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Winemakers Warn of a Coming Burgundy 'Apocalypse'

Published on Jun 28 2016 10:13 AM in Drinks tagged: France / Wine / Spain / Burgundy

Winemakers Warn of a Coming Burgundy 'Apocalypse'

For years, vintages of Burgundy have been smaller and smaller, while prices have gone up and up. Rain, floods, and hailstorms have decimated vineyards since 2010, especially in the Côte de Beaune (the southern part of the famous limestone strip that’s home to the most famous vineyards). Growers invested in weird anti-hail devices, but, alas, they haven’t worked. Regional businesses are facing a crisis of how to survive.

The chardonnay grape harvest was down 30 per cent in 2013, pinot noir as much as 50 percent. In 2014, which had some of the worst weather in recent memory, some winemakers lost 90 per cent of their crop; 2016 is already looking to be worse, weatherwise. This means the remaining grapes are much more expensive, and businesses that depend on making wines from them will be forced to pay a premium they increasingly can’t afford.

“Growers essentially say, pay what we ask, or we’ll sell to someone else,” says Blair Pethel, one of the growing number of "micro-negociants"— small domaines who buy grapes from growers to turn into wine rather than owning their own vines. Grapes to make his 300 bottles of 2009 grand cru Charmes-Chambertin cost €8,000 ($8,800); the price for the same amount in 2015 was €22,500. He didn’t buy.

David Croix, of Domaine des Croix, says that his cost for Meursault grapes is double what it was in 2011, but the price for the wine that he makes from them is only 15 percent higher.

Even small domaines that own their vines are hurting. As Alex Gambal of Maison Alex Gambal puts it, “Imagine that over six years, you have the equivalent of no income for three of them, yet have the same costs.”

It’s hard to see how this situation is sustainable, especially since the worst frost since 1981 swept across Burgundy in April; 2016’s potential harvest may be down 40 percent. At the same time, global demand for Burgundy is skyrocketing. That started with the great 2005 vintage, when it finally dawned on many Bordeaux collectors that top Burgundies were much scarcer. Even in years without weather problems, the famous Côte-d’Or, the heart of the region, makes only 1 percent of the wine in France. The patchwork of tiny plots of vines is classified into basic Bourgogne, village-level cuvées, and at the top, premier and grand cru vineyards that account for only 19 percent of the wines.

The world’s well-heeled wine lovers are chasing the premiers and grands crus from the 20 famous names (your Romanée-Conti, Roumier, Rousseau, and Roulot). Prices have risen so fast, some domaine owners are no longer sure what to charge, especially because merchants and restaurants mark them up way, way more.

Can Burgundy prices keep rising? Or will the bubble burst? Will wine lovers rebel and look elsewhere for their pinot noir and chardonnay?

These questions are giving owners of small domaines, such as Pethel of Domaine Dublère, sleepless nights. Though they’re paying higher prices for grapes, such vinters as Croix and Pethel don’t have superstar status, so there’s a limit to what they can charge for their wines before buyers start saying "no way." That squeeze is why Pethel fears a Burgundy “apocalypse” of small players shutting down or a dramatic price crash.

Wine lovers, including me, have bemoaned Burgundy’s rising prices for a decade. Bottles I could buy for $30 three years ago cost $70 or $80 today, while those from the 32 grand cru vineyards in the region have become trophies for 1-percenters. Just one example: The 2103 La Romanée from Domaine du Comte Liger-Belair is nearly $3,000 a bottle.

“It’s a question of scarcity—short harvests (2012, 2013, 2014) or less crop than expected (2010, 2011, 2015),” explains Jasper Morris, the Burgundy buyer for UK merchant Berry Bros. & Rudd.  “Some growers may be greedy, but mostly they’re trying to stay afloat.”

Despite weather problems, there are good wines in all the past five vintages: 2010 is excellent for reds and whites; 2011 is a definite notch down, with light, fruity, and charming wines; the best 2012s are rich and luscious, while complicated 2013 produced juicy, pure reds and whites for drinking now. In 2014, whites are the stars. The 2015s look stunning, but prices will be very high.

Merchants see all this as a perfect storm.

In the USf, David Kunicki, a vice president of importer and distributor Martin Scott Wines, worries that savvy American buyers may not be willing to keep paying high prices. “Now,” Kunicki says, “I’m looking for value.” In London, some merchants buy only Burgundies they can sell as futures. Sebastian Thomas, of London’s Howard Ripley Wines, warns,  “There are a lot of midrange Burgundies from recent vintages stuck in the pipeline. If customers see wines increase by over 100 percent in three years, they vote with their feet.” (And with Brexit looming, and the pound dropping against the euro, they will be more expensive than ever.)

So what’s the answer for a Burgundy lover?

Buy strategically. Go for basic Bourgogne rouge and blanc from famous names, and buy village level Burgundies, especially those labeled vieilles vignes (old vines), and less expensive premiers crus from small negociants such as those in my list below. Other good up-and-coming producers include Chantereves, Sylvain Pataille, and David Moreau.

For Americans, the strong dollar against the euro helps—at least for now.

News by Bloomberg, edited by Hospitality Ireland

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