It’s not surprising to discover that Burgundy sales in the U.S. suffered last year. Exports to the U.S.—long the region’s largest export market—plummeted in the first half of 2020, eventually closing out the year down 15.2 percent in volume and 22 percent in value, according to the Bureau Interprofessionnel des Vins de Bourgogne (BIVB). Though Burgundy was generally in line with overall French export numbers, this stings for a region that exports almost 50 percent of its production.
While Burgundy remarkably held its own in terms of global exports—volumes up 0.8 percent and revenue down only 0.8 percent over 2019—the drop off in the American market reveals that the 18 months of U.S.-imposed tariffs on French wines (referred to as “la taxe Trump” in France) were more damaging to sales than the pandemic.
Currently, the U.K. has surpassed the U.S. as the number one export market in volume for the region (though the U.S. remains the leader in export value). And while stakeholders on both sides of the Atlantic believe the tariff suspension announced in early March will be permanent, the impact is far from over: A lot of high-end Burgundy in the market today will reflect tariff pricing for many months to come.
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“Distributor clients generally hold three to four months of stock,” says Albéric Bichot of Maison Albert Bichot, which has its own importing company in the U.S. It will take time to sell through that wine, just as it will take time to bring over more bottles—particularly because there is a critical shortage of cargo shipping space between Europe and North America.
Yet for many in the trade, the challenges of tariffs and on-premise closures have merely deepened pre-existing fractures created by Burgundy’s elevated prices. Many importers fear that recovering restaurants won’t have the appetite for Burgundy’s premium pricing, and wonder: Is a full recovery in the relationship between the U.S. and Burgundy possible?
An Unpredictable Future
Generally, it’s the opposite ends of the Burgundy spectrum that have continued to perform well: the expensive Grand Crus and more prestigious premier crus, and entry-level whites from Mâcon and Chablis. The middle ground covering Burgundy’s village and lesser-known premier cru cuveés—which accounts for 50 percent of Burgundy’s production—has suffered the most.
One example of a Burgundy value success story is Irancy, a charming but little-known village making Pinot Noir near Chablis. The region posted a 60 percent gain last year (albeit from a minute volume base) and the appeal is simple: affordable Pinot Noir in a rather robust style that is accessible in its youth yet age-worthy, too. That’s not something Burgundy makes in abundance.
A trio of top Pouilly-Fuissé producers—Frédéric-Marc Burrier of Maison Joseph Burrier and Château de Beauregard, Audrey Braccini of Domaine Ferret, and Antoine Vincent of Château Fuissé—report that the road has been challenging for their middle tier wines (the U.S. is the number one market for Pouilly-Fuissé, better known by American drinkers than French). Vincent points out that the region’s high-end wines—to be designated premier cru from 2020 forward—were already in a more price-demanding category so were less affected.
The problem is unpredictability, reports Doug Polaner of Polaner Selections, who has seen sales vary wine by wine, even within the same producer portfolio.
The Burgundy distribution model is heavily dependent upon U.S. importers. Unlike the Bordelais’ Place de Bordeaux, an exchange where the vast majority of Bordeaux’s most expensive wines are sold and which allows for easy redistribution of cases across the globe, the Burgundians generally build long-standing relationships with their importers. Those importers attest that they have done everything possible to maintain sales.
Michael Feuerstein, the owner of Pas Mal Selections in New York City, flew over wines—including all of his pre-sold 2017 Burgundies—before tariffs went into effect. Andy Lum, the regional sales manager at Wilson Daniels’ Denver outpost, says the company brought in a six-month inventory of high-volume items before the tariffs hit. John Sellar, the senior vice president of Frederick Wildman’s wholesale division in New York City, started working on sharper margins and didn’t make any profit on tariff-impacted wines while massaging currency differences, in order to maintain pricing.
Sellar notes that everyone focused on the “25 percent” tariff being added to a wine’s price, but that wasn’t always necessary. In fact, in many cases wine pricing could be increased only slightly, particularly when wineries cooperated by lowering their prices and when exchange rates could be smartly managed.
The Impact of Channel Shifts
Because Burgundy—especially mid-level Burgundy—is often a hand-sell wine, it’s much harder to sell without restaurant wine programs, according to Michael Sullivan, the founder of Beaune Imports in Berkeley, California. With restaurants at “half mast,” as Polaner describes, far fewer sommeliers on the floor, and wine stores restricting entry in many regions, the stories that sell these wines have not been told. So, the wines are left to sell on price alone—prices that include tariffs.
“Nothing is as challenging to sell as no-name Burgundy,” says Victor Schwartz, the founder of VOS Selections in New York, something he’s said for years. As restaurants closed, the flood of high-end Burgundy to retail only made it that much harder.
While consumers revelled in the new opportunity to buy these highly allocated wines without restaurant mark-ups, it put additional pressure on less famous wines, explains Tim O’Rourke, the district manager for Prestige-Ledroit Distributing in Washington, D.C. Now, mid-tier villages-level wines from lesser-known producers must compete on retail shelves against bottles that were formerly only available on restaurant lists.
For decades, the Burgundians have had the advantage of controlling the supply of their wines to a U.S. market that clamored for more. That’s changed.
Importers like New York City’s Michelle Peters, the French direct-import manager at David Bowler Wine, and Greg Doody, the president and CEO of Vineyard Brands, say that “protecting on-premise placements” has been their primary goal—but it hasn’t been easy. According to Peters, by-the-glass placements suffered early on from tariff increases (a point that became moot once the pandemic hit and dine-in business came to a halt).
Resourceful importers have found ways to make inroads with on-premise accounts amidst shutdowns. Lum at Wilson Daniels partnered with a Colorado restaurant for two months to offer two three-packs of to-go Burgundy wines—priced higher than retail mark-ups but lower than restaurants mark-ups. “The carry-out bottle is seldom Burgundy,” observes Kurt Eckert, the national manager for Maison Louis Jadot at Kobrand in New York City.
Is the Romance Over?
Others believe the power shift between the U.S. wine trade and Burgundy has been in the making for quite some time.
“We are seeing a saturation point for increased production from truly great producers that is making it difficult to sell through quality wines from very good vintages,” says Beaune Imports’ Sullivan, noting that this happened even before the tariff-impacted 2017 vintage. “The inflation of prices at the producer level over the last five to ten years is the main reason for this.”
While the Burgundians don’t raise prices in a spectacular way like the Bordelais, they do raise them systematically, typically a small percentage each year. Though producers argue that this makes their wines more reasonable, critics note that while Burgundy raises its prices in a lower production year, it doesn’t back down on prices in a more plentiful vintage.
Those small increases add up over the decades. U.S. importers aren’t going to sell Burgundy at a loss, and many are tired of continually narrowing their margins. “Adding the tariffs onto this trend has not helped,” says Sullivan.
Many importers and retailers point out that there isn’t a substitute for Burgundy, especially the reds. Still, high-end buyers are going elsewhere—while still paying big bucks—for greater satisfaction at less lofty prices. Regions like Piedmont and Champagne, as well as top producers in less-heralded areas like Bodega Catena Zapata in Argentina and By Farr in Australia, are all seen as worthwhile Burgundy alternatives, according to Lauren McPhate at Tribeca Wine Merchants. Jamie Wolff, the owner of Manhattan’s Chambers Street Wines, says that Oregon has long been a beneficiary of Burgundy’s ever-climbing prices.
Tim Varan of Tim’s Wine Market in Orlando has seen an uptick in “ex-patriate white Burgundy customers” who now seek out high-end white wines from other regions, like single-vineyard Soave and Loire Valley Chenin Blanc. However, Varan still believes in Burgundy—he expanded his red Burgundy selection by 200 items (a 20 percent increase) in 2020 thanks to better availability and great deals.
Even with tariffs lifted, the thundering crescendo of higher pricing reverberates. Burgundy still needs to sell a lot of pricey wine in the U.S.—and importers aren’t sure if they can do that while making a profit. “We love Burgundy, but we don’t sell it for the money,” says Sullivan. “Ultimately, we’re not going to let everything go down the tubes by attaching our hopes to a system that is fracturing.”
But many proud and private Burgundians—many of whom have become accustomed to a degree of comfort that previous generations never enjoyed—are unwilling to lower their prices. Top domaines drive pricing and have the best chance of getting what they ask for—and given continued worldwide demand for Burgundy, they have no reason to concede.
“Demand for Burgundy is much stronger and more widely distributed around the world in 2020 than in 2008,” says Etienne de Montille, the owner of Domaine de Montille. “If prices are stable, I think that the great domaines of Burgundy can survive the crisis without too many problems.” He notes that importers didn’t request that he lower the prices for his 2019 vintage wines, though they did ask that he avoid increasing the price too much. Winemaker Dominique Lafon of Domaine des Comtes Lafon agrees, having successfully resisted requests to reduce pricing in the face of tariffs.
Additionally, there is an unspoken code that a buyer must purchase wines further down the quality chain in order to obtain a domaine or négociant’s top tier bottlings. If those mid-level wines can’t sell in the world’s largest wine-consuming country, will Burgundy just take its high-end wines elsewhere? For some, the U.S. market is simply too historically important, and those producers will continue to invest in and prioritize American wine drinkers. Jean-Marie Fourrier of Domaine Fourrier, for example, believes it’s critical to “attract the next generation of Burgundy lovers,” regardless of short-term fluctuations in profitability.
In any relationship, the party who cares the least has the most power. For decades, the Burgundians have had the advantage of controlling the supply of their wines to a U.S. market that clamored for more. But between tariffs, COVID-19 restaurant closures, and the availability of more affordable alternatives at equal quality levels, the U.S. market isn’t demanding Burgundy in the same way it used to. From importers and distributors to retailers and sommeliers, the consensus is that a reckoning is underway.
Christy Canterbury, MW is a New York-based journalist, speaker, critic, and wine list consultant. Previously, she directed wine buying for Smith & Wollensky, Culinary Concepts by Jean-Georges Vongerichten, and leading global retailers.