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Burgundy 2022 proves to be the ‘hair of the dog’ the fine wine market needed

07 February 2024 By Arabella Mileham

The Burgundy 2022 campaign has provided some respite for the fine wine market that has been in a “year-long downturn”, a new report from Liv-ex has said – but caution remains about the pricing.

The 2022 vintage had come as a welcome boost for a market grappling with a year-long downturn, according to the new Liv-ex Burgundy report, particularly after last year’s “pricing turmoil”. With “ample” yields and high-quality wines, pricing has also remained relatively flat – with producers “hoping to entice buyers in a challenging market”, although some had cautiously increased prices.

Justin Gibbs, Liv-ex co-founder and exchange director, commented that it had proved a respite for a market in retreat.

“The combination of excellent overall quality and decent yields has been welcomed by growers, merchants and collectors alike. But the question of value remains unanswered,” he said. “Secondary market prices are under pressure while relative value measures continue to be stretched. With a bumper 2023 crop in the offing, the retreat in prices looks set to continue.”

While still too early to call, it looks as though this year has gone”better than many dared imagine late last year”, the report said – with decent yield able to “satiate a dangerously thin market”, good quality and, as db reported last month, producers roughly listening to the market and keeping price hikes to a minimum.

The report noted that a small proportion (roughly 10%) had lowered their prices year-on-year, while about 40% of producers raised their prices, even if only modestly – which had made selling “tricky in some quarters”, although allocations had mostly been restored, and merchants “remain hopeful the 2022 vintage will eventually sell through, albeit at a slower pace than in recent years”.

It noted that while the volumes of both the 2022 and 2023 vintage offered “relief” to producers, pricing is not only dependent on the volume or quality of the vintage. Jasper Morris, for example recently highlighted the rising cost of grapes and juice, which have risen around 15% in 2022, according to Wine-Searcher. “Many winemakers’ cost base is currently ‘out of kilter with the reality of where the market is’,” it said and the challenging market conditions means “the gap is widening between their release prices and what buyers are willing to pay”, the report said. “Considering that the upward momentum of the Burgundy market relies in no small part on scarcity, which will not be a problem this year or next, prices may need to adjust down to attract significant demand.”

This echoes Neal Martin’s recent reflections that Burgundy’s pricing strategy needs to be recalibrating to align with consumer willingness amid economic challenges, it pointed out. As a result, uncertainties “loom” and it is important to balance the “quality peaks with economic realities”.

Meanwhile, on the secondary market, the Burgundy 150 index has fallen 17.4% since its peak in October 2022 and looks “far less buoyant” than it did at its peak when compared to other equities and commodities. However, the report pointed out the importance of looking across the classifications of Burgundy rather than only focussing on the “most collectible, but rarely the most accessible” wines to get a fuller picture of the market. The data showed for example that while Grands Crus saw a 12% dip in their average trade price year-on-year, the biggest dip year-on-year, Grand Crus’ outside the top 150 saw a 7.7% dip, while Premiers Crus and Village wines saw “modest” increases, up 10.1% and 9.2% on average in 2023 than in 2022 (although still falling short of the 31.3% for Premiers Crus and 57.7% for Village wines recorded in 2022, when Grands Crus were trading on average over 50% higher than in 2021)

“Notably, the gap between Village wines and Grands Crus is narrowing, raising concerns about the justification of these prices during a market downturn,” it said.

And in comparison to some of its peers from Bordeaux First Growths and Super Tuscans, “Burgundy’s reputation and the rarity of its wines contribute to the high price tags they command, but it becomes increasingly harder to justify these prices during a market downturn.”

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