Troubling Times for Bourgogne Lovers

 

Short crops in the last four vintages, skyrocketing demand, rising land prices and the threat of a serious region-wide vineyard disease is just some of the troubling news coming out of La Bourgogne, one of the world’s most famous wine regions. Burgundy lovers are faced with the very real and unpalatable prospect of having to look elsewhere for their fix, or at least pay a hell of a lot for the genuine article. Considering that Canada is the fourth largest importer of Burgundy by value, that’s a serious concern in this country.But there’s also a silver lining: these unfortunate developments will give some of La Bourgogne’s lesser-known corners a chance to emerge from the giant shadow of the most famous Côte d’Or villages. There is, believe it or not, good value red and white Bourgogne still to be had. And at the same time, the very best of the region is better than ever before.

In part I of this report I’ll examine some of the challenges facing La Bourgogne, and follow that up in subsequent postings with a look at a few of the regions/appellations and producers where quality and value intersect: Chablis and Grand Auxerois, Marsannay, La Côte Chalonnaise and the Maconnais. Each section will include a Buyer’s Guide of the best kit currently available, somewhere in Canada.

(Editorial note: the anglicised name of the region, “Burgundy”, has been dropped from all marketing material by the BIVB, so I’ll respectfully follow suit and use the French name – after all, no other French wine region uses a different English name.)

Part One: The Challenges

A String of Small Vintages

The most serious immediate issue facing growers in Bourgogne is the loss of a significant proportion of the crop in all of the last four years, with certain regions also down significantly in 2014. The main culprits have been poor flower set and especially hail, and nowhere has been hit harder than the Côte de Beaune, with Beaune itself, Volnay and Pommard particularly unlucky, as well as Chablis.

Giles Burke-Gaffney, Buying Director for Justerini & Brooks, a British wine & spirit merchant established in 1749, has this to report in his introduction to the 2012 offer:

“Gerard Boudot of Etienne Sauzet has been making wine since 1974 and has never known such a small vintage, his Folatieres is just one example – he made two barrels instead of the usual ten. 2013 is also terribly small, and with 2011 and 2010 being short crops, too, Burgundy has effectively produced the equivalent of two decent sized vintages in four years. Cellars up and down the Côte d’Or look empty”.

Hugues Pavelot of Domaine Pavelot in Savigny-lès-Beaune confirms the situation: “the last four vintages have been the equivalent volume of two average years”, he tells me, referring to the years 2010-2013. It’s late May 2014 as he speaks these words, inadvertently forgetting to touch the wood of the bistro table at La Ciboulette restaurant in Beaune where we’re lunching. A month later, the Côte de Beaune would be struck yet again by devastating hail on June 28th, further compounding growers’ woes.

Estates from Beaune to Meursault reported damage affecting up to 40% of the potential 2014 harvest, after golf ball sized hailstones destroyed leaves, grape bunches and canes. Some areas were even less fortunate, like the famous Clos Des Mouches vineyard in Beaune where up to 90% of this year’s harvest was obliterated in a matter of minutes.

Even more discouraging is that the hail fell despite measures in place to prevent it. Thirty-four ‘hail cannons’ had been deployed every 10 kilometres in the storm-prone areas, which shoot particles of silver iodide and copper acetylacetone into threatening clouds to disperse hail pellets or reduce their size. But the measures ‘failed to work’ according to Thiebault Huber of Domaine Huber-Verdereau and also president of the Volnay Wine Council, or at least didn’t work well enough. This year’s damage has prompted discussions on other anti-hail measures like netting, as is practiced in Argentina. But hail nets are both expensive and reduce sunlight exposure – an estimated 10%-30% – which is not a problem in the intense sunlight of Argentina, but is a genuine concern in far less sunny Burgundy. In any case official INAO approval could be years away.

The slight increase in the 2013 harvest over 2012 is of little consolation for many growers, considering that 2012 itself was exceptionally small. Taking the average of the last five years, 2013 was down 7% and 12% for reds and whites respectively, and also down 12% for Crémant de Bourgogne.

For many, this could spell financial ruin, Thiebault Huber tells Decanter.com. “We have lost the equivalent of two harvests over the last three years”, he says, echoing Pavelot’s and many other grower’s difficult situation. Ultimately prices will have to keep rising to keep domaines solvent.

High Demand

And it seems the unprecedented demand for top Burgundy around the world will encourage and sustain those prices. “I’m not sure why you’re here”, Frédéric Mugnier says to me immediately after arriving at his highly-regarded domaine in Chambolle-Musigny. “I have nothing to sell”. It’s perhaps not a dramatic change of attitude, but noticeable nonetheless, from when I first started travelling to Burgundy in the late 1990s. Back then, doors at all but the very top estates were still open.

But now Mugnier’s wines, like all of the top wines from the Côte d’Or and especially the Côte de Nuits, are on tight allocation, with importers/distributors bemoaning the few cases they are allotted to broker. Most growers are reluctant to even open their doors to prospective clients (or journalists), knowing that fueling more demand just causes more headaches. The world can’t get enough of sought after appellations like Gevrey-Chambertin, Vosne-Romanée, Chambolle-Musigny, Nuits-St-Georges and Morey St.-Denis (and of course all of the premiers and grand crus within them).

Exports to Hong Kong have tripled since 2008 when taxes on products with less than 30% alcohol were abolished, and growth shows no signs of abating with the first part of 2014 up another 12%. At the same time, Hong Kong importers have set up distribution in Mainland China, which has also increased demand. And it’s not just a handful of prestigious labels – Bourgogne is second only to Bordeaux now in China in terms of the number of different labels offered on average at points of sale.

Elsewhere, the United States remains the number one market for Bourgogne by value and is increasing despite a strong euro and weak dollar, indicating a buy-at-any-price attitude, while Canada also continues to grow, fuelled mainly by Québec, which accounts for 70% of Bourgogne sales by volume in the country. In the UK, allocations for the top wines are ever-tighter. Giles Burke-Gaffney of Justerini & Brooks warns prospective buyers of 2012s in no uncertain terms:

“2012 is an extremely small vintage, one of the smallest on record, and in many cases wine will have to be allocated to customers. The crop ranges from 20-90% down on 2011. Add this to furious, ever-increasing demand and we have quite a shortage on our hands and producers will inevitably have to put prices up.”

That pretty much sums it up. Bourgogne lovers and collectors, buy what you can, while you still can.

Flavescence Dorée: The Phylloxera of the 21^st Century?

Another spectre is haunting La Bourgogne and threatening to reduce quantities further: Flavescence Dorée. “La Flavescence” is a deadly vine disease – a phytoplasm to be more accurate (parasitic bacteria) – which first appeared in France in the 1950s in Armagnac. It has since spread across the south and into Northern Italy and beyond, and is moving further northwards. There is no cure for the disease, which spreads from plant to plant on vector insects, more specifically the sap-sucking “cicadelle de la vigne” (Scaphoideus titanus) or leafhopper, that also arrived in france in the 1950s, likely on vine rootstocks imported from the Great Lakes region of North America. Once a cicadelle becomes infected with the bacteria, which is harmless to the insect, it will in turn infect the plants with which it comes into contact, including grapevines. Flavescence remains asymptomatic for a year, making early detection difficult, but the bacteria then works quickly to kill the vine within a year or two.

Jean-Philippe Gervais, Technical Director of the BIVB (Bureau Interprofessionelle des Vins de Bourgogne), tells me that Flavescence Dorée first appeared in Burgundy in the late nineties near Puligny but was quickly eliminated. More recently it appeared again but in a much larger area in northern Mâcon around 2011 and has spread. He considers the disease a threat on par with phylloxera: “it’s really epidemic”, he says. “It multiplies almost exponentially. In the beginning you have one vine infected; by the following year, thanks to the movement of the cicadelle, you can infect all of the surrounding vines”. It’s believed that many phytoplasm-infected vines were sold by nurseries up to the mid-nineties, before obligatory hot water treatment was introduced to kill the bacteria. Thus nurseries unwittingly helped to spread the disease to many parts of France. And now with the increasing population and movement of leafhoppers, there is a very real danger that Flavescence Dorée could spread out of control.

Ironically, it’s been the dramatic reduction of insecticide use in Bourgogne over the last 15 years that has allowed the population of leafhoppers to grow virtually uncontrolled. It’s estimated that Bourgogne has 100x more leafhoppers than some other affected regions. The solution to the problem is two-fold: 1) identify and rip out all of the vines infected with the bacteria, and 2) reduce the population of leafhoppers with insecticide sprays.

Action last year was swift and decisive, some would argue excessive and reactionary, others necessary. In 2013, all communes of the Saône-et-Loire and Côte d’Or départments (covering a large part of Bourgogne the wine region) were ordered to spray three times against the insect. “We didn’t know how many infected areas there were”, reveals Gervais “there wasn’t time to inspect the entire region. But there were definitely large areas – eleven hectares [in Mâcon] were ripped out after all”. A commune-by-commune inspection of every single vine was also ordered to be carried out just before the 2013 harvest, when the symptoms are most visible. The inspections were preceded by work shops for vignerons on how to identify the symptoms of the disease: coloration of the leaves (reddish for pinot noir, yellow for chardonnay), poor lignification of canes and withering of berries, for example.

The action was considered largely successful, and in 2014, only thirteen communes in the southern part of the Côte d’Or, in which or near which Flavescence was detected, were required to spray, and even then only according to a 1+1 strategy, meaning that a second treatment is required only if the cicadelle population remains above a certain threshold. In the regions where the greatest incidences of Flavescence have been detected, namely in Mercurey (Côte Châlonnaise) and the northern Mâconnais, two obligatory treatments were ordered this year, with a possible third if deemed necessary. “The goal of course is to reduce treatments”, says Gervais. Nobody wants to spray insecticides unecessarily”.

But despite the seriousness of the problem, the severe approach has not been universally lauded, as could be expected from hundreds of individual vignerons each with varying winegrowing philosophies. The highest profile case involved organic/biodynamic grower Emmanuel Giboulot, who refused outright to spray insecticides on his grapes, though he was not alone. Even more dangerous are the countless growers who feigned to follow orders, purchasing the insecticide spray in order to be able to show the authorities the receipt, yet never used it.

Although Flavescence appears to be under control, the danger is still present. And the stakes are very high.

Land Prices Beyond Reach

Another long-term problem, but without any solution, is the skyrocketing cost of land in Bourgogne, some of France’s, and the world’s, most expensive vineyards. According to government figures, vineyard prices in the Cote d’Or rose by 5% on average last year versus 2012, to €515,600 per hectare, though the top grand crus can change hands for the princely sum of €9.5m per hectare ($14m CAD). Headlines were made when luxury goods giant LVMH purchased the 8.66 hectares of the Clos des Lambrays grand cru for a reported €100m.

This of course puts upward pressure on the cost of wines from the most prestigious sites. But even more seriously, it puts into question the long-term viability of family-run domaines. According to French inheritance laws, descendants pay 40% of property value in taxes in the succession from one generation to the next. Considering the astronomical value of the top estates, few families will be able to afford the taxes without serious succession planning.

“Our concern is that, in a couple of years, family domaines will have to sell their vineyards to big financial groups,” Caroline Parent-Gros, of Domaine AF Gros, said in the July issue of Decanter magazine.

The large number of family-run domaines in Bourgogne is one of the defining features of the region, compared to more corporate-run regions such as Bordeaux or Champagne. The family estates have also been instrumental in pushing up average quality across the region over the last couple of generations, in what was before a market dominated entirely by négociants and cooperatives. To see the region fall predominantly into the hands of large multinationals would indeed be a shame.

Impossibly high land prices also stifle development. Anyone with less than a massive fortune can only dream of buying vineyards in the famous communes of the Côte d’Or, which makes the region the playground of a small elite. The only way in for any outsiders is through the route of the “micro negociant”, a business model whereby individuals purchase small lots of grapes or juice, or finished wines in barrel or bottle to sell under their own label, like Canada’s own Thomas Bachelder. And even in this case, you need to be extremely well connected to have access to the best lots, like Benjamin Leroux for example, former régisseur at Compte Armand in Pommard from 1998 until this year, who’s striking out on his own, or Nicolas Potel, whose father, Gérard Potel ran Domaine de La Pousse d’Or in Volnay, who now operates a negociant business under the Maison Roche de Bellene label, and offers an impressive collection of crus. But they are luckier than most.

Part II next week takes a look at where to find value in Bourgogne, along with a buyer’s guide of the top, currently available wines.

John Szabo MS

Part II: Finding Value in Bourgogne

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