Why premium french wines cost BIG $ Billionaire's bragging rights and Robert Parker's influence!

Why premium french wines cost BIG $ Billionaire's bragging rights and  Robert Parker's influence!
That dream of buying a grand cru vineyard in Burgundy or a classed growth château in Bordeaux has become more expensive in the last year, suggest new figures.

A single hectare of Burgundy grand cru vines may cost up to €14.5 million, according to the latest figures from French land agency Safer.

It said the average price was €6.25m per hectare in 2018, up by 4% on 2017 and double the price from 2011.

That kept Burgundy grands crus top of the French vineyard price ladder last year, despite the wide disparity in the value of deals. Some grand cru hectares were available for a comparatively low €2.85m, said Safer.

There has previously been concern about the effect of rising land prices on succession planning for family owners in Burgundy.

Other prized French regions also saw price increases in 2018.

In Bordeaux, Pauillac rose by 10% to an average €2.2m and Pomerol jumped by 20% to €1.8m, although Pomerol’s very best plots could sell for up to €3.6m and the cheapest might fetch €1.2m, said Safer.

Buyers have an ‘even greater focus on the most prestigious regions and appellations in spite of the scarcity of opportunities and high prices’, said Alex Hall, founder and MD of the Bordeaux-based Vineyard Intelligence estate agency and advisory firm. 

He added that another general trend in 2019 has been the interest among France-based investors, from entrepreneurs to those in wine already.

AOP vineyard prices across France rose by 2.4% in 2018 to an average €147,300 per hectare, according to Safer. Prices were as low as €5,000 per hectare in parts of Beaujolais. In the Côte d’Or, vineyards classified under the regional Burgundy appellation could cost as relatively little as €13,000 per hectare, although the best sites might sell for up to €73,000, show Safer figures.

Safer’s figures show that the total value of French vineyard deals dropped by 31% in 2018, to €844m. There had been a series of high-level purchases in the previous year, notably in St-Emilion.

The number of vineyard deals fell less sharply in 2018, down by 7.5% to 8,750.

Côtes de Provence vineyards in the Var region rose by 10% in price in 2018, to an average €55,000 per hectare, according to Safer figures.

Those in the Littoral zone near to the coast could sell for up to €120,000, it said.

‘The success of Provence rosé, particularly in international markets such as the US, has seen increased demand for vineyards in AOC Côtes de Provence, from both domestic and international investors,’ said Hall.

With the recent news of Robert Parker's retirement, we look back at just five times—of very many—that the famed wine critic moved the Bordeaux market

Parker first published his 100-point review of the 2009 Haut-Bailly in the Hedonist’s Gazette (Nov 2014) following a private dinner at the Château. The market responded rapidly: three days after the score was announced, its trade price had increased from £775 per 12×75 to £1,125—a 45.2% gain.

Six months later, the wine saw a further uptick after the review was officially added to The Wine Advocate archives. 

Parker’s influence on Bordeaux 2005 began months before his 10-year retrospective review of the vintage was even due to be published (June 2015).

In the six months leading up to the report’s publication, Liv-ex observed a period of increased trading activity for the vintage—and rising prices. Upgrades for several 2005s in late 2014 and early 2015 led to speculation that further upgrades would follow, resulting in a “ripple effect” of price gains across the vintage.

When the report was eventually released, it emerged that several wines tipped for an upgrade didn’t achieve three digits. The 2005 Mouton Rothschild, for example, received 97 points and saw its price drift over the months that followed.

The 2005 Mission Haut-Brion was a beneficiary of Parker’s 2005 report, as it was upgraded from 98+ to 100 points. “Pure perfection” and a “modern-day legend,” Parker comments. “This is a fabulous wine and a great effort from this hallowed terroir.”

Parker had hinted at an upgrade back in August 2012 (“If everything comes together in 10 to 15 years, this brilliant 2005 should merit a triple digit score”). With buyers anticipating a bigger score, its price began to creep up at the beginning of 2015. Between January and June 2015, when the score was revealed, its trade price moved from £3,200 to £4,506—a staggering 47.7% increase.

The upgrade for the 2010 Montrose came at the end of a period of declining prices for the wine: between March 2013 and May 2014 its trade price dropped 32.3%—from £1,600 to £1,100 per 12×75.

Parker increased its score by just one point—from 99 to 100—in August 2014, calling it “among the greatest vintages ever made in Montrose.” What the wine lost in over a year, it regained in a single day following Parker’s announcement: on the day of the upgrade, it traded at £1,650.

Parker has been effusive in his praise of the 1989 Haut-Brion, publishing 100-point scores for the wine on six separate occasions—as well as 98-100 in barrel. He calls it “one of the immortal wines and one of the greatest young Bordeaux wines of the last half-century...a seamless, majestic classic.”

As the chart below shows, this Parker favorite commands a significant premium on other Haut-Brion vintages: its market price is 139% above the 2005, the next highest of the last 20 vintages.

Parker concludes: “Life is too short not to drink this wine as many times as possible!”

Burgundy grand cru:  Maximum price €14.5m | Average price €6.25m

Pomerol: Maximum price €3.6m | Average price €1.8m

Burgundy premier cru, white: Maximum price €3m | Average price €1.59m

St-Emilion: Maximum price €3m | Average price €270,000

Pauillac:  Maximum price €2.5m | Average price €2.2m

Burgundy premier cru, red:  Maximum price €2.25m |  Average price €680,000

Champagne, Côte des Blancs: Maximum price €1.8m | Average price €1.58m

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Attribution: HERE and HERE

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