Vineyards Spike in Price

Filed in archive French Wines on March 21, 2007

With the on-going struggle of the Burgundy area, you would think there is not one more thing that they can handle, but yes, there is another issue thrown in the mix. The land, once rich when it comes to growing grapes, is now rich for other possibilities, and that does not necessarily include family-run vineyards and wine making facilities. From Burgundy's tiny vineyards attracting international investors:

SUVs -- Hummers, Range rovers and Ford Explorers -- increasingly ply the roads. They are a potent reminder to consider carefully the economic complexities always swirling beneath Burgundy's idyllic surface when seeking a fuller appreciation and understanding of the region's wines.

In this case, worldwide speculation by frenzied individual collectors has caused sharp prices increases. Consequently, the land values of Burgundy's tiny vineyards have soared. Ironically, this has created a mounting crisis at many small domaines where independent vignerons -- grape growers and wine makers -- barely sustain economic feasibility.

France's Napoleonic inheritance laws requiring each child of the domaine owners to receive an equal share in the vineyards have always made it challenging for such vignerons to maintain viable, intact domaines. Even if agreement can be reached over partitioning the tiny vineyard holdings of economically marginal operations, it is increasingly impractical for individual heirs to pay inheritance taxes in the range of 50 percent of currently inflated land values. It is a classic situation of being land-rich, but cash-poor.

Sensing vulnerability, wealthy investors and cash-rich corporations circle like hawks waiting to swoop in and pay top dollar for the prestigious land interests of small domaines.