Over the last five years, prices of top Burgundies on average have risen by as much as 40 per cent. Bordeaux First Growth by comparison has fallen 20 per cent. During that same period, the FTSE 100 was up 20 per cent and gold was down by nine. If you go back further, say a decade, top Burgundy is up 175 per cent versus FTSE, which is up 18 per cent and S&P, which is up 68 per cent. Evidently, Burgundy shouldn’t be overlooked as a place to invest for wine collectors.
What makes Burgundy different from Bordeaux is its extremely restricted supply.
This is exacerbated by the skyrocketing demand for the region by fine wine collectors, more recently, from China. Of the world’s 20 most expensive wines (source: CW Burgundy Wine Investment Report), 15 are from Burgundy, two are from Germany and one each from Bordeaux, Napa and Rhône.
For all practical purposes, all reds from Burgundy are Pinot Noir, and whites, Chardonnay. But the simplicity of this hallowed region ends there. Here’s where it gets complicated. Burgundy—which is one-fifth the size of Bordeaux—is comprised of some 3000 individual vineyards, some with as many as a dozen different owners or producers.
The extreme fragmentation of the vineyards, the myriad of micro-climates, soil types, and the vast number of producers make it a very difficult and complex region to understand. In the past, this region was overlooked by wine collectors and speculators, particularly from Asia, precisely because it was too complicated to comprehend. That has changed, however, as collectors have caught on and become savvier.
It might be useful to compare Burgundy’s classification system to the better known Bordeaux Classification of 1855. The ranking of Bordeaux Châteaux was based solely on prices that prevailed at that time as price was then viewed as the most reliable measure of quality; during that period, Lafite, Latour, Margaux, and Haut-Brion fetched the highest prices. Up to this day, these are bestowed First Growth status (Mouton Rothschild was elevated to First Growth in 1973).
Burgundy’s classification system was drawn up in 1936 and was based on terroir. Every vineyard has its place in the hierarchy, descending from Grand Cru to Premier Cru to Village and Bourgogne, which sits at the bottom. Picture a pyramid. At the very top are 32 Grand Cru vineyards that account for a mere two per cent of Burgundy’s total production. Grand Crus are the crème de la crème and are considered the most expensive wines in the world.
Premier Cru lies beneath Grand Cru. There are 530 vineyards designated as Premier Cru. They widely vary in quality and account for roughly 18 per cent of Burgundy’s production. Below Premier Cru are “village” level wines that make up 36 per cent of production; and finally, “regional” wines, which account for the balance.