Burgundy investments back on the rise as Biden re-opens the door to US buyers

Burgundy was put back on the shopping list this March for US buyers and fine wine investors. Joe Biden’s suspension of the US Tariffs on the 5thMarch saw a 25% discount for US-based merchants, investors and collectors from the prices they have had to weather since Trump imposed the measure in Autumn 2019. Merchants and Liv-ex report an immediate impact on trade in March 2021 with increased demand especially for the big brand Bordeaux and Burgundy investment wines.

The EU and USA have agreed a 4-month review period and whilst the expectation is this will lead to a permanent arrangement, some buyers are seeing this as a window of opportunity to stock up and import big-ticket wines to the US without the 25% tariff.

Burgundy icons were particularly hard hit by the tit-for-tat trade levies due to the values involved. A 25% surplus on wines costing a 5-figure sum was a bitter pill to swallow for even the most ardent collector, never mind an investor planning for future growth.

As a result, prices drifted for the top wines of the region during 2019 and 2020. The Liv-ex Burgundy 150 was the worst performing regional index in 2019, down 8.8% as the US tariffs magnified the issues caused by unsustainable prices for the top brands.

2020 proved to be a robust year generally for the fine wine investment market but Burgundy, shackled by tariffs and, to a greater extent than other regions, Covid, didn’t experience the growth levels that Champagne and Italy enjoyed. The region’s top wines still recorded impressive price performance as recorded by Liv-ex.

Top traded Burgundy wines by value on Liv-ex in 2020:

BURGUNDY WINE VINTAGE MARKET PRICE
1 DRC, Romanee-Conti Grand Cru 2016 £180,000
2 DRC, Romanee-Conti Grand Cru 2009 £194,136
3 Joseph Drouhin, Montrachet Marques de Laguiche 2017 £4,602
4 DRC, La Tache Grand Cru 2017 £33,556
5 DRC, Romanee-Conti Grand Cru 2006 £198,000
6 DRC, Romanee-Conti Grand Cru 2017 £151,636
7 Domaine Armand Rousseau Chambertin Grand Cru 2017 £17,952
8 Trapet Pere et Fils, Chambertin Grand Cru 2018 £3,790
9 Joseph Drouhin, Montrachet Marques de Laguiche 2018 £4,386
10 Trapet Pere et Fils, Chambertin Grand Cru 2017 £3,248

Source: Liv-ex Power 100 Report, 2020. (Prices: 12 x 75cl)

The region’s fortunes started to turn during the pandemic and Liv-ex’s Burgundy 150 index recorded a 1.5% decline to 31st December 2020, improving its performance on 2019 markedly. The market in Burgundy with iconic labels DRC, Armand Rousseau and Leroy leading trade by value,  broadened further in 2020 and brands that rarely previously enjoyed secondary market activity became of interest to investors.

Volume of trade In Burgundy last year grew by 31% on 2019 and the number of trades on Liv-ex increased by 34% year on year. Six of the top ten brands by average trade price ranking on Liv-ex in 2020 were Burgundy wines.

 

Top ten brands by average trade price ranking on Liv-ex in 2020:

BRAND REGION Av. TRADE PRICE
1 Henri Jayer Burgundy £97,308
2 Romanee Conti Burgundy £39,934
3 Le Pin Bordeaux £26,410
4 Petrus Bordeaux £26,127
5 D’Auvenay Burgundy £25,289
6 Screaming Eagle USA £21,665
7 Du Comte Liger Belair Burgundy £11,132
8 Georges Roumier Burgundy £9,741
9 Armand Rousseau Burgundy £9,548
10 Harlan Estate USA £6,974

Source: Liv-ex Power 100 Report, 2020.

Investing in Burgundy at an affordable level

Fine wine investors should understand that they don’t have to find 5-figure sums to invest in top Burgundy brands. For example, Domaine Leroy offers a more affordable entry point into the region. Ranked the world’s most powerful fine wine brand by Liv-ex  in 2018 and 2020 (third in 2019), the average trade price of the 55 Leroy wines  / vintages traded on Liv-ex in the period 1 October 2019 to 30 September 2020 was £2,878 (source: Liv-ex Power 100, 2020 Report). On average these wines saw 8.8% growth in that same period at a time when Burgundy lost market share to Champagne and Italy, both exempt regions to the US tariffs.

Burgundy Performance Q1 2021

The traditional focus for the fine wine market in January  every year is Burgundy, as the latest vintage en primeurs are released to market. In January 2021 the 2019 vintage hit the global market with the US tariffs still in place but even these did not prevent a well-received campaign. Critic Neal Martin commented “ This small, excellent quality vintage certainly merits excitement and demand.”

With lower levels of supply and excellent quality the 2019 en primeur campaign was a success and dragged investor focus to Burgundy back vintages offering value as a consequence to the price drift in the previous 18 months.

In Q1 2021 Burgundy is seeing growing demand and upward movement in prices. Market share was 23.3% in January on Liv-ex and the exchange’s Burgundy 150 was the top performing regional index in the first two months of the year with  a 1.5% gain in February. This dynamic has been super-charged with the removal of the US tariffs in March with data due out after Easter.  Whilst appetite remains strong for Italy and Champagne – there is no doubt that adding Burgundy to a wine collection takes it to another level.

For more fine wine investment information, see our 2021 Guide to Collecting and Investing in Fine Wine, get our latest Market Report for performance information and detail on news and events affecting the market in Q1 2021 and speak to a member of our expert team on 0203 384 2262 for current Burgundy opportunities for growth.