you can (before market prices get too high) and keep them in professional storage for a decade or more. However, if you’re simply looking for wines that are enjoyable to drink now, then vintages like the 2009 and 2014 may better suit your needs. While not quite as age-worthy as the 2005 and 2015 wines, they are drinking well already.

The main tip to keep in mind as you invest in Burgundy this year is to be aware of rising red Burgundy wine prices, and to choose wines that offer a good quality-to-price ratio. Overall,  grand cru and premier cru producers are very reasonably priced, whereas some of the smaller village wines are starting to increase in value a little too rapidly. Unlike grand cru and premier cru bottles, which you can easily sell on the secondary market due to consistent demand from other collectors, smaller village estates have less inherent secondary market value. Paying too much for these wines will make it difficult to profit from them later. Still, there are plenty of Burgundian producers that have a lot to offer–in value, collectibility, and taste.

Whether you are starting your high-end wine collection or adding to an established portfolio, Vinfolio is your partner in buyingselling, and professional storageContact us today to get access to the world’s finest wine.

At Vinfolio, we help our clients buy, sell, store, and manage their most treasured bottles of wine. But in our spare time, we’re just a group of passionate and slightly obsessed oenophiles--we love sharing a great glass of vintage Champagne, followed by a Burgundy, and then a Bordeaux, to get things started. We’re always obsessing over the latest (and oldest) vintages, and we want to share that knowledge and passion with our readers.