Review of 2019 and outlook for 2020

The Bordeaux vineyard market was relatively calm in 2019. Most of the activity was focused in the Médoc, with several notable transactions in Margaux, including the sales of Château La Tour de Mons and two Grand Cru Classé estates, Château Cantenac Brown and Château Dauzac. Other sales in the Médoc in 2019 included Château Fourcas-Dupré in Listrac-Médoc, Château Domeyne in Saint-Estèphe and Château Cambon la Pelouse and Château Lamothe-Bergeron in the Haut-Médoc. On the Right Bank, the number of transactions in Saint-Emilion and the surrounding appellations was lower than in recent years, the most notable transaction being the sale of Saint-Emilion Grand Cru Château Haut-Brisson.

Elsewhere in Bordeaux activity remained subdued, with a challenging wine market coupled with continued over supply of properties and a lack of buyers affecting the generic Bordeaux and Côtes de Bordeaux appellations in particular.

By contrast, vineyard prices continued to rise in the South of France, as demand for Provence rosé showed no signs of slowing. The most active buyers were existing producers looking to secure or increase their supplies of grapes and investors attracted to the region and to the opportunity to benefit from a lucrative and growing market. Vineyards in the Côtes de Provence appellation were particularly sought-after, with buyers willing to pay a significant premium for estates closer to the coast and the main tourist centres with well-established brands and distribution. The most high-profile transaction in 2019 was the purchase of Château d’Esclans, producer of the highly successful Whispering Angel rosé, by LVMH, which was announced in December. This followed on from their purchase earlier in the year of Château Galoupet, one of 18 Grand Cru Classé estates in Provence.

The market remained very tight in Burgundy and Champagne, with few properties changing hands and those that did rarely appearing on the open market. Buyers from outside these regions remained focused on the prime assets, resulting in further increases in values of the top vineyards, while local buyers continue to account for most sales (although often with the backing of external investors). Two US-owned domaines in Burgundy were sold to local buyers in 2019 – Domaine Dublere, which was sold to Domaine Terres de Velle in Auxey-Duresses, and Maison Alex Gambal, which was sold to the Boisset family.

The number and size of transactions in the other major wine regions – the Loire, Languedoc and Rhone Valley – were modest, with the majority involving existing producers looking to increase production or to establish a presence in a new region.

2020 is unlikely to see any significant change in the trends outlined above. The global wine market remains challenging, particularly for producers outside the premium sectors, and the cloud of US tariffs is further weighing down the French wine industry.

The market is once again likely to be dominated by domestic buyers, both established industry leaders looking to consolidate or expand their portfolio with strategic purchases and wealthy individuals and families looking to purchase prime assets in the most prestigious appellations. French financial institutions continue to invest in vineyard assets, although some have been divesting assets in recent years, as illustrated by the sales of Château Lamothe-Bergeron and Château La Tour de Mons referred to above.

Buyers with a smaller budget who are unable to access the most prestigious appellations can afford to be highly selective. They should focus on opportunities that offer not only high quality vineyards and technical installations that do not require significant capital investment but also on businesses that can demonstrate well-established distribution and a capacity to overcome the current market challenges.

Across the different regions, the Bordeaux market is likely to remain challenging, with buyers focused on a handful of the most prestigious appellations. Burgundy and Champagne might see some loosening of supply, as succession issues force the hands of some owners, while Provence is likely to remain sought-after by domestic and international investors attracted to the region and the continued popularity of rosé.

Alexander Hall
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