Crus control

Once, Burgundy was divided into merchants and grape growers. Now, says Roger Morris, both groups are rushing to be more like each other.

Anne Leroy-Baroin; Frédéric Barnier ; Frédéric Drouhin
Anne Leroy-Baroin; Frédéric Barnier ; Frédéric Drouhin

In 2003, American journalist Blair Pethel quit his job and moved his family to Beaune to make wine as farmer/owner of a small estate he called Domaine Dublère. Almost 15 vintages later, he still farms grapes he owns but he also buys grapes from other farmers as a small negociant, the traditional Burgundy wine merchant who purchases grapes from various sources, makes them into wine, then turns them into vineyard-specific bottles or regional blends. Today, Pethel’s business is half estate wines, half wines from bought grapes. By contrast, the large negociant Louis Jadot, founded in 1859, just snapped up Domaine Prieur-Brunet, adding the estate’s 18 ha of vines to the 46.5 acres Jadot already owns, in total a significant portion of its overall production.

These two producers are not anomalies. Since the turn of the new century, many small grape growers who make wine from some of their crop and sell the rest to negociants have rushed to become negociants themselves, buying grapes from famous estates or crus in addition to what they farm to fashion a broader, more-attractive, portfolio. Meanwhile, most large negociants look to snap up estates up for sale to secure their own supply of grapes. More than ever, each group is competing for grapes with the other on its home turf — or terroir.

While there has been increased worldwide demand for red and white Burgundies from its most-treasured vineyards — the grands crus and premiers crus of Chablis and the Côte d’Or that stretch north and south of Beaune — the grape supply from many of these crus has actually shrunk over the past 50 years, as the best producers have reduced yields to make better wines.

Bottom line: Prices for Burgundy land and grapes, and thus for finished wines, continues to skyrocket. 

The scale of the jumps

Burgundy’s 2016 export volume was up 1.6%, while revenue climbed 4.5% to about $953m over the previous vintage. For its crème de crème, the Liv-ex Fine Wine exchange reported that the August selling price for two Domaine de la Romanée-Conti rose more more than 10% each — the 2012 Romanée-Conti to $161,784 per case and 2012 Richebourg to $18,044.

“Burgundy is not far off from shooting itself in the foot,” says Pethel. Anne Leroy-Baroin, head of marketing for the large negociant, Bouchard Père et Fils, adds: “The phenomenon of scarcity is the main factor. It must be said that Burgundy has not been spared [weather-related grape shortages] the past decade, but prices must stop rising. Consumers will turn away from Burgundy — even if Burgundy is irreplaceable.”

It helps to step back and look at why this is happening. There is no place in France where terroir — specific vineyards — is more treasured than in Burgundy, especially in Chablis and the fabled Côte d’Or. By critical consensus, the best Pinot Noir and Chardonnay vineyards in the world are along the Côte that stretches north-east to south-west along the mostly gentle slopes of the west side of the broad Saône Valley.

Unlike Bordeaux and elsewhere, there are very few single-owner or “monocru” vineyards in Burgundy. Through centuries, these vineyards have been subdivided into smaller plots of a few rows of vines with multiple owners. Farmers lived in the villages, not among the vines, and each owner was responsible for farming their own vines. For example, the very large Clos de Vougeot grand cru currently has about 86 different owners on its 50 ha. 

In the marketplace, the names of these cru vineyards are magical. Anyone who makes wine from them — no matter how many or how few rows of vines they have; no matter how well or how poorly they make wine — can have those names on their bottle labels. A century ago, small local family farmers would own a few parcels from a few vineyard and would sell their grapes to negociants. Until the 1930s, almost no farmers also made their own commercial wines, and there was strong negociant resistance when they started doing so.

But as the market prices for cru Burgundies grew in the last half of the 20th century, more growers decided to produce their own wines, which brought extra profit but also extra duties — winemaking, bottling, storage and marketing. Additionally, as wine critics such as Robert Parker started rating wines, certain grower-producers were singled out as making the best estate wines. Other growers sought to keep up, even if they had to buy grapes.

“There are now more than 800 negociants in Burgundy,” says Frédéric Drouhin, head of family-owned Joseph Drouhin, one of Burgundy’s largest negociants, as well as president of the Union des Maisons de Vins de Grande Bourgogne. “Most of them were formerly domain owners. I challenge you to find a single ‘grower’ in all of Meursault. They are all ‘negociants’.” Under Burgundy regulations, anyone who buys grapes, no matter how few, becomes a negociant and is no longer classified as just a grower. 

This major shift in small growers also becoming negociants is not widely appreciated within the wine trade, as being a small grower carries a certain cachet that being a negociant does not. In an interview a couple of years ago, Frédéric’s brother, Philippe, who manages the family’s estates and grape purchases, put it this way: “It’s unknown due to the fact that growers who become negociants don’t want customers to know about it.”

While Drouhin and a few other negociants have long owned some estate vineyards, the movement for negociants to secure their own vineyards accelerated during the 1980s, partly as a defensive measure. “We have to buy some land to make sure we have some wine to sell,” says Frédéric Barnier, winemaker at Louis Jadot. Additionally, negociants complain their “bigness” is held against them in the marketplace, both by critics and consumers. For example, a bottle of Meursault from a domain owned by a large negociant may typically fetch as little as a third or less of what a similar Meursault made by a respected smaller grower/producer would get.

It should be noted that Burgundy is especially vulnerable to serious crop loss from hail and frosts. And when there is “short vintage”, what grapes there are generally go first to larger negociants, having established long-term grower relations and being seen as more economically reliable. With no surplus grapes, smaller negociants are often left out. “In 2016, for example, so much of my ‘négoce’ fruit was frozen that [my production] ended up being 75% domain and 25% negociant, instead of 50/50,” reveals Pethel.

Whether the producers are large or small, both domain wines and blended wines are generally made to the same standards. Unlike negociants in Bordeaux, Burgundy négoces make wine from bought grapes, not purchased base wines made by growers/producers. That means Burgundy négociants try to ensure grapes they buy have been grown to their standards. “We usually get into their vineyards in May when the vines are flowering and continue to check through the harvest, asking about disease pressures and crop sizes,” says Drouhin, “even with the growers who are not organic, as we are in our own vineyards.”

There are no differences in regulations as to how a negociant wine and how a domain wine is made, so they are generally similar in style according to the producer. “To me, it’s the brand name that people should trust, not whether it’s a negociant or domain wine,” says Drouhin. But each has to be labeled correctly, and it would be both illegal and unethical if purchased grapes were blended into an estate or domain wine. “All our wines are identified, estate and non-estate, and we guarantee traceability from start to finish,” confirms Bouchard Père et Fils’ Leroy-Baroin.

But while bought grapes cannot go into an estate wine, the reverse is fine. “For example, with villages like Savigny red or Chorey red, they are made with 70% or 80% of our ‘own grapes’,” says Barnier. “The other grapes are purchased.” Either way, there are minor, yet important, differences on the labels between an estate and a negociant wine. “When the wine comes from an estate-owned vineyard, the term ‘Domaine’ is written on the label,” explains Leroy-Baroin.

Balancing the costs

When it comes to which is cheaper to produce — estate wine or negociant wine — it depends on the circumstances. “It’s cheaper to make a domain wine depending on how long you’ve owned the vineyard and what your purchase price was,” says Pethel. “Grape and vineyard prices have exploded in Burgundy in the past several years — a phenomenon that’s reflected in wine prices as well. So if your family has owned the vineyard forever, you can basically say that the farming costs are your only costs for a bottle from that parcel.” 

Barnier agrees: “This is one reason why most negociants are also land owners,” he says. “It is a good way to offer more stable prices in the long run.” Pethel says he tries to keep prices steady on estate-grown wines, while prices of wines from bought grapes often fluctuate. Of course, a recently purchased vineyard may have more costly grapes in the beginning than bought ones, no matter how expensive.
So why don’t the large negociants just buy up the smaller grower/negociants as they become successful in the market? This would be the case in the USA and most non-European markets, where the beverage conglomerates are always snapping up successful wineries, as well as craft distillers and brewers. After all, hasn’t Burgundy just gone through rounds of consolidation at the top, as major negociants purchase other major negociants?

As in most things, France is different. Just as in Champagne, with its hundreds of small growers, a government agency called SAFER gets involved with any potential vineyard sale in Burgundy in an effort to protect small farmers and to prevent market domination by a few firms. “Even if I want to buy a property, the government can say, ‘You’re too big’, and sell it to a smaller negociant,” says Drouhin.

So, for the time being, Burgundy — and Burgundy lovers — seem stuck with both the status quo and higher prices, perhaps even more of both. “The lines between domains and negociants have become even more blurred,” says Drouhin, then, perhaps putting on his growers’ association hat, adds: “Maybe that’s a good sign, a sign that we’re very dynamic.” 

Barnier strikes a similar theme: “Burgundy has changed. What we used to call ‘family growers’, compared with the negociants, are now doing the same thing. All of us are growers, farmers and negociants — large or small.”

For the time being, liberté, égalité — although perhaps not yet fraternité — reign in the vineyards of Burgundy. 

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