Tough Economy Hits Hospices de Beaune Auction
Annual charity event in Burgundy raises almost $3.9 million, a smaller take for the second straight year
"I hope that prices will go down," said Bouchard Père & Fils owner Joseph Henriot, moments before the start of the 148th Hospices de Beaune charity wine auction in Beaune on a gray Sunday afternoon. "I'm not sure that the growers yet understand what's been happening in the financial markets."
By the end of the five-hour-long sale, Henriot, who owns more vineyard land on the Côte d'Or than anyone, had gotten his wish: The average price per barrel of young red wine had fallen by a dramatic 31.5 percent from 2007's prices. A total of 450 barrels of red from 2008 were sold. The much smaller quantity of white wine—94 barrels—considered more promising than the ripe but light reds, edged down by 2.45 percent. For all 43 cuvées offered, prices dropped by an average of 26.42 percent. In contrast to last year's total sales of 4,297,096 euros ($5,457,312) for 607 barrels, this year's take was only 3,075,481 euros ($3,898,516) for 544 barrels, including the 7 percent buyer's premium.
The annual charity auction consists of barrel lots produced from vineyards owned by the Hospices de Beaune and raises money for the hospital. While it doesn't set the prices for a vintage anymore, it is Burgundy fans' first glimpse at the quality of a vintage and what the market will pay. As a charity event, prices at the auction are inflated by about one-third over market prices, according to Louis-Fabrice Latour, CEO of Maison Louis Latour and head of the local négociants' syndicate. Still, as the earliest indicator of market mood in any major French wine region (Bordeaux's futures offerings don't come until next spring), the Hospices auction, always held on the third Sunday of November, is closely watched.
This year's downturn, coming in the wake of tumbling sale prices at commercial fine wine auctions, sends a stern message to the markets—the heady prices of recent years are no longer sustainable. That suits many Burgundian négociants just fine. "Our customers are happy with the pricing of the lots we bought on their behalf this year," said Frédéric Drouhin, president of Maison Joseph Drouhin, who bought 15 of the 18 barrels offered of a Beaune premier cru, "Maurice Drouhin," a cuvée named for his grandfather. "We were able to get it for them for 10 percent less than I expected."
Sunday's priciest regular lot, in a hall which started out packed but was only about a quarter full as the auction wound down at 7:30 p.m., was a grand cru white, Bâtard-Montrachet Cuvée Dames de Flandres, sold to Maison Henri Boillot for 42,000 euros ($63,385). The top red was the grand cru Clos de la Roche, Cuvée George Kritter, purchased by both Vineyard Road and Lucien le Moine for 32,000 euros ($40,566). Least expensive were the final four barrels of the last lot—Savigny-les-Beaune premier cru, Cuvée Arthur Girard, which sold for 1,800 euros ($2,286).
As always, the special "President's Barrel," whose proceeds go to an outside charity chosen by the auction's honorary presidents, fetched the highest price of all. This year, it was a Pommard Premier Cru, Cuvée des Dames de la Charité, purchased by James Thompson, a Scottish hotel magnate wearing a kilt, who paid 50,000 euros ($63,385). In a nod to an old custom at the sale, candles were lit at the start of the bidding on this lot, and when the last one flickered out, the bidding was over.
The Hospices administrators, currently in the middle of a costly expansion of the local hospital, are not happy when the négociants push auction prices down. After prices dropped by 30 percent in 2004, right in line with the négociants' prediction, the president of the Hospices and mayor of Beaune, Alain Suguenot, began a series of moves to break the trade's traditional grip on prices. The next year, the auction was put in the hands of Christie's, instead of being handled locally. Bidding, previously open only to the trade, which could bid on its own behalf or for clients, is now open to all comers. And the old rule that only multiple barrel lots could be sold has yielded to single barrel lots—far more friendly to amateurs. (A barrel holds about 24 cases of wine.)
Last year Christie's introduced yet another innovation—bids can be placed in the sales room, by phone or via live Internet connection. At Sunday's auction, the auctioneer easily switched from French to English for the benefit of Internet bidders following the action globally. One American wine broker who bought several barrels by phone from Massachusetts, Michael Reiss, said, "I was happy that the dollar is 20 percent stronger than before. It's a privilege to be able to do this."
The challenge for barrel buyers who lack trade connections is to locate a négociant-grower willing to care for the wine during aging. The search must be speedy, since owners must remove their barrels from the Hospices' new winery on the outskirts of Beaune by Jan. 15. Christie's offers help in finding a suitable négociant-éleveur, who are typically paid 1,200 to 1,600 euros to do the job. But not all members of the trade are willing to volunteer. "If we're asked to raise a wine which we wouldn't have selected ourselves," said Philippe Drouhin, viticulturist for Maison Drouhin and Frédéric's brother, "the customer could end up telling us he doesn't like it. We don't want to be in that position."
The problem of finding a négociant to raise the wine is not lost on the Hospices. Interviewed as he took a break from the long auction, Seguenot revealed that the Hospices is considering offering purchasers the option of having the wine raised in its own cellars. For many amateur buyers, that would be a welcome development.
The organizers of the auction and the négociants seem to hold varying opinions on the recent innovations. As a boy, Frédéric Drouhin remembers the auction as an exclusive event. "You'd see Rolls-Royces and Ferraris here, and ambassadors and movie stars would come."
In place of the old exclusivity, the world's most famous wine auction can now boast democratization. At the end of the day's bidding, a French Burgundy lover approached Anthony Hanson, Christie's Burgundy specialist, and asked for help in finding a négociant-éleveur to raise the two barrels of wine he'd just bought. "Until today," he told Hanson, "I'd thought that for a person like me, the wines of the Hospices were untouchable."
