A "Crazy" Auction
The discrepancy between Hospices prices and the perceived quality of the vintage has set up a battle between Burgundy négociants and growers.
Only négociants, may bid at the sale for themselves and their clients, essentially purchasing the wines as futures. The Hospices auction can backfire on the négociants if they bid up the prices, since over the following weeks, they must negotiate prices for the latest vintage with growers, ultimately determining the prices that consumers will pay in the coming year.
The négociants believe '00 will be a hard sell if prices are higher than the '99s, especially for the reds. But the growers, who supply wines to the merchants, will point to auction results to argue that prices should go up. "The Hospices gives the general direction," said Michel Caillot, a grower at a small domaine in Meursault.
But since Burgundian winemakers say that quality of the Pinot Noirs from the 2000 vintage pales in comparison to the reds from the superior 1999 vintage, the Hospices sale logically should have resulted in lower prices, argued négociants. They noted that demand for Burgundies is slowing and that wineries are reporting sizeable stocks from the huge '99 vintage.
Before the sale, several merchants said it would be reasonable if the sale ended with a price decrease ranging from 5 percent to 15 percent. But on Sunday, at 8:30 p.m., as the six-hour auction came to an end, these négociants were shaking their heads at the results, wondering if the '00 wines would set another record for Burgundies.
"The sale completely missed the mark," said Michel Boss, formerly an executive with the Syndicat des Négociants. "Our research shows that the Hospices and the market are normally in synch, but about every 12 years, the Hospices goes into a separate orbit; this is that year when the auction is out of whack."
Judging from some prices, the sale suffered from the same syndrome as the annual charitable Napa Valley Wine Auction: high prices with little correlation to the current market.
For example, at the auction, a barrel of Mazis-Chambertin Madeleine Collignon went for 111,000 francs ($14,500), more than three times the current trading price in Burgundy.
Results like that prompted Gagey to request at a press conference that journalists refrain from using headlines like "Burgundy Has Gone Crazy," since he feels the final bids won't truly reflect retail prices.
"The Hospices wines have become products of the stars," said Alberic Bichot of Maison Bichot, a Beaune négociant. "People buy these wines like they might buy caviar or Romanée-Conti. But the more they do so, the less this sale will have to do with the real Burgundy market."
At least one large négociant house refused to get into a bidding war over the Hospices wines, feeling higher prices sent the wrong message to its growers. "I want to buy, but not at prices higher than in '99," said Louis-Fabrice Latour of Beaune-based Maison Louis Latour. "We want growers to lower their prices 10 to 15 percent. Business is slow."
Strong Buyer Enthusiasm
But many restaurateurs, retailers and collectors -- several from the United States -- wanted to secure wines with the end-of-the-century vintage on the label. "We didn't know before the sale what effect the 2000 vintage might have," said Louis Trébuchet, the president of BIVB and co-owner of the Chartron & Trébuchet négociant firm. "Now we know."
Plus, buyers like Morris Robinowicz of Dallas were enjoying the benefits of a strong dollar, which has risen significantly against the French franc in the last year. The Texan and his friends bought some barrels of a red cuvée, Beaune Nicolas Rolin, and a white cuvée, Meursault Charmes Albert Grivault, according to Trébuchet, who bid on their behalf.
"My American client said, 'I don't care if prices go up 10 percent or more. He said, 'For me, a 10 percent increase means the wine costs the same as last year,'" said Trébuchet.
Bordeaux enologist Michel Rolland and some fellow French wine lovers sat to the end of the auction so they could snap up the best wine in the sale: two barrels of Bâtard-Montrachet cuvée Dames des Flandres for 170,000 francs ($22,100) per lot. After commissions, taxes and shipping, the wine will cost about $100 a bottle.
"This is sympa-fun," said Jean-Marie Chadronnier, CEO of one of the largest négociant firms in Bordeaux, CVBG Dourthe-Kressmann, who was with Rolland. The Bâtard-Montrachet, he added, is "a rarity and at the same time it is very good."
Check out Per-Henrick Mansson's article: Two French Traditions Meet in Beaune: the Hospices Auction and Andouillette.
Read reports about past Hospices auctions: