Lyle et al,
Price tremors of Burgundy started with '99s, but were, as it turns out minor. '02 was more serious, and signaled that Burgundy was on a fast track to unaffordability. Top '02s saw 50%+ jumps. Then the freakish
'03s came along and between very short yields and a very weak dollar, prices stayed very high. 04 was a pause
in the progression, but in feb 07 when Allen Meadows issued his Greatest vintage in 50 years comment the roof blew off prices for 05s.
Something that is important to remember with Burgundy is that it operates very differently than Bordeaux as far as distribution goes. Bordeaux production is at an industrial scale compared to the very small amounts produced by Burgundy's producer/farmers. Cellar door prices in Burgundy are very stable, rising slowly and incrementally year to year. Bordeaux ex chateau prices rise and fall significantly depending on vintage. Most cellar door prices for 05 Burgundy were at the most 5-10% above 04s, some didn't rise at all. Where all the increases came from were from all those in the trade between the domaines and consumers. The problem is that production of premier and grand cru Burgundy is essentially what it is and cannot grow, yet awareness and interest in Burgundy continues to increase at exponential rates. The interweb has seen to that. Too much disposable income was chasing too little wine and the trade was entirely willing to capitalize.
One reason Burgundy prices have traditionally been stable is that while it is a revered region, demand has always been much lower than demand for Bordeaux. Vintage fluctuations over the years have meant that the Burgundy producers are far more interested in selling out their wines than playing pricing games. Long relationships and stable consistent pricing are the way this has been achieved. I think many people would be surprised to learn what Roumier has been getting at his door for a bottle of Musigny. Only DRC and Leroy have traditionally had exceptional and very high prices.
Recent events have now seriously disrupted the rather staid world of Burgundy pricing. In the past, crazy
secondary prices were pretty much laughed off. Now the feedback loop to producers has them raising prices for top wines based on what happened to the previous vintage. The 06 Richebourg from X went up to adjust
to prices seen for the 05. The increases were too big for producers to ignore. The thing is, in Burgundy,
prices once raised, don't go down. Those with cellar door access will either have to pay or risk losing access to that top domain, and that carries on down the line. Whoever declines is likely to lose their allocation
but then when the wines don't sell those at the end of the line take the hit.
So what should have happened with the 05s? For starters, the media, critics etc, should have been less hyperbolic about the vintage. They were effective at creating a virtual hysteria for the wines. The trade
should have acted with greater restraint, resisting the temptation to squeeze every possible penny of profit
knowing that they will need to sell the next vintage and the next... too. Sure, some short term money would have gone unmade but responsible business practices result in that sometimes. Finally, some wines sold for prices no one should have been willing to pay, Deep pocketed consumers were too willing to shell out obscene amounts. Level heads were outvoted by irrationally exuberant ones.
I guess it remains to be seen if some kind of equilibrium can be restored.