Fine wine profile: A direct approach

Like so many successful businesses, the concept is simple: Patrick Bernard’s Millésima – Europe’s “leading” fine wine mail-order merchant – supplies top labels from the banks of Bordeaux to private customers around the world, direct. Attentive service and an ageing cellar with incredible capacity (it houses over 2.5 million bottles) are further reasons for the company’s impressive performance, but, essentially, Bernard has created a powerful fine wine business by doing little more than cutting out the Bordeaux middlemen – his company is the shipper, wholesaler and retailer for fine wine. What is more complex, however, is that Millésima didn’t start out this way.

 

Bernard in fact began in the wine business as founder of Les Vins des Grands Vignobles, a fine wine supplier, which worked with all sectors of the trade: supermarkets, merchants, restaurants, and so on, “to see what would work”, explains Bernard. By the summer of 1988, some five years since he first dipped his proverbial toe in fine wine, Bernard paused, reflected, and made a dramatic change to his operations. “I said now stop everything. Instead, I will try just selling to private customers using direct marketing.” 

 

In practice, Bernard created both Millésima in its current form – a merchant selling to customers directly through the internet, by phone, using mail-outs or at masterclasses – and a subsidiary supplying restaurants and wine shops in France. He claims over 80% of his country’s Michelin-starred restaurants have used this subsidiary business in the last six months. But why did he alter the direction of his company so markedly? What made him switch his emphasis from B2B to B2C? 

 

“For one reason,” begins Bernard, “the margin.” What had become clear to Bernard in those first five years in the fine wine trade was that those businesses buying en primeur wine from him were keeping a proportion back for ageing before selling it on. This way they were “adding value”. On the other hand, a business founded on selling wine futures alone – like Bernard’s first foray into wine – was susceptible to the vagaries of the vintage. “If it’s a good vintage you can sell a lot of bottles at high prices and get a very nice margin – you sell a lot and earn a lot. But if it is a small or average vintage you sell small quantities and with a very low margin. So if you just work with futures you are dead because you climb too high and fall too low.” Hence, for Bernard, “The only solution is to sell direct to private clients who buy futures but also wine that is ready to drink.” This meant he could retain the margin held by importers – through supplying direct – and add value by ageing a proportion of the wines he buys. As he sums up: “To take the [importer’s] margin you need to both sell the wine after ageing and [direct] to the consumer, and to do this you can either be a supermarket or a direct-marketing specialist.” 

 

Having opted for the latter, Bernard was treated with suspicion in France and elsewhere. He recalls nervous reactions from certain famous wine merchants in the UK – frightened that as a négociant from Bordeaux turned mail-order B2C wine merchant too, Bernard would get cheaper prices on top wines. “But I told these people that you are in the UK – you are not obliged to buy each vintage, whereas I am.” Further, Bernard explained that if his business does steal market share, “it will be because of the service” rather than undercutting others on price. “I am in business to earn money, not lose it.”

And service is a crucial element to the Millésima model. “For every 100 orders there will be 80 phone calls from clients,” says Bernard, illustrating the inquisitive nature of his customers and knowledge and personal approach needed from his staff – all of whom are bilingual. “For each country we deal with I recruit a girl or a guy born in the country to which he sells, but who has married someone from France,” he explains. “For example, I have two German girls dealing with Germany, but they are married to Frenchmen, because our [foreign] customers appreciate a French approach to wine, which is a cultural appraoch, it is one part of our way of life.” 

 

As for the current demand for Millésima’s vast inventory of fine wine sitting in its quayside cellars, as well as 2008 en primeurs, Bernard is not concerned. “I’m not worried at the moment because the market is so strong,” he says. “There are a lot of people who have got money even if they don’t want to show it to others. There are many who are still in their jobs with the money they earnt last year.”

 

However, he does identify one current and somewhat potentially difficult issue. “The real problem this year is that Burgundy and the Rhône Valley didn’t move on price, or if prices are down, it is only a little bit. This means we are selling 20 times more Bordeaux on each mailing than we are selling of Burgundy, for example.” 

For the future, Bernard won’t be filling his cellar with any Italian or non-European fine wine. “I just sell wine from my country,” he states proudly. French wines and, he adds, French women, are for Bernard the pinnacle of their respective categories, although he’s more than happy to turn to Germany for his automotive requirements, and Britain for tailoring.

Finally, there must be one further reason for Millésima’s success – and that no doubt is Bernard’s unreserved and fearless approach to people and business. It is clear from only a brief conversation that he is outspoken and confident, traits fuelled by experience and, thankfully, measured by humour.

• Founded by Patrick Bernard in 1983 as Les Vins des Grands Vignobles

• Became Millésima in 1988

• Millésima’s Bordeaux-based cellars contain over 2.5 million bottles

• All bottles are only kept in two cellars – Millesima’s and those of the châteaux

• Millésima is one of the five largest purchasers of en primeur Bordeaux

• The company has 55,000 customers in Europe

• Millésima has the second largest inventory of grand cru classé wine in the world

• France is the company’s biggest market (55% of turnover), followed by Germany (16%). The UK is in third place and accounts for 8% of turnover

• Although Millésima is based in Bordeaux it is a fully registered company in every country it operates in. This means it trades as any British or Irish merchant. The average spend per order is just under £1,700

• Millésima only buys wines direct from the individual châteaux. The wines are then stored in the company’s 5,900 square meters of cellars on the Quai de Paludate 

in Bordeaux

• The company has traded on the internet as millesima.com since 1997 and has 13 websites. E-sales currently represent from 20% to 25% of turnover

• In 2005 Millésima opened a wine school and wine shop at its cellars

• Born in 1947, in Bordeaux

• Studied business studies and management at Bordeaux’s Ecole Supérieure de Commerce

• After a period at the Credit Commercial de France bank in Bordeaux, joined the family spirits company, Lucien Bernard, founded by his grandfather in 1928 (Patrick is a cousin of Olivier Bernard of Domaine du Chevalier)

• Founded Millésima (then known as Vins des Grands Vignobles) in 1983 as a traditional business-to-business merchant 

• In 1988: broke the mould by turning the company into a business-to-consumer merchant. He was the first person to have done this in Bordeaux and the first Bordelais to use direct mail to sell fine wines to consumers 

• In  June 1998: Purchased two crus bourgeois in the Médoc: Château Peyrabon, 50 hectares in AOC Haut-Médoc; and Château La Fleur Peyrabon, 7.5ha in AOC Pauillac 

• In January 2001: Patrick Bernard set up a 50/50 partnership with Moët Hennessy, to enter the growing internet wine sales market with Wine and Co (www.wineandco.com). Wine and Co has an average order value of €200 and €300 

• At the end of 2006: created Millésima US, directed by Roger Bohmrich MW who owns 10% of the share capital, the remaining 90% belonging to Millésima SA (www.millesima.us)