Many of you have probably noticed that the price of French wines, labeled “premier crus” and “Grand crus” had notably increased in the last 6 to 8 months. We shall through this article the reasons for this rise in price, the consequences that this will have on the market, and how to benefit from this strong price hike.
Lets put aside the Bordeaux region for the time being and lets concentrate on the Burgundy area, a region where the price increase has been remarkable over the last 6 months, showing an increase of up to 30%!
The primary and upmost reason for the increase has been the drop in production on the last two vintages, 2012 and 2013, provoked by the horrendous weather. The 2013 harvest took place with a delay of a few weeks, due to the strong rainfall and low temperatures, present up to the end of June; a difficult spring for the harmonious growth of the vines. Hailstorms also damaged several hectares of vineyards, and this has delayed the harvest, the latter being much smaller than usual.
The second reason and not the least, is the interest that the Asian market has shown for the Bordeaux market. Since 2005, Asia has sworn only by the Bordeaux vintages, buying industrial quantities of Bordeaux 1er crus: Pétrus, Lafite Rothschild, Mouton Rothschild, Angélus, Cheval Blanc, Margaux, Haut Brion, Mission Haut Brion, Latour…
Therefore the prices of the Bordeaux wines have shot up sky high and have reached to-day, record prices.
Asia having finally understood the interest and incomparable quality of Burgundy wines, has changed its position and has “attacked” two regions: the Burgundy and Champagne areas! But beware the wine production of the Burgundy area cannot be compared with that of the Bordeaux vineyards!
When one sees the mean annual production of the Burgundy vineyards (between 4000 to 10 000 bottles), and those of the Bordeaux area (approximately 300 000 bottles), it is easy to conclude: the strong demand and the reduced production leads to a shortage market hence the price increase. In order to give you an idea , the Domaine Mugnier in Burgundy, produces excellent wines, hasn’t accepted a single new client in the last 5 years, this might seem an absolutely astonishing situation.
For all the lovers of great wines two choices open up to you, increase your wine budget, or reduce your consumption, I suggest you increase your budget!
Let us now have a quick look as to how one can profit from this price rise: by investing in great vintages! Everyday several thousands of persons are looking to fructify their money and all have the same question in mind, “where am I going to place my liquidities?”
You’ll have understood that fine wines are an extremely interesting placement, and one of the most stable ones in the market place!
If I can give you some advice, diversify your portofolio by buying grand crus, not through an investment fund but directly on the real Mackoy! And let those bottles age gently, getting better and more valuable over the ages!
The wine investment remains basically an investment in pleasure, from which you will obtain interesting returns as well as offering yourselves the pleasure of opening some excellent bottles.