Trading Place: gaining global distribution through Bordeaux

Around 400 négociants ship wine worldwide from Bordeaux

It was also a time of change at Opus, then in its 25th vintages – good changes, but ones involving some difficult tasks. One of his first duties as CEO, Pearson remembers, was to write individual letters to about 60 importers and distributors who sold the icon wine around the world to tell them – essentially – that they had been fired.

Opus One was taking the unusual step of deciding to sell its wine internationally through La Place de Bordeaux, a network of 400 or so négociants whose centuries- old job has been to buy wines produced by the châteaux along the Left and Right Banks of the Gironde and to make sure the wine was sold and distributed in every nook and cranny of the globe where people drank fine wines.

“The owners had looked at this option a couple of times before,” Pearson says, “and they made the decision to do it shortly before I joined.” In the years since, Opus One’s sales outside the US have increased from 16% to 52%, a tribute to La Place’s global reach. Its selling price has also risen to reach parity with the top Bordeaux properties.

Opus One was the first wine outside France to be traded through La Place de Bordeaux

Opus One was one of the first – if not the first – prestige wineries outside of France to take this unusual move. But it has been followed over the past dozen years by an increasing number of other high-profile wineries, notably estates such as Masseto and Sassicaia from Tuscany, Clos Apalta in Chile and Vérité in Sonoma County. Many others are exploring the option, although La Place is picky about whom it represents.

Understanding La Place is both simple and difficult. Allan Sichel knows Bordeaux from all angles, as he heads Bordeaux’s CIVB trade group, and his family’s négociant firm, Maison Sichel, also owns a significant portion of Château Palmer.

“Négociants are merchants,” Sichel says, “Their core business is to buy and sell wine.”

This is simple enough, until one gets into the details. First, many négociants have allocations to sell the same wines from the same châteaux in the same destination countries. In fact, some large châteaux may spread their allocations among several dozen négoces. In countries such as the US, which has its own bizarre collection of distributing and marketing laws, consumers and retailers are often confused as to which négociants are selling wines from which châteaux.

Second, there is another historic class of merchants – courtiers – who serve as brokers between châteaux and négociants. While courtiers may not be as vital a link between the great-growth châteaux and La Place, they can be a crucial connection in getting lesser-known châteaux a good distribution through La Place. Finally, most of the classified growths who sell on La Place also take part in the en primeur barrel tastings each spring of the previous vintage (to establish expected quality) and in “the campaign” that takes place the following weeks (to establish an opening price, as there may be subsequent releases or tranches).

The attraction for both the foreign winemakers wanting to sell on La Place and the négociants is that they only need be involved in the first step – matching buyers and sellers – while not generally dealing through courtiers or being allowed to take part in en primeur.

“For years and years, the Bordeaux wine merchants have sold in their portfolios wines from outside Bordeaux, including wines from Burgundy, the Loire Valley, Provence and so on,” says Emmanuel Cruse, owner of Château d’Issan and Grand Master of the Commanderie du Bontemps de Médoc et des Graves Sauternes et Barsac. “Now, due to other investments, they are able to sell in their portfolios wines from the US, Argentina, South Africa, and so on.”

Those “other investments” to which Cruse refers are those having been made by many classified Bordeaux estates in the past four decades to make wines in far-away places, either solo or in partnership – such as Baron Philippe of Château Mouton-Rothschild’s investment in Opus One. Their ability to then pressure négociants to represent their New World wines is readily apparent, but one they seldom need to exercise, as their foreign off-shoots are generally of high quality and independently much in demand.

Four years after Opus One’s move to La Place, in 2008, it was joined by Masseto, the Tuscan merlot-based wine owned by Tenuta dell’Ornellaia, which was the first estate in Italy to do so. “Basically, we wanted to divide Masseto from Ornellaia, as Masseto does a much-smaller volume,” says Giovanni Gedes da Filicaja, who heads Ornellaia. “We wanted to go from being a ‘brand’ to being a small estate, and being on La Place helped achieve that.”

The fact that courtiers – who get about a 2% commission for each transaction – were being left out in the cold with these new relationships was for a time a point of contention, Sichel says. “The traditional approach for Bordeaux wines would be to select one or two courtiers who would then help the property build up a list of potential négociant buyers who would subsequently receive an offer,” he says. “The négociants would then decide whether they wished to take up the offer or not.” Ultimately, the association of courtiers decided not to get involved. “The lack of geographic proximity with wines made outside of the Gironde makes it difficult for them to provide the same level of guarantee on wines they do not have a long-standing, detailed and intimate knowledge of,” Sichel says, an important factor because of courtiers’ traditional legal and fiduciary standing within France as guarantors.

Tuscan Merlot, Masseto, chose to be traded through La Place in 2008

Although Masseto does work with a company that provides broker services for foreign customers, most foreign wine estates put together their own lists of négociants to be approached and their rationales as to why they would be a deserving partner. “We quickly built up special relationships with 22 négociants,” Pearson says of Opus One’s entry on La Place, “and we now have an office in the centre of Bordeaux to support négociant sales.”

Once such an arrangement is reached, he says, there is little reason to expand the network of négociants. Apart from the US and parts of the Caribbean, Opus One sells all its wines through La Place, Pearson says.

Jackson Family Wines – the company put together by the late Jess Jackson with his wife, Barbara Banke, who still heads the enterprise – owns and operates several wineries around the world, producing both everyday and premium wines. “The Jackson Family team recognised the tangible and intangible benefits of working with a small group of top négociants for Vérité and Cardinale,” its top estates in California, says Charlotte Selles, vice president of marketing – international. The vetting process that goes on between the négociants and the estate “is more of a mutually agreed-upon one,” Selles says, “where the estate’s acclaim, its vision and the négociant’s strengths align. Or not.”

The latter is an important point. Many estates come to La Place prematurely or even when they should not come at all, either not having yet built a solid reputation or whose reputation is somewhat less than stellar. As Sichel points out, La Place is not the place to come for a winegrower hoping to build a brand. “To take on a new product,” he says, “[négociants] have to be reasonably confident that they will sell the wine and generate a reasonable product. The more attractive the offer, the keener the négociant will be.”

Where there is a match, the business transactions are relatively simple. The estates generally sell their wine to La Place one vintage at a time after it is in the bottle and ready to distribute, unlike the en primeur futures system. That is a point about which the traditional châteaux feel strongly. Non-Bordeaux wine, Cruse says, “will never be sold in ‘futures’ and officially quoted on the Bordeaux marketplace. The futures system is so special, and I am sure that Bordeaux, generally speaking, especially the classified growths, will not accept wines from outside Bordeaux being part of that system – it is unique for Bordeaux’s top estates.”

In truth, most non-Bordeaux wineries that sell on La Place are happy not to be part of the hurly-burly of the futures system, whose original purpose was to provide the merchant with wine at a guaranteed reduced price and the winegrowers with an early commitment as well as some upfront cash, something most foreign supplicants to La Place do not really need.

“The key advantage [to selling on La Place] is to build the right distribution in the right place,” Selles says. “Our partners, because of their access to the finest Bordeaux wines, have long built access to the most discriminating outlets.” The demand is also met more universally with a dozen or so négociants receiving their allocations and getting the wines spread across markets efficiently. Of course, both Jackson Family Wines and Constellation’s Robert Mondavi have built up their own longstanding distribution networks to sell their other wines internationally, independent of their most iconic brands.

Allan Sichel: “It is in everyone’s interest for La Place to grow and become stronger.”

There are, of course, still naysayers who prefer that La Place remain exclusively French. “Some Bordeaux producers have voiced their concern around the arrival of ‘outside’ wines, which would lead to weaken the négociants’ motivation or ability to distribute their own wines,” Sichel concedes. “I do not believe such worry to be founded. Négociants can grow, and it is in everyone’s interest for La Place to grow and become stronger.”

Nor should we forget the importance of regional pride. “Consolidating the activity and reinforcing the reputation of La Place is good for Bordeaux and good for all parties involved, as it will lead to more expertise, professionalism and efficiency,” Sichel concludes, adding, “It also provides Bordeaux with an extra argument to claim the ‘Capitale Mondiale du Vin’ status.”