Despite gloomy wet weather in Beaune this Sunday and gloomier economic signs around the globe, the mood inside the hall at the 149th annual Hospices de Beaune auction was bullish. Individual buyers and Burgundy wine merchants bid 20 percent more per barrel on average than last year, resulting in a total hammer price of $8.1 million. It was the second highest total since the auction began in 1859 and the best results since Christie's became involved in 2005.
"We are surprised by the increase of 20 percent. Five to 10 percent we thought could happen," said Louis-Fabrice Latour, president of the syndicate of négociants. For the fifth consecutive year, the sale was open to private individuals, who bid enthusiastically. "Certainly we underestimated the power of the private customers," said Latour.
The annual charity auction offers barrel lots produced from vineyards owned by the Hospices de Beaune, with proceeds benefiting the hospital. As a charity event, prices are inflated, but 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.
A total of 799 barrels were up for sale this year, compared with 544 last year. The barrels were auctioned one by one. After successfully purchasing a barrel, the buyer had the option of purchasing additional barrels from that particular lot at the same price.
By mid-auction, bidding on the reds was up 35 percent compared to last year. The increase was partially due to the perceived quality of 2009, which has already received positive reviews from the press. The Pinot Noir crop was healthy, though yields varied from village to village. The young wines show plenty of fruit, lower acidities than average and ripe tannins. Overall, the 644 barrels of red fetched 31 percent higher prices than in 2008, while the total sales of the 145 barrels of white decreased nearly 3 percent.
The auction has evolved from a wholesale market to a retail market now that individuals can bid on barrels. This has effectively taken away the profit margin of Burgundy's négociants, though they still earn a fee for aging the barrels in their cellars and bottling the wine on behalf of the private clients.
According to Latour, nine times out of 10 what happens at the Hospices auction reflects the eventual prices of that year's Burgundy in the market. Combined with the potential quality of the harvest, expect to pay more for the 2009s. "We know that the prices will go up," said Latour. "So why don't people buy [the 2007s and 2008s] now, when we are more flexible?"