Additional reporting by Peter Meltzer and Bruce Sanderson
Prices for red and white Burgundies rose at this year's Hospices de Beaune wine auction, held this past weekend, although not as much as industry members had speculated that they would, in light of the potentially excellent quality of the 2005 vintage and the involvement of international auction house Christie's.
The average price for a barrel--4,805 euros--was up around 11 percent from 2004, in a sale that is generally considered a barometer for the Burgundy market. "The prices could have been a lot more," said Pierre-Henry Gagey, the head of Burgundy firm Maison Louis Jadot, who bought a few barrels of Meursault Genevrières Baudot. "The increase in prices was very reasonable considering the very good quality of the vintage."
For the first time in the 145-year-old charity auction's history, the Hospices de Beaune brought in an outside auction house, Christie's, to organize the sale. One of the changes made was to allow private individuals to bid on barrel lots, with the minimum purchase set at a single barrel instead of bidders being obligated to acquire the entire tranche. In the past, collectors could only bid by going through a Burgundy négociant.
This year's sale totaled 5.08 million euros (nearly $6 million), including the 6 percent buyer's premium and all taxes, according to Christie's. In comparison, the 2004 barrel auction brought in only 3 million euros, but that vintage was considered less exciting and occurred amid a tougher market for French wine. There were also 90 more barrel lots this year than in 2004, and Christie's and the Hospices added a bottle auction on the day before the barrel sale. Consisting of 239 lots of rare wine from the Hospices' private cellars, that portion of the event earned almost 213,000 euros (about $250,000).
Most of the 2005 proceeds came from the auction of 789 barrels--649 red and 140 white--of just-harvested wine from the Hospices' vineyard holdings. Those lots brought in around 3.8 million euros, or nearly $4.5 million, excluding taxes and fees.
In general, prices were higher for the whites than the reds (an average of 6,815 euros versus 4,372 euros). With a few exceptions, the lots did not generate enough excitement to exceed the high estimates. The top lot was a barrel of Cuvée Dames de Flandres Bâtard-Montrachet, which fetched 65,923 euros ($77,346)--65 percent above the presale high estimate.
Louis-Fabrice Latour, president of the Syndicat des Négociants en Vins de Bourgogne, said the négociants were generally pleased with the 11 percent increase in the barrel prices, as it was a good sign for the Burgundy market. "What it means is that the prices will at least be stable and maybe increase up to 10 percent," he said. Latour did note, however, that the quantity of lots and the length of the auction probably depressed the overall prices somewhat. "Had it been the same quantity as 2004, I think the increase would have been 20 to 25 percent."
Reaction to the sale was lukewarm among some other Burgundians. For example, the local newspaper, Le Bien Public, questioned why Christie's was unable to attract a greater number of important, affluent buyers from around the world, and added that the sale results reflected the general malaise for Burgundy wines in the market.
"Christie's didn't bring many buyers," Gagey agreed. "It could have been really crazy."
But David Elswood, head of Christie's international wine sales, said that the auction exceeded their expectations. "All told, our changes were not that revolutionary," he said. "I think we assuaged any concerns local négociants may have harbored that their influence would be diminished. Instead, I think we added an important element by opening the auction to private collectors." He noted that the house had at least 20 private clients who bid successfully on the barrels.
Latour added that the négociants hadn't expected Christie's to bring many more private buyers and that he thought the auction house was successful in its role because it "brought prestige, a catalog, exposure and organization to the auction."
The proceeds of the sale go to support the ancient and highly respected hospital, and the sale caps a weekend of festivities in Burgundy. The vintage preview and the parties around it draw merchants, collectors and Burgundy lovers from around the world.
Most of the wines were sold to wine merchants both in France and around the world, including a number of American merchants and restaurants, many of whom still bid on the barrels (which hold 228 liters, or about 25 cases) through négociants, who also age and bottle the wines for a fee.
"Prices were really reasonable," said Ron Junge of retailer Brown Derby in St. Louis, Mo. He bought a couple of barrels of premier cru Beaune and some Meursault Genevrières Baudot. "We thought prices would be up 25 percent or more with Christie's around, but they weren't. And the dollar is a little stronger now so it makes it even better."
Most of the buyers tasted the 2005 Hospices wines the morning before the six-hour sale, which began at 3 p.m. The tasting, at which samples were poured from 40 barrels and about 15 barrels worth of wine was consumed, was held in the cellar of the Hospices, and the wines were very cold (about 54° F), making the reds particularly difficult to taste--hard and tannic. "I don't know anyone who could understand what the wines were like from this tasting," commented one Beaune négociant.
In any case, some of the independent buyers were excited about the quality of both the reds and the whites from 2005, and they bought.
"It's a thrilling vintage to be involved in, and many growers I spoke to believe it is the best since 1990," said Geddy Lee, a member of the Canadian rock band Rush and a serious wine collector. He and his friend and fellow Canadian wine collector Josh Latner bought, among other things, some barrels of Mazis-Chambertin Madeleine Collignon, Beaune Clos des Avaux and Meursault Genevrières Baudot. "I have come to the auction before, and I always wanted to buy. This vintage was the one to buy."
Mounir Saouma of the small négociant firm Lucien Le Moine, which bought 10 barrels and is aging another eight for private clients, summed up this year's auction as "a good start for Christie's." Saouma, who has been in Burgundy since 1995 and is not as steeped in the region's traditions as the long-established négociants, noted that the sale was very long, with the new system allowing the sale of single barrels. "We finished at 9 p.m. Some people left, and it's too much in one time," he said. "But in a quiet market like today they did well."
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