A region adored by wine enthusiasts, Burgundy certainly produces some of the most beautiful Pinot Noir and Chardonnay in the world. Nevertheless, vintage after vintage, the prices of wines from the region continue to rise, making their acquisition increasingly difficult for the less affluent enthusiast.
But then, why are Burgundy wines on average more expensive compared to those from other regions of France? Why is this trend accelerating?
Many factors come into play here.
Supply and Demand
Located in the northeast of France, the Burgundy region consists of 30,000 hectares, representing only 4% of the French vineyard. In comparison, the Bordeaux region covers 120,000 hectares (16% of the vineyard) while the vineyards of the Rhône Valley stretch over 79,000 hectares (10.5% of the vineyard).
This size difference has a significant impact on the quantities produced. Thus, for 200 million bottles produced each year in Burgundy, 650 million are put on the market for Bordeaux and 465 million for the Rhône Valley.
You will have understood, and although these figures are very general, the supply is much more limited in Burgundy...and this inevitably has an impact on the final price of your bottle!
The average size of a farm is also a decisive factor partly explaining certain price differences. Indeed, if the average area of a vineyard in Burgundy is 8.2 hectares, it is 12 hectares in France ! As a result, economies of scale are inevitably lower for a Burgundian winemaker, thus forcing them to better value their production.
Moreover, this rarity of production faces an ever-increasing national and international demand.
Indeed, today, nearly one in two bottles of Burgundy wine is exported. While the historical customers are the United States (21% of exported volumes), England (17%), Belgium (9%), Canada (9%), and Japan (8%), many other countries are now interested and want their share of the market.
While this increase in demand allows Burgundy winemakers to better distribute their sales, it also makes the distribution of volumes more complex each year among all market players, once again driving up prices.
Key figures of Burgundy wine exports
Finally, climatic hazards, although not affecting only Burgundy, also have a clear impact on prices. Thus, the terrible 2021 vintage for example represented half of a usual production for the region. Consequently, and in order to compensate for this enormous quantitative shortfall, prices have seen average increases ranging from 20 to 30%...and oddly, the good 2022 vintage will not lower prices either.Go figure…
The classification of the vineyard
Another factor explaining the high price levels in Burgundy is the great renown of the classification system used in the region.
This system indeed ranks the plots throughout the region, starting at the level of regional appellations, passing through the AOC Villages to finally end with the very precise delimitation of plots (or climates) classified as Premier Cru (10% of the vineyard) and Grand Cru (1% of the vineyard).
Although this system of valuing the finest regional terroirs offers numerous advantages, this hierarchy nevertheless directs consumers towards the most sought-after 11% of the vineyard and thus puts additional pressure on the prices of the finest vintages.
For example, the recognition as Premier Cru in 2020 of 200 hectares in the AOC Pouilly-Fuissé has seen the prices of wines from these climates increase by a good ten euros from one year to the next simply due to the valorization effect of this production.
The hierarchy pyramid of Burgundy wines
Land prices
If we have seen that the levels of supply and demand as well as the classification of the Burgundy vineyard are all elements greatly influencing prices, another important factor also explains the rise in rates year after year: land prices.
Purchasing land in Burgundy has indeed become a considerable investment and the prices of the region's vineyards are the highest in the world.
As an example, in 2019, the average price of a hectare of Burgundy Grand Cru was 6.5 million euros! In the same year, a hectare of Chardonnay Premier Cru cost nearly 1.65 million euros while a hectare of Pinot Noir of the same level was worth more than 700,000 €. Did you say outrageous?
It's simple, in ten years, the price of vineyards has at least doubled, even tripled, and has even increased tenfold for certain plots. A crazy situation that challenges the traditional model of small family production on which the region was built.
Successions are indeed becoming increasingly complex.Indeed, if an estate has a few plots of a Grand Cru as well as several hectares in a village appellation, the fees to be paid for the former will far exceed those for the rest of the property. Often, only one solution presents itself to the young successor: to part with their most prestigious lands.
Beyond these inheritance issues, and unless they have a very significant starting capital, it has also become impossible for young winemakers to establish themselves in the region.
If this surge in prices particularly affects the Côte-de-Nuits as well as the Côte-de-Beaune, the two most prestigious sub-regions of the vineyard, this situation is now also trickling down to less valued lands, thus contributing to a generalized price increase.
To illustrate the frenzy of certain transactions here are two examples. In 2014, the Clos des Lambrays, a very famous Burgundy estate with 11 hectares, was acquired by Bernard Arnault for the modest sum of 110 million euros...or 10 million euros per hectare.But that's not the worst! In 2017, its neighbor, the Clos de Tart, a monopoly owner of the eponymous 7.5-hectare Grand Cru, was sold to François Pinault for a sum close to 250 million euros, or more than 33 million per hectare!
Have we reached the limit? No one knows... but it questions the historical organization of the entire vineyard. Indeed, in recent decades, many financial structures (banks, insurance companies) as well as several wealthy investors have taken control of the most beautiful properties in the region.
Speculation
Besides the price of land, speculation has also taken hold of Burgundy wines since the early 2000s. Nevertheless, it almost exclusively affects the most renowned estates.
Thus, the year 2023 once again broke all auction records in the wine world: 33,000 euros for a bottle of Musigny Grand Cru 2006 from domaine Leroy, 31,620€ for a bottle of Romanée-Conti 2015 from domaine de la Romanée-Conti, or even 26,164€ for a bottle of Criots-Bâtard-Montrachet Grand Cru 2005 from domaine d'Auvenay !
Unreasonable? It is clear that some ultra-rich individuals (notably in China) are willing to do anything to acquire these prestigious bottles.
While some Burgundy owners are not entirely blameless for the situation, others are fighting to ensure that their precious bottles are appreciated by true enthusiasts.Despite this, and by temptation of profit, some holders of iconic domains decide to resell their bottles, fully aware that they can fetch 4 times, 10 times, 20 times more than their purchase price.
This same speculation has another consequence of encouraging counterfeiting. Indeed, without such sums of money at stake, there would be no fake bottles on the market. A vicious circle, therefore.
Winedex Burgundy Index: price evolution of the 40 most expensive wines from the region considering the last 10 vintages for each cuvée: +359% between 2013 and 2023
Burgundy is not the only one
Finally, it is clear that in recent years, prices have increased in all regions of France, and not just in Burgundy.
Indeed, if the latter has experienced more significant increases than the average, all winemakers in France, whether from Bordeaux, Loire, Alsace, or even Languedoc-Roussillon, have encountered the same issues.
Thus, due to COVID, the war in Ukraine, or various international conflicts, multiple raw materials have skyrocketed, and many factories have slowed down, leading to shortages. This is particularly evident in transportation (oil) and dry materials (glass, cardboard, labels, etc.) whose prices have surged.
Conclusion
As you will have understood, the concepts of supply and demand, the land classification system, land prices, and speculation are the most important parameters for understanding the sometimes completely crazy prices in the Burgundy region.
Nevertheless, rest assured, there are still many accessible vintages in the region for those who know where to look, especially in the southern part of Burgundy (Mercurey, Mâcon, Saint-Véran etc.) or on appellations from the less renowned northern part that still produce delicious wines, such as Fixin, Marsannay or even the Hautes-Côtes de Beaune and the Hautes-Côtes de Nuits.
In any case, whether you are looking for a prestigious bottle or an excellent value for money, do not hesitate to reach out to
General map of the Burgundy vineyard
