http://www.harpers.co.uk/news/anti-fraud-squad-raids-burgundy-producer-bejot-vins-et-terroirs/534156.article

Really there’s not much to be said, or rather that can be said, about the above – yet.

I saw the first reports – illegible text and photos from Burgundian newspapers at the end of last week. Here is the first English note of the ‘fraud investigation.’

I’ve met the people from Bejot, and Vincent Sauvestre (right – a very nice man, clearly successful, who has bought many old brands) comes across in this report as a little evasive – I really don’t believe that he doesn’t have a working knowledge of what’s in his tanks – that said he wasn’t present in any of my tastings or technical discussions.

It seems to be business as usual for now, but ‘no smoke without fire?’ That’s hard to say given some of the local ‘investigative’ past history – just ask Jean-Marie Guffens – but if anything is amiss, hopefully we will get, sooner rather than later, to know the full detail.

As for the noted fines at the end of the article – not really a deterrent – eh?

Of that I’m completely sure…

“In 2006, Kurniawan took 250 shares in a partnership created to buy several prestigious vineyards on Burgundy’s Côte d’Or, including some parcels of Beaune premiers crus and the Vosne-Romanée cru Malconsorts. Kurniawan’s shares constituted 22.73 percent of the six-person entity, named Etienne & Partners. The shares entitled each holder to dividends in wine from the vineyards, managed by Etienne de Montille, 53, scion of the Volnay-based de Montille family.”
The Wine Spectator

Don’t expect me to explain the market for Chablis to you – it generally leaves me confused!

There is a certain lack of wine here in Chablis, and a lot of it sells rather quickly; yet a significant amount of this volume departs the producers’ cellars for less than €7 per bottle for Chablis, and less than €10 for premier crus – for larger orders of-course.

The average domaine size in terms of hectares is much larger than in the Côte d’Or, though because of the pricing of the wine, the turnover per domaine is rarely more – only four employees for 80 hectares wouldn’t be uncommon in Chablis. Because of this larger number of hectares per domaine there is often a blurring of lines between ‘agriculture’ and ‘viticulture’ – you definitely won’t find such large tractors in the Côte d’Or, though the latter does have a few harvesting machines. Harvesting machines are not the exception in Chablis; for all the evocative images of a horse ploughing the rows, Chablis is machine-driven – even very well known domaines, of quality, may harvest their Petit Chablis and Chablis by machine and their more important wines by hand – even a proportion of the grand crus have machines doing the work.

Then there are the wines: I’ve slowly, organically, built up a list of producers that I like to visit, put together largely through tasting blind. This has taken me more than three years and the result, so far, is that this January I’m making almost 50 producer visits to taste their 2014s – but this list really doesn’t reflect the larger reality of wine from Chablis. Because of my methodology, I search out only the interesting stuff, so I’m insulated from the market realities. Of-course you are too if you buy only from domaines that I like!

It’s really only through open, off-the-record, discussion with (certain) producers that you appreciate that there is a lake of not great wine that comes from Chablis – grand crus that taste like poor villages wines – here I fail you, as my modus operandi doesn’t bring me into contact with them! But that being true, one has to ask the question why?

30 years ago there was also a lot of ‘sub-moderate’ wine in the Côte d’Or, but a virtuous circle of new generations that have; travelled the world and taken on different perspectives, seen price growth which has enabled investment in their cuveries, and the best working materials, has gathered critical acclaim that has further increased their apparent desirability and pricing, which has, slowly-but-surely, increased the average quality of wine. This has without doubt been helped by benevolent vintages, but domaines are equipped to deal with most things today.

The question I’m struggling to answer today is ‘why not in Chablis?’

The top wines from Chablis are fabulous, with a quality, desirability, tastiness and most importantly, character, that can match almost anything from the Côte de Beaune, yet where is the virtuous circle? Are there insufficient critics reporting? Is the, generally, more agricultural structure to blame? The desirability of the land reflects, if to a slightly lesser extent, the feeding frenzy of the Côte d’Or with parcels of grand crus very hard to come by today – at almost any price. Certainly the small, everything by hand, model of the Côte d’Or – for example, someone like Jean-Claude Bessin – is rarer in Chablis, yet there are exponents of the mechanised approach that really make compelling wine too.

It’s clear to me that low pricing has a hand in the problem, and you will know me as someone who pushes back against pricing excess, but in the last 10 years the price of a villages Meursault has doubled, Chablis considerably lags – I even have to suppress laughter when a producer of Chablis tells me that they will increase their prices this year – by perhaps 10 centimes…

In the end, I see pricing as indicative of the problem, and the lack of price appreciation as affecting the virtuous circle, but the totality of the issue still escapes me.

I have to say, extreme lover of Burgundy’s wine and people as I am, I have the fear that harder times lie ahead. I hate to write notes such as this, but whilst my reports of the actual wines of 2014 are laced with joy, my view of their market is becoming ever-darker.

Since 2005 there has been a step-change in global pricing. Unlike the decade of the 1990s where there was typically a small price increase each year to cover inflation (plus 5% on the price of the old bottles in the cellar), the prices of some domaines’ wines in the market have tripled – and more – often re-sellers earning much more money per bottle than the producers of those bottles. Critical and merchant hyperbole must bear a significant responsibility, but they cannot alone explain the ‘Louis Vuittonification’ of the produce of Burgundy. Each vintage being reported more in the manner of a fashion show with more articles devoted to the cost of the wines, than the contents of those bottles.

Since 2009 there have largely been small volume harvests – pity the poor vigneron(ne)s with vines from the centre of Meursault to Pernand-Vergelesses, three times hailed. The Côte de Nuits has also seen much lower harvest volumes but don’t for a moment think that there are not crocodile tears to be found at the premises of certain Côte de Nuits producers, increasing their prices 15% per year ‘in sympathy’ with their brothers and sisters in the Côte de Beaune – whilst making maximum yields… There will always be somebody!

Essentially the recent years’ marketing of Burgundy’s wines into new markets such as China, largely via Hong Kong, supported, since 2010, by a significant reduction in the output of the ‘famous domaines’ has been largely synergistic in terms of their effect on pricing – most obviously for an echelon of sought-after wines (and their vocal would-be buyers). The problem is that the increase of bulk prices for traditionally harder to sell labels has also tracked, at least to some extent, those most sought-after wines. Large negociants were trying to dampen down sales of Petit Chablis (2013) earlier this year as they were losing money on the bottles – because it’s a question of what the end market will pay for a bottle – a wall if you like – and bulk prices were/are too high for some merchanted grapes/must, to achieve that.

Burgundy has two large pricing problems – iniquities – one internal and one external.

• Externally; if all the wines you would like to drink cost significantly more than, let’s say, Chianti-Classico – you will more often than not, buy the Chianti in a restaurant. Many, many restaurants who used to list villages and 1er Cru wines, have replaced them with Saint Romain and Rully – and even they are a hard sell. Anecdotally, the market for good burgundy ‘has tanked’ in France in the last six months. And I’m sure that it’s not just the case in France. Note, from a recent article in a trade-publication: “When you can get three [cases] of Haut-Brion for the same price of one [case] DRC Richebourg, is the price of rarity justified?” In my own opinion, maybe a small premium, but no more.
• Internally; there is a problem of imbalance when villages wines from the Côte de Nuits such as Vosne, Gevrey and Chambolle typically cost more than great 1er Crus from the Côte de Beaune – whites included.
  Both of these problems need rectification.

But bulk pricing is multi-faceted; an undoubted driver is the lack of volume – historically such ‘volume-related’ price challenges have been moderated by large merchant houses or ‘maisons’ who would harness either their buying power, or their stocks, to moderate the ups and downs of pricing – but with consecutive low volume vintages, and empty warehouses, these maisons’ market-making ability has been massively curtailed.

The higher prices are, however, not just ‘yield-related;’ competition is also a large driver in the last vintages. Of-course competition will become stronger for a dwindling resource, but there are also so many new entrants who want to become negociants that the competition for grapes is further magnified.

The Hospices de Beaune wine auction was often seen as a barometer of pricing, but the increases of recent years, have more and more been dismissed as ‘its own thing, and a result only of charity’ yet we should not so easily dismiss this. The day after this year’s auction, the courtiers were indicating that anyone who HAD to buy today, would see 20% higher prices. Actual settlements have been nearer 10% for those who needed wine to fulfill orders, but that’s still another 10%, and overnight too! Perhaps the most recent increases can be attributed to the growing hype towards the 2015 (red) wines, but it seems that every year there is yet another reason for more than a ‘cost of living’ increase.

Land pricing and inheritance costs are certainly drivers that go all the way through the hierarchy of wines, so it’s not just the sought-after premier and grand crus that have problems, it’s also the more basic, volume oriented ‘commodity/everyday’ wines – at least the negociant versions. Established, low debt domaines have an advantage on pricing, but Dujac, for instance, have stopped making a négoce Morey-Saint-Denis, because it would have been more expensive than their domaine version [oops – see comment from Jeremy, below]. It IS still possible to find great pricing on Saint Aubin 1er Crus (less than €20 direct) and Beaune, Pommard and Volnay 1er Crus (less than €25, direct) from domaines – indeed many, many wines and of both colours – but the rest is becoming messy, indeed very messy in the Côte de Nuits.

Prices are also, slowly but surely, changing the culture in Burgundy too – and that’s my greatest personal worry. There’s an old saying that ‘In Bordeaux you can buy everything and taste nothing, but in Burgundy you can taste everything and buy nothing’ – well, I have the impression that that’s also changing. More and more doors are becoming closed to the casual visitor and the range of wines being offered to taste is shrinking as the grand cru bottles become ‘too expensive to open.’ For a long time the Bordeaux market was seen as the bad guy, but the market sentiment is also trending towards a similar impression of burgundy wine, with no nuance between Montrachet and Mâcon.

And the big wall coming?

Eventually, there will be a market correction, maybe followed by a couple of, or more, years of introspection and pain. I’m sure that the pricing inertia will hold for the exceptional (weather) 2015s, particularly given the modest volumes, but, for a moment, just imagine a 2016 vintage of high volume and average quality – who is going to buy at recent pricing? Or higher pricing? That would be the straw that breaks a camel’s back, at least for a period of re-alignment!

http://www.bloomberg.com/news/articles/2015-12-02/don-stott-burgundy-collection

It’s a sign of the times. Today there’s an apparent lauding of ‘flash wealth’ and narey a critical word over such things. Certainly the linked article seems a celebration of what Stott has, and is, doing. There are, of-course, multiple perspectives to this:

Now if Don Stott had been publicly selling these (link above) bottles for charitable ends (maybe he anyway IS!), i.e. doing a Bill and Melinda, or (this week) a Mark and Priscilla, I would have simply applauded. But that’s not the case. It seems to me that this is just the next installment of the mad rush to elevate the pricing of what, for some – and I assume I’m not alone – was a daily staple, to something approaching a Louis Vuitton accessory for ever-fewer people. Sad to say, some wines have been in this bracket for some time.

There are many producers that are also uncomfortable with the back story of people who, over years, they sold lots of wine to (let’s not, however, forget the word ‘sold’), but who didn’t drink it and later went on to make large profits from it. And that will make it harder for everyone hoping to build relationships in the future. Still, Stott bought more wine than he could ever drink, so what did the producers think that he could do with all that?

If we go back almost 20 years (actually 1997), Andrew Lloyd Weber hit the headlines for doing exactly what Don Stott is doing today. The reaction was very different – and of-course the wines were mainly ‘affordable’ at that time – at least in the context of current pricing. Still, there was plenty of DRC (et-cetera) but there was a more overt negative reaction at that time. Even wine professionals were rather stuffy about it (paraphrasing) ‘It’s just the usual list of labels from the typical sources’ – at least judging by the publicity for the sale at that time.

It’s really not the same now – eh? I’m sure it will, first get worse, and then get painful, before it ever gets better, if it ever gets better…

Due to the multiple news headlines of the weekend, you would be forgiven for having missed it, but this month, for the first time in many years, a chunk of Musigny changed hands.

News of this transaction was broken by the Winespectator, just before the Hospices auction.

Anyway, The Dufouleur family were parting with a small piece of the Musigny jigsaw, and Erwan Faiveley (today, right) was waiting with open wallet.

The two producers have long had links, indeed not just are their cuveries almost next-door to each other in Nuits St.Georges, François-Xavier Dufouleur and Erwan Faiveley were also at school together.

Domaine Dufouleur Frères:
This domaine have, for a long time, been exploiting the Musigny vines of Jean Dufouleur, who died this year, over 100 years old, and leaving 14 heirs to be satisfied. I’ve profiled these young producers before, and I found their 2010s and 2012s were very promising – the 2013s proportionally less-so [Subscribers], but the ‘2013 issue’ was a symptom of the succession to come. And here we have the rub. François-Xavier Dufouleur told me yesterday (at the Hospices auction) that the family chose to sell because:

• “We (the family) did not sell by choice but because of succession”
  (It was the death of Jean Dufouleur, owner of the vines, that triggered the transaction. He had 14 potential ‘inheritors.’)
• “We decided to sell to a local and quality oriented producer, and for that, refused some higher financial proposals”
• “We also obtained, by exchange, about 1 hectare of Nuits & Nuits 1er cru vines (Vignerondes), which helps to confirm our anchoring in Burgundy”

Domaine Faiveley:
And really, Faiveley are overwhelmingly a domaine today. Erwan Faiveley has been unstinting in taking every opportunity to buy-up expiring domaines – Billaud-Simon in Chablis was the last one, about 12 months ago. Let’s be honest, this transaction is certain to have been of much higher monetary value than the €1 million paid for Château de Puligny’s 0.03 hectares of Montrachet, in spite of the villages and 1er cru Nuits parcels taken by the Dufouleur family in lieu of some cash.

Have Faiveley unlimited cash? Well, that’s a good question. We should be aware that Faiveley have, very recently, sold a significant part of their family railway engineering company to US company Wabtec – a multi-billion dollar deal. Erwan notes “It’s a merger and we keep a significant ownership interest, and we also have seats on the board – but we were also able to take some cash from this transaction.” Just as well, as they also have a new cuverie project in Nuits, which begins at the end of this year. They won’t need much additional space for the produce of these vines in Musigny though.

My opinion?: I would suggest, given that such vines don’t often change hands, even once in a generation, that if you have the opportunity, and you have the means to pay, then you should not hesitate. The vines are (potentially) yours forever, just like the first vines the Faiveley family ever bought; their Nuits 1er (today) Les Porets, puchased in the 1830s…

But at least to start with, there is a small divergence of opinion:

An interesting quote from my Dufouleur domaine profile (2012):
“We are lucky to have a lot of things, and yes, we have 0.1 ha of Musigny – just 500 bottles – but it is on the limit of the vineyard next to Les Argillières – which is just Chambolle villages. Actually this Musigny is no gift for the domaine as people have such high expectations, but maybe the plant material is not the best, or it is just its position, but our Clos de Vougeot is usually better – so it’s a bit frustrating!”

Today’s quote from Erwan Faiveley:
“The Musigny vines are in really good shape. We already did some repiquage last week. Really, we are very happy with the work that the Dufouleur team have done with these vines in the last years.”

Of-course, Faiveley is now selling, not buying!

I’m a strong proponent of the phrase – it’s not what you pay for something, it’s what you do with it that counts. Dufouleur had no strong record in producing a small cuvée of Musigny but Faiveley have. Indeed, Faiveley are so good at it, that they even need a lock for their bespoke Musigny barrel’s bung (right) – currently big enough for 150 bottles.

It remains to be seen ‘how good are the produce of those vines’ once Faiveley start in earnest – and they already forecast producing only 60% of the number of bottles that Dufouleur used to. We will see, soon enough, how good that plot is.

Note: Faiveley also ended up with the 2015 Musigny crop. This, I assume will need to take a négoce label as the transaction for the sale of the vines was completed only after the harvest – but let’s see. Erwan Faiveley will certainly, now, need some more barrel locks!