Vino Business E-Book

Isabelle Saporta

• Herausgeber: Grove Press UK
• Kategorie: Lebensstil
• Sprache: Englisch
• Veröffentlichungsjahr: 2015

Beschreibung

For centuries a bastion of tradition and the jewel in the crown of French viticulture, Bordeaux has in recent years become dogged by controversy, particularly regarding the 2012 classification of the wines of St.-Émilion, the most prestigious appellation of Bordeaux's right bank. St.-Émilion is an area increasingly dominated by big international investors, especially from China, who are keen to speculate on the area's wines and land, some of whose value has increased tenfold in the last decade alone. In the controversial 2012 classification, certain châteaux were promoted to a more prestigious class because of insider deals that altered the scoring system for the classification of wines into premier crus and grand crus. This system now takes into account the facilities of each château's tasting room, the size of its warehouse, and even the extent of its parking lot. The quality of the wine counts for just 30% of the total score for the wines of the top ranking, those deemed premier grand cru classé A. In Vino Business, Saporta shows how back-room deals with wine distributors, multinational investors like the luxury company LVMH, and even wine critics, have fundamentally changed this ancient business. Saporta also investigates issues of wine labelling and the use of pesticides, and draws comparisons to Champagne, Burgundy and the rest of the wine world. Based on two years of research and reporting, Vino Business draws back the curtain on the secret world of Bordeaux, a land ever more in thrall to the grapes of wealth.

Leseprobe

I am grateful to all the great or unrecognized winemakers who fight for their wine every day.

CONTENTS

Introduction

1 The Bordeaux Elite and the Fête de la Fleur

2 Louis Vuitton and Prada Make Wine

3 The Hidden Side of the System: Blockbuster Wines

4 The Classification Scandal

5 Such a Nice Dictator

6 With a Bogus Authority, the INAO

7 And in the Middle, a Handful of Alchemists

8 That Hide a Dangerous Secret

9 Maintained by Curious Methods

10 Praised by an Enthusiastic Court

11 A Very Nice Carnival

12 Bordeaux Is Booming in China

13 Vino China

14 The Sharks Divide Up the Land

15 The Long March of the Pomerol Exiles

16 You Have to Think Bigger

17 The Helicopters of Good Taste

18 Little Arrangements Between Lords

19 Pesticide Victims

20 The One Who Said No

21 A Little Guy Among the Greats

22 Tribulations of a Bordeaux Winemaker in China

23 The CAP Jackpot

24 Fear, or the Reign of Modern Oenology

25 My Kingdom for a Chip

Afterword

Acknowledgments

Notes

Introduction

In France, we have no shale gas, no gold mines, and no oil wells, but we have wine, including our famous Bordeaux, whose wines date back to our earliest history. The story of Bordeaux begins with the Roman Empire, when wine was already a coveted symbol of wealth praised by the greatest poets, such as Ausonius. And while Rome’s decline led to a darker time for this region, the twelfth century and the marriage of Eleanor of Aquitaine to the future king of England, Henri II, led Bordeaux to glory—until the Hundred Years’ War between France and England. Bordeaux then looked to Holland, then to still other markets, until its most recent conquest: China.

Bordeaux is divided into two distinct regions: its left bank, the Médoc, and its right bank, the Libournais. The Médoc’s first classification was organized in 1855 by influential merchants and brokers who decided which wines were worthy of belonging to the holy of holies. The classification has remained almost unchanged since then—except that the terroirs covered by it have been greatly expanded. But who cares! The wine still sells just as well. Now that the estates have become huge, many have fallen into corporate hands.

As for the right bank, until recently it had remained in general more family owned. Its wines were not classified until a hundred years after the Médoc. The classification is revised every ten years in order to be fair and give new challengers a chance to succeed. This was an admirable intention on the part of the creators of the 1955 classification, but they didn’t imagine that each new version of the classification would launch a merciless war with colossal sums of money at stake.

The bitter battles fought by the greatest estates to have their wines classified and to obtain the best terroirs resembles the most twisted machinations of Dallas. Modern-day J. R.s have entered the vineyards and made the prices of wine and land skyrocket. And just like the characters of Dallas, they don’t shy away from using the dirtiest tricks to make this red gold soar.

This sector represents a lot of money: between €7 billion and €10 billion of export revenue (equivalent to $7.6 million to $10.8 million). And North America is one of our best customers, spending €2.4 billion yearly on our wine. Wine is second only to aeronautics in French exports and every year French journalists express the sales figures for wine in terms of fighter jets. The wine sector currently represents 157 jets, and we have a lot less trouble selling our fine wines than our planes.

So France is a wine power, and Bordeaux is a jewel that is especially popular abroad. Americans have developed a special relationship to it. It’s thanks to an American that Bordeaux became an international name. Yet this relatively unknown young man received a cool reception when he first arrived in the Bordeaux region back in 1982. The local château owners looked at him with haughty contempt and had to be persuaded to open their doors. Almost no one at the time could have guessed that this American whom they snubbed would become the Million-Dollar Nose, Robert Parker, the man whose hundred-point grading scale makes and destroys the global reputation of wines.

Bordeaux’s golden age came about through the convergence of several factors: a strong dollar, a flourishing market, and wealthy golden boys who were looking for any chance to blow their money. Robert Parker gave them this chance by inventing a simple scoring system that even neophytes can master without getting bogged down in the arcane words appellations d’origine contrôlée, vintages, domaines, châteaux, grands crus classés, and premiers grands crus. Parker didn’t just put Bordeaux in the spotlight; he also brought this prestigious appellation into American territory.

Bordeaux has now become a huge business, a subject of large-scale speculation, and a worldwide brand. But as with any great success story involving massive amounts of money, rapid growth has led to a host of new problems. In the Chinese market, Bordeaux winemakers must learn to navigate government interference and rampant counterfeiting. Back in France, wines are heavily treated with pesticides, leading to controversy and concern over health risks to workers and wine drinkers. Meanwhile, our wine-making elite jealously guards its position within the kingdom of France and doesn’t hesitate to climb to the top by any means necessary. Say good-bye to the traditional family vineyard. Say hello to the world of Vino Business.

1

The Bordeaux Elite and the Fête de la Fleur

Security is tighter than at the French president’s palace, with walkie-talkies, barricades, and bodyguards. After guests are asked to leave their cars, flocks of young women in white dresses shield them with umbrellas so they don’t get soaked in the pouring rain while stepping to the golf carts that will take them to the château. The anticipation is at its peak. A black sedan makes its way through the crowd, the only car permitted to enter the courtyard. It comes to a stop, and French actress Carole Bouquet emerges, looking magnificent.

Welcome to the Fête de la Fleur, the highlight of the spring season for the crème de la crème of the world of Médoc and the other wines of Bordeaux’s left bank. In 2013, this huge party thrown by the Commanderie du Bontemps, the self-proclaimed “wine brotherhood” of Bordeaux’s left bank, took place on the last day of the big wine show Vinexpo in Saint-Julien-de-Beychevelle, at Château Lagrange, which is owned by the Japanese company Suntory, the alcohol and soft drink giant whose holdings include the Orangina Schweppes Group. It’s a magical place, the sign of a time when big capital has invested in vineyards and businessmen have replaced winegrowers.

The Bordeaux wine industry has become adept at bringing VIPs on board and crafting a swanky image. In thirty years, this very private world has undergone a sea change. The important wine figures of yesteryear have yielded to wealthy investors, traditional winegrowers have been pushed aside by CEOs, and old vineyard owners have been replaced by movie stars. In just three decades, the business has radically changed in scope. Big capital has invaded the vineyards, bringing its marketing managers and PR apparatus. And the guilds, those old bastions of the Bordeaux bourgeoisie where the local officials used to love to get together, now hold glamorous celebrations that resemble Hollywood premieres.

In the multimillion-euro splendor of the Fête de la Fleur, with its chandeliers and gilded ceilings, deals are closed and reputations are forged. No self-respecting wine merchant or established winegrower would think of missing it. But it’s not cheap. Members of the Commanderie du Bontemps, the so-called commanders, pay €5,000 for a table for ten. Despite this high price, they all jump at the chance to get a table and invite celebrities, important clients, and those to whom they owe a favor. These ten seats provide the opportunity to display not only your power but also your gratitude. Of course, the well-known wine critics are seated at the best tables, including Jean-Marc Quarin, a Bordeaux critic who simultaneously proclaims his integrity as he grabs a spot at these elite shindigs. Or the American critic James Suckling, formerly of Wine Spectator, who describes himself as a California surfer who fell into wine by chance. Just a few years ago, he said that he loved Berlusconi and hated France and its pathetic soccer team. He also declared that Bordeaux was over.1 A few tables away sits Michel Rolland, the man who invented the profession of wine consultant. You may remember him as the man of almost Mephistophelian power who was seen in the movie Mondovino commanding his driver with the same authority he exercises in the vineyard. The owners of the greatest estates are here too, such as Pierre Lurton, head of Cheval Blanc and Yquem. The most prestigious Bordeaux vineyards are all represented. The circle is large, but not too large—a handpicked elite.

In 2013, there were only fifteen hundred tickets and competition to obtain them was fierce. The day before, people were still trying to wangle a ticket. “I heard that such and such château still has one available,” one local whispered to me. “I’m going to call them!” People worm their way in—or at least they try. After all, your presence may not be noticed, but your absence will be.

That was the experience of Bernard Pujol, head of the wine purveyor Bordeaux Vins Sélection. He is handicapped from a serious boating accident. As soon as he received the announcement, he rushed to reserve a table, but apparently he was not deemed prestigious or successful enough, for he was rejected. Two of his most important clients, SAQ (the Société des alcools du Québec) and the international French-owned supermarket chain Auchan, had asked for seats at his table. Aggrieved and embarrassed at losing face, he decided to sue the head of the Commanderie du Bontemps in Bordeaux civil court. “I look like a clown in front of my clients, like somebody with no influence, and that’s bad for business.”2 He’s seeking €500,000 in damages. But he’s willing to settle if the Commanderie will hear his arguments. “They’ll listen. You just have to put enough pressure on them,” he told me, with a smile.3

This elite world may look civilized and discreet. But being excluded from it can mean financial ruin. The day of the event, the organizers made sure that no interlopers managed to crash the party, which was indeed a splendid one. You have to be made of strong stuff to survive being left out of this charming little clique. A few rebels make a point of boycotting these high-class affairs. One of them is the world-renowned wine consultant Stéphane Derenoncourt. Every year he thumbs his nose at the Bordeaux elite by throwing an anti–Fête de la Fleur with the cellar masters—the laborers whose hard work is behind the production of fine wines. He likes to call it the beggars’ ball. Derenoncourt hasn’t forgotten his roots. After a troubled childhood in northern France, he moved to the Bordeaux region and started at the bottom of the ladder as a laborer in the fields. In twenty years, he worked his way up from vineyard worker to internationally renowned wine consultant. Refusing to attend the Fête de la Fleur is his way of rejecting the privileged classes of Bordeaux, who wanted nothing to do with him when he was just a nobody.

That evening, as soon as guest of honor Carole Bouquet had gotten out of her car, the Commanderie began to pay her its respects. She was entitled to this privilege not just as a famous actress, but also as a winemaker. She has a vineyard on the Sicilian island of Pantelleria. In Michel Rolland’s opinion, her wine is not even worth carrying back to the mainland—perhaps a harsh assessment, but who cares? A gorgeous winemaker–actress is the perfect image. Two other actresses—Bond girl Michelle Yeoh and Karl Lagerfeld’s muse Anna Mouglalis—were also wearing the Commanderie’s traditional wine-colored robes. In addition to famous actresses, as well as the Japanese ambassador, there were the big clients, especially Chinese wine importers—­everyone who makes the Bordeaux market what it is today, that is to say, extremely speculative. The Fête de la Fleur is for thanking and honoring those who make Bordeaux thrive, and this exceptional wine industry has made its living from China ever since that country developed a thirst for red wine.

A few days before, under clearer skies, the Jurade de Saint-Émilion held its own event on the right bank. Of course, it wasn’t quite as nice, since the right bank doesn’t have as much money as the Médoc. At least that’s what the local gossips say (and there are many of them). But Hubert de Boüard, president of the Jurade and the owner of one of the biggest crus classés, Château Angélus, maintains that Saint-Émilion represents history, knowledge, and culture, while Médoc is for shopkeepers, even nouveaux riches. Be that as it may, Saint-Émilion couldn’t have gotten Michelle Yeoh or Anna Mouglalis, not to mention Carole Bouquet. The only actor who deigned to make the trip is Stéphane Henon, who plays a police officer on the French soap opera Plus belle la vie. But Chinese and American investors also had a place of honor in the picturesque village of Saint-Émilion, which is a UNESCO World Heritage site. As at the Fête de la Fleur, the highest honors go to those who make deals, not wine.

There was not an empty seat at the Fête de la Fleur, but at the Jurade de Saint-Émilion some tables were sparsely filled. Two major figures in the world of fine wine refused to attend: Pierre Lurton of Cheval Blanc and Alain Vauthier of Ausone. Their wines were the first ever to be classified as Saint-Émilion premiers grands crus but, for them, it would have been a disgrace to attend this flashy ceremony put on by the man they’ve nicknamed Hubertus Magnus or don Hubert de Saint-Émilion. It is this man, Hubert de Boüard de Laforest, who is responsible for the Saint-Émilion classification scandal.

Welcome to the private world of the grands crus classés, a.k.a. Vino Business, a kingdom that can be more cutthroat than Wall Street.

2

Louis Vuitton and Prada Make Wine

He’s not very tall, and he proudly displays the round belly of a bon vivant who enjoys the pleasures of the table. Two large wrinkles extend diagonally from his forehead, looking to all the world like devil’s horns. His eyes sparkle, but they’re also piercing. This jovial businessman with the sharp eyes, the man who punctuates all his sentences with a booming laugh even before they’re finished, is Michel Rolland. The wine-making king of kings. The man who has spread the wine gospel to every corner of the world. But this savvy businessman, this modern shark of the wine industry, becomes wistful when he talks about his properties,1 especially the family estate in Pomerol, Bon Pasteur, which he had to sell to satisfy the monetary desires of his lawyer brother.

Like many before him, he was caught up in the financial spiral that’s taken hold of vineyards these last few years. The price of land has skyrocketed, whetting the appetites of all the heirs to these great dynasties.

“Why was Cheval Blanc sold, why was Pavie sold, why is everything being sold?”2 asks Rolland, irritated. It’s of course because the land is such a gold mine that the brother or sister who has left the family wine-making business behind won’t agree to wait a long time before cashing in. “We try to get as much money as possible from the property to save it, but the profits are nothing compared to what the land is worth! It’s only human that each person wants a piece of the pie.”3 And, at age seventy, Rolland’s brother decided to get his.

All over Bordeaux, in a painful process, the current winemakers’ siblings are now claiming their right to the riches within their grasp. When land reaches astronomical prices, it is indeed hard to rein in a family’s dreams of instant wealth. A press attaché who knows Bordeaux well explained to me: “Just think of the brother or sister who didn’t take up wine making and knows perfectly well that they’re sitting on a colossal fortune that they can’t touch! There’s no way they’d accept this!” Not to mention the estate taxes, which reduce the chances that land will stay in the family even further. How can the heirs get access to that much cash when the money is all in the land?

Michel Rolland, like many others before him, had to resign himself to selling most of his estates—the very ones that made his reputation and his success—to a real estate conglomerate, Hong Kong’s Goldin Group.

Rolland knows Goldin well because he was already a consultant for Sloan Estate in California, which it owns. The sale price was not released, but it must have been very high. People in the Bordeaux wine community believed it was on the order of €15 million. For that kind of money, you reluctantly give up the family estate. The one that belonged to your grandfather, a landowning Pomerol farmer. The one where your parents were wed in 1942. You forget the little stone bench that had been kept until then, a souvenir of all those old memories that make a family’s history. “I can’t let myself be melancholy. I don’t have the means. It’s fantastic to get to keep your estate. But when you can’t, you have to stop being emotional.”4

These small family tragedies play out every day in French wine country. Why is there such a crazy spike in land prices? Because big companies, afraid of stock market fluctuations and real estate speculation, decided to invest in land, creating a bubble. But big money hasn’t invested everywhere; they’ve focused on the most prestigious appellations. Prices in Pomerol in 1993 were on average €292,000 per hectare and reached a peak of €2.35 million per hectare in 2012.5 In Saint-Émilion, the increase is also staggering: €120,000 in 1993 versus €1.1 million today. Over twenty years, with the massive influx of money into renowned terroirs, prices have gone up almost by a factor of ten. And while this upward movement began in 2002 (when the Internet bubble burst), it became even stronger in 2008 during the financial crisis, with Pomerol passing the €1.7 million per hectare.

At the same time, in lesser-known appellations, such as Côtes de Castillon, despite its location right next to Saint-Émilion, prices have stagnated for twenty years: €16,100 per hectare in 1993, €21,000 today. In fact, prices are half what they were at their peak in 2002, when this magnificent land reached the modest record of €56,400 per hectare. At that time, investors thought they had found a new gold mine in this special place near the wonderful terroir of Saint-Émilion. They quickly dropped the idea, and the appellation along with it. “In Côtes de Castillon, prices are very attractive and yet no one wants to buy. But as soon as you’re in Pomerol, everything sells for insane prices. Wine making is really a two-tier system,”6 sighs Alain Vauthier, owner of the legendary vineyard Ausone, located in Saint-Émilion. While you could hardly call Côtes de Castillon disadvantaged, wines made there are sold at very inexpensive prices, its appellation is practically unknown, and its land will never be speculated on. But in the “rich man’s” area, the situation is exactly the opposite.

But all is for the best in the best of all possible worlds—if you’re well-off. Among the top fifty wealthiest vineyard owners, according to the magazine Challenges,7 are names that the French public already knows for their colossal fortunes in other areas. Number one, as always, is LVMH chairman and CEO Bernard Arnault, whose vineyards are worth €1.5 billion and include treasures like Yquem and Cheval Blanc as well as a veritable empire in the Champagne region (Krug, Veuve Clicquot, Dom Pérignon—all told, some 1,717 hectares of Champagne grapes). His rival François Pinault, the majority shareholder of French luxury goods company Kering, whose subsidiaries include Alexander McQueen and Gucci, is in fifth place with vineyards worth €700 million, including the prestigious Château Latour. Also on the list: wine businessman Bernard Magrez (€525 million), Michel Reybier, founder of the food company Justin Bridou (€450 million), engineering and communication magnates Martin and Olivier Bouygues (€250 million), Chanel owner Alain Wertheimer (€235 million), the Dassault family, famous for their aviation companies (€150 million), etc.

Land has three major advantages. First of all, it’s a relatively stable investment compared to the wild fluctuations of the stock market. Moreover, land has tax advantages that allow the super wealthy to avoid part of the wealth tax (in France, a special tax applies to assets above a certain threshold, which is currently set at €1.3 million). Some of the capital gains from the successful companies these people own can be shifted to vineyards, which can tend to lose money or require large investments in infrastructure. Finally, vineyards offer all these businessmen a “passport to nobility.”8 “When a guy who makes bolts goes to fancy dinner parties, he’s not very sexy, but if he takes out a card that says he’s a winemaker with a château in Bordeaux or Burgundy or somewhere, all of a sudden people start to look at him differently,”9 laughs winemaker Stéphane Derenoncourt.

These wealthy businessmen now have competition from institutional investors—banks, insurance companies, mutual funds—that have also gotten into wine to avoid stock market fluctuations, which, ironically enough, they often have a hand in causing. Château Lascombes in Margaux is said to have been sold for almost €200 million in 2011 to the insurance company MACSF.10 Another insurance company, AGR2 La Mondiale, is said to have spent about €35 million11 in Saint-Émilion to purchase Soutard, the Ligneris family estate. It’s a colossal windfall, but the former manager François des Ligneris still misses his wonderful estate. According to the Revue du Vin de France, banks and insurance companies own 2,400 hectares (5,930 acres) of vineyards estimated at €1.4 billion, primarily in Bordeaux.12

And the newest arrivals in Bordeaux wine country? Chinese investors have bought about fifty châteaux in the last four years or about a thousand hectares of vineyards. “It’s all very simple: if they buy so much wine and so many estates, it’s because they have the money,”13 says Rolland, who is surprised to see such an outcry in Bordeaux against Asian buyers when there was no criticism of the arrival of the institutional investors. “This is all just business. And it’s quite good business,”14 jokes the winemaker, a greedy look in his eye. “We should be glad that Bordeaux is still attracting big investors and the Chinese; if it stops happening, then we should be worried.”

Dominique Techer doesn’t share this enthusiasm. It should be mentioned that he’s unusual for a Bordeaux winegrower. A believer in organic produce, he started a vegetable garden on part of his land (“After all, this is the countryside!”),15 while his neighbors have grapevines growing all the way to the road. “On the Pomerol plateau, there must be two or three wine-making families tops who are still around. We’re the last of the Mohicans; soon people will come stare at us like curiosities. We’re surrounded by pension funds, banks, insurance companies, and now the Chinese . . . The Chinese buy like any other investor. Five years ago, they bought wine. Today, they buy the estates.”16

“Prices are spiraling out of control,” admits Jean-Luc Thunevin. He’s a Frenchman born in Algeria, where his parents raised pigs, and nothing in his background would have augured a future career in wine. After working as a woodcutter, he almost became a psychiatric nurse before changing directions and going into banking. “I started off in Saint-Émilion selling neon jewelry. Then, plot by plot, hectare after hectare, I created my Valandraud wine [called after his wife’s maiden name].”17 The wine has become legendary, but Thunevin’s success story would be practically impossible to repeat today. The land in Saint-Émilion that he financed entirely for 1.5 million francs per hectare in 1999 is worth between €3 million and €4 million per hectare today.

On the Pomerol plateau, it’s the same story: buyers snap up land at €3 million per hectare. “As soon as there’s the least little bit of land for sale, there are fifty vultures diving onto it,”18 according to Dominique Techer.

“It’s the system that makes this happen,” Jean-Luc Thunevin told me at another time. “Each time a plot sells, another winegrower leaves. And the more investors there are, the more expensive the land will be.”19

“Average but good quality vineyards will disappear or belong to big companies. It’s inevitable. No family will be able to keep hold of its estate,”20 as Rolland put it.

Land is becoming more and more expensive, and super-wealthy vineyard owners will be tempted to make colossal investments, not only because there are tax advantages, but also because, as Stéphane Derenoncourt points out, they think of wine as a leisure pursuit and they’re ready to sink millions of euros into their passion.21 And because these are shrewd businessmen, not dreamers, of course their gambles will pay off. So their wines become brands sold at astronomical prices. With millions upon millions, they’re creating the Louis Vuitton and Prada of wine.