Burgundians were heralding the quality of the 2009 vintage–perhaps another "vintage of the century"–even before the grapes were harvested, let alone transformed into wine. That’s because the weather during the growing season predicted an extremely successful vintage. Prices at
the just concluded 2009 Hospices de Beaune auction confirm the locals’ enthusiasm for the vintage. The average price of the red Burgundies was up by 31 percent compared to last year, while prices for the whites overall fell by about 3 percent. And that’s in euros. Consider the weakness of the dollar over the past year and we Americans can expect an even greater increase in price.
A Unique Auction
This auction, unlike other charity auctions, sells newly made, but unfinished, wine (this year 799 225-liter barrels or about 19,000 12-bottle cases) from their vineyards. The Hospices actually owns vineyards. With 150 acres in prime locations, they are among the most important landowners in Burgundy. Although not as influential on the market as in the past, the Hospices still helps determine the price of the new vintage while raising money for two local hospitals.
Wine auctions have helped transform the world of wine in the United States over the last three decades. But none have the impact or draw the world’s attention like the Hospices de Beaune, officially known as Vente des Vins des Hospices de Beaune, which just completed its 149th annual sale.
Charity auctions, such as the Napa Valley auction, attract high rollers and highlight the wine country "lifestyle.” Commercial auctions held by Christie’s and Sotheby’s or wine retailers, such as Zachy’s, an important New York wine store, have allowed consumers to acquire older, mature wines unavailable through the usual retail channels. In the process, these commercial auctions have demonstrated wine’s collectability and moved it from the dinner table to the investment portfolio. But none of these auctions have an impact on the prices of a new vintage.
The Old and the New
Held annually on the third Sunday of November in the charming town of 
Beaune, the center of the Burgundy wine trade, the Hospices de Beaune auction offers only the latest vintage of wines made from grapes grown in vineyards that have been donated to, and are now owned by, the Hospices. These young, newly made Burgundies are sold in barrel and are still one to two years away from bottling. Until recently, bidders were restricted mainly to large Burgundy wine producers or négociants, such as Maison Louis Jadot, Maison Louis Latour or Maison Joseph Drouhin, who would perform the élevage (or “upbringing” of the wine) by completing the winemaking and offering it for sale via the usual commercial channels.
To modernize this ancient and quaint event–in years past the bidding for each lot was concluded when a candle burned out–the Hospices de Beaune partnered with Christie’s, the prestigious London-based auction house, in 2005. Christie’s encourages ordinary consumers to bid by introducing Christie’s Live™, on-line real-time bidding by anyone via a computer anywhere in the world. They also reduced the size of each lot to a single barrel to make it easier for consumers to buy. This year the Hospices raised 5.45 million Euros (approximately $8.2 million) from selling 799 barrels of wines from the just harvested 2009 vintage.
The Longest Lunch
The auction is the centerpiece of the Les Trois Glorieuses, three feasts that act as a magnet drawing wine lovers from all over the world and transform the usually sleeping town of Beaune into one bustling outdoor festival. The weekend culminates on Monday in a grand way with the Paulée de Meursault, the longest lunch in the world in which over 1,000 Burgundy enthusiasts–including prominent producers–bring bottles of Burgundy to share liberally with tablemates.
A Little History
The auction’s roots go deep, back to 1443 when Nicolas Rolin, Chancellor to Philippe Le Bon, Duke of Burgundy, and his wife,
Guigone de Salins, established the Hôtel-Dieu–a hospital to care for the sick and the poor–which along with the Hôpital de la Charitié are the beneficiaries of the money raised at the auction. The first donation of vineyards to the Hospices de Beaune followed in 1459 and now, with the last donation of 3.5 acres in Pouilly-Fuissé by Françoise Poisard in 1994, the Hospices owns almost 150 acres of prime vineyards from which they produce 44 different wines (called cuvées)–31 reds and 13 whites. Each cuvée honors an individual or group with their name on the label, such as Cuvée Nicolas Rolin, or the donor of the land, such as Cuvée Maurice Drouhin, in addition to the appellation of the wine.
Interest and Prices Are Up
Each barrel, known locally as une pièce, holds the equivalent of 288 bottles (24 cases) of wine. Prices this year ranged from about $3,900 for a barrel of Savigny-lès-Beaune 1er Cru Cuvée Forneret to about 
$86,000, up over 50% from last year, for a barrel of Bâtard-Montrachet Cuvée Dames de Flandres. Those prices are for unfinished wine and do not reflect the costs of élevage and distribution. Although it’s too early to analyze the effect of Internet bidding by individuals on prices, 40% of the purchases came from outside the auction hall, either by Internet, telephone or facsimile transmitted bid. Christie’s attempt to expand the audience of bidders is clearly working, which is certainly good for the charity. But as more people bid, prices are likely to increase substantially, which will translate into higher prices for consumers in general.
Since it is a charity auction, the prices paid run about three times normal, according to representatives of the auction and négociants. Nonetheless, when auction prices go up, growers can’t help but be tempted to raise their prices for grapes and wines they also sell to négociants who then will be forced to pass their increased costs onto consumers.
Tasting is Tough
The Hospices has its own full-time winemaker, Roland Masse, who supervises a team of vineyard workers who tend the vines during the year and harvest the grapes. He has the unenviable position of having the public and trade taste all of his wines roughly 8 to 12 weeks after the harvest. In contrast, when other producers present their young wines for tasting, they typically select only a few that are “showing” well. Masse has no such luxury. He must have barrel samples of all 44 cuvées available for public and trade tastings Friday and Saturday before the auction.
At this early stage in their lives, the wines are very hard to evaluate. Not all have completed malolactic transformation (the bacterial reaction that transforms harsh malic–or fruit–acid to the creamier lactic–or milk–acid) and hence, many wines come across as hard and acidic. Some wines still have not completed the primary alcoholic fermentation and have a touch of unfermented sugar remaining. Tasters need incredible experience tasting very young wines to be able to form accurate assessments, decide which wines to buy and how much to pay for them at the auction.
The Négociant is Crucial
The role of the négociant who performs the élevage is critically important. Since the négociant buys the wine in barrel, which by 
tradition has always been made of new French oak, he must decide whether and when to transfer (rack) the wine into older oak barrels. (Over the last several years, the Hospices has experimented by fermenting and selling several of the cuvées in one-year old oak barrels). Négociants must make other winemaking decisions to achieve the style of wine they want, including how long to age the wine in barrel, whether and how to control the malolactic transformation and whether to fine and filter the wine prior to bottling.
The Label
Understanding the label of a wine from the Hospices de Beaune
reinforces how complex Burgundy can be. All of the wines carry the traditional Hospices de Beaune label showing the cuvée, the village and/or vineyard name. In addition, the name of the person who bought the wine at auction and the négociant who performed the élevage appears at the bottom.
Hurdles for the Public
Although now open to the public, the auction poses hurdles for the ordinary consumer. Off-site bidders have no opportunity to taste the wines before the auction, and so are forced to bid solely on the reputation of the cuvée and the vintage. The winning bidder must arrange for and pay a négociant to perform the élevage. “Christie’s will be delighted to advise you if you are not already in contact with a local négociant,” according to the auction catalogue. But it might be difficult to convince a négociant to raise a single barrel (those in the trade typically buy multiple barrels of the same wine), especially a wine they didn’t think enough of to bid on themselves. After all, the négociant’s name still appears on the label along with the buyer. Despite these potential pitfalls, there will undoubtedly be wealthy individuals who want to see their name on the Hospices de Beaune label and will drive the prices up to satisfy their ego.
So, along with the falling dollar, here’s another reason prices of Burgundy will rise next year.
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