Krug’s CEO on living with luxury

For CEO Maggie Henriquez, fully communicating the heritage of Krug proved pivotal in changing the fortunes of the brand, writes Richard Woodard.

Even a dream job can turn into a nightmare if the timing is wrong. When Maggie Henriquez got the call to take over as president and CEO at Krug, it was late 2008, the global economy was in meltdown and fear was running through the well-appointed boardrooms of Reims and Epernay. Especially at Krug. The house haemorrhaged 35% of its volumes in late 2008 – and lost another 35% in 2009.

“It was very hard for the whole of Champagne, but it was particularly hard for the business of Krug,” recalls Henriquez. “This is where you realise that there’s something else going on, and it’s not just the crisis.”

At least Venezuela-born Henriquez had the right kind of experience, from the economic woes of her home country in the late ‘80s and early ‘90s (when she worked at Seagram), to a stint at Nabisco in Mexico a few years later that coincided with a wheat crisis.

The economic black clouds even followed her to her first Moët Hennessy appointment at Chandon in Argentina in 2001. “When I was sent to Argentina, they thought the business might almost disappear because the crisis was so strong,” she says. Far from collapsing however, Chandon grew – so when Krug hit trouble in late 2008, Moët Hennessy CEO Christophe Navarre called on the services of Henriquez. But, for the first time, the Henriquez approach to crisis management didn’t work.

“I arrived here and I did the same as before,” she remembers. “I listened to the people here and to clients. Normally by listening you get what you need to turn things around. But one year and two months in, I knew nothing. I was really lost for the first time in my life.”

The problem wasn’t technical – Henriquez understood the production side well enough – but she was struggling with the deeper identity of Krug. She admits: “Until then, even the word ‘luxury’ – I had problems with it.” Henriquez explains: “I grew up in a very discreet, elegant family where nothing was to excess. Anything in excess bothers me.

I didn’t know really well what luxury was – it was part of life, but I was never behind developing luxury brands, only ever premium and superpremium brands.”

Two eureka moments were to follow: the first in a tasting room in Reims alongside Krug chef de caves Eric Lebel. They were sampling wines from three plots in Bouzy, plus six reserve wines, with the female vineyard owner whose husband had recently died.

Two wines were “marvellous”, but the third was overripe because it had been picked four days too late. “She was quite upset,” Henriquez recalls. “Eric told her: “I am afraid this wine will have to leave the Krug programme.” She was almost crying.” For the first time, Henriquez ‘got’ what Krug was.

“Before, people talked about the concept of having a parcel approach in Champagne,” she explains. “For me, this was nothing new. I had that in Argentina with 4,000 hectares, because we used that approach with the growers. But here, the oldest and best reserve wines had come from that plot.

I understood that this was a terroir approach, rather than just a parcel approach.” Eureka moment two came when, sent to London for an LVMH leadership programme, Henriquez met the president of Dior Parfums, who had joined the company from Unilever. He revealed to her that she was going through exactly what he had endured previously.

“You are now in front of real luxury,” he explained. “This will take you three to four years to understand. So Henriquez went back to school, learning about luxury and scouring libraries and bookshops to read up on the subject.

“Eventually, I realised that luxury is a real, living being – the founder and a continuation of his vision. But where was our founder? We couldn’t answer ‘why’ in our house, but only ‘what’.”

What followed was an exhaustive search for Krug’s own history, involving sixth generation family member Olivier Krug, historian Nigel Fountain and, Henriquez estimates, some 1,500 hours of her own time. The key proved to be a dark cherry leather notebook written by founder Joseph Krug, handed down to his son and subsequently left forgotten in a box for more than a century.

Joseph Krug’s notes summed up the ethos of the house, focusing on just two wines: Cuvée 1 – the story of Champagne (Grande Cuvée non-vintage) and Cuvée 2 – the story of a year (Krug vintage). “Business-wise, it’s brilliant,” says Henriquez. “He’s saying: “I’m not going to make thousands of bottles and sometimes it’s good. I want the best.” It’s so intelligent, and any vin clair that takes your blend a little bit off can be an amazing wine to be used for the vintage.”

In the end, the 21st century Krug crisis was primarily one of communication – revealing to the world the details that set the house apart from other Champagnes, providing an insight into the heritage and philosophical approach that make Krug Champagne so unique.

“The house concentrated all the communication on the oak barrels, when all houses did that until the ‘50s,” says Henriquez. “This is not what makes Krug unique.

If (three Michelin starred chef) Arnaud Lallement says: “Oh, you like my food – did you know I make it in small casserole dishes?” – who cares?” Krug’s new wave of communication was shaped by Henriquez’ conviction that Grande Cuvée was, first and foremost, a great wine and thus suitable for long-term cellaring.

The company didn’t keep old bottlings, but eventually several were located and tasted, with the Grande Cuvée based on 1998 – a “magical” wine, recalls Henriquez.

“We had treated Grande Cuvée as a little Champagne when it takes the whole savoir-faireof the house and years of aging to create it. For me, that was a big contradiction. I said: “We need to give people more information, because great Champagne needs to be aged.”

The result – after some resistance – was the introduction of the Krug ID code on the back label at the end of 2011. A sixdigit number, it gives information on the number of wines in the blend, the number of vintages, the oldest and youngest wines, the period of disgorgement – all via a website and smartphone app.

More than five years after that phone call from Christophe Navarre, Henriquez says Krug is already having a “very good year” in 2014, enjoying growth in key markets like the US, the UK and Japan, alongside positive prospects in destinations as diverse as Germany, the Nordics, Singapore and Hong Kong. But she still isn’t entirely happy.

“There is one thing we have to do better,” Henriquez says. “With all the elements we have as a brand and as a house, we should be doing more in China.” But, she adds, this will be a long-term process of seeding Krug in the market, rather than the pursuit of exponential short-term growth, with all the risk of volatility that particular strategy brings.

“I come from an emerging market, so I know that an emerging market can change from one day to another,” Henriquez points out. To illustrate the point, she recalls the launch of Clos du Mesnil 2000 in Hong Kong, when somebody offered to buy the entire production of about 12,000 bottles.

“I said no. He spent all the lunch trying to convince me that he could buy half. I said: “I think 50 bottles is quite enough.” When we go into our DNA, who we are and how we behave, one of the characteristics is based on emotional belonging, this feeling of family.

This is critical. “We must always be faithful to the historic markets of this house, to the historic Krug lovers who have continued to love Krug. Thanks to these people, we are alive today.”