Business set takes over Bordeaux vineyards

19th December 2006, Comments 0 comments

BORDEAUX, France, Dec 19, 2006 (AFP) - Of the 22 vineyards sold in Bordeaux this year, eight have been bought by people who made their fortunes at the head of major French corporations, including LVMH, Bouygues Telecom, Peugeot and Hermes.

BORDEAUX, France, Dec 19, 2006 (AFP) - Of the 22 vineyards sold in Bordeaux this year, eight have been bought by people who made their fortunes at the head of major French corporations, including LVMH, Bouygues Telecom, Peugeot and Hermes.

A ninth was snapped up by Syrian-born British investor, Simon Halabi.

Over the past few years, France's southwestern prime wine region has seen a clear shift in the balance of ownership, said Marc De Welle, of Paris-based France Prestige Real Estate.

"Up until about two or three years ago, it was 50-50 business-family. Now it's 60-40," he said.

While the prestige, and the fact it is fashionable again to own a piece of the Bordeaux region, are two of the reasons for the trend, it is also driven by a desire for a long-term investment.

And, one common denominator in business-related investments in châteaux, said Bordeaux-based vineyard agent Francis Anson, "is that someone at the top is deeply passionate about wine".

Although the interest in Bordeaux chateaux is generally welcomed by the region's established winemaking families, any hint of a quick turnaround purely for profit does not go down well.

A recent move by the American property conglomerate Colony Capital to put its Margaux chateau, Lascombes, up for sale after just five years is described among the wine-making community as worrying.

What does arouse concern among the Bordeaux winegrowers is the possibility that a corporate Bordeaux would lose its variety of wine styles and some of its personality.

"It's usually a good thing and the wine improves, although it does change the ambience when they put in an MD (managing director) or a director," said Anthony Barton, whose chateau, Leoville Barton, has been in his family since the 1800s.

Anne Françoise Quie, who runs the Quie family chateau, Rauzan Gassies, agreed.

"Generally it is to be welcomed," she said, adding: "But there is always a risk of the wine losing the uniqueness and personality of a family-run business."

However, she warned that the rapid turnover of properties could destabilise the market and damage Bordeaux's value as a producer of 'vin de garde' — wines that need between 20 and 40 years, sometimes more, to reach their peak.

"Basically, you can do speculation, or you can do wine, but you can't do both," she said.

Much can depend on whether the chateau is bought privately by an individual businessman, or by the company itself.

Either way, business-funded acquisitions are on the rise, as are the reported prices.

This year they ranged from EUR 20 million, paid for Château Guiraud in Sauternes, by four buyers including Robert Peugeot, of the French car group, up to 120 — and some reports say EUR 140 million for Château Montrose in Saint Estephe by Martin and Olivier Bouygues of Bouygues Telecom.

Then, Cantenac Brown was sold to Halabi, Château Marquis d'Alesme Becker went to Hubert Perrodo, a French oil entrepreneur and polo player who already owns Château Labegorce and Château Labegorce Zede.

Château La Tour du Pin Figeac was bought jointly by Bernard Arnault, founder of the luxury goods empire LVMH and France's richest man, and Belgian financier Albert Frere, and is now called La Tour du Pin.

Château Soutard was sold to health insurer La Mondiale, Château Fourcas Hosten was bought by Laurent and Renaud Mommeja of the Hermes family, which is behind the French luxury goods group.

And in October, the Bouygues returned to buy Château Tronquoy-Lalande, while French construction group Fayat bought themselves another 10 hectares (24.7 acres) of vines in Pomerol.

Jean-Charles Cazes, who has just taken over from his father Jean-Michel at Chateau Lynch Bages, was also upbeat about buyers with business backgrounds who have money to invest to improve both the chateau and the wine.

The main drawback, he added choosing his words carefully, could be a lack of independence and the standardisation of wines.

"Strategies put in place by one family over generations can be lost. They might make a wine that is not fashionable, while business owners might want to please more modern tastes and not take a long-term view."

Outside of Bordeaux, Simon Staples of Berry Brothers and Rudd wine merchants based in Britain, was more direct.

"Yes, Bordeaux is getting more corporate," he said. "It's what's happening, and anyway, only they can afford the prices.

"But if the wine is good, there's never really a problem. Latour has surpassed itself since Francois Pinault (the French industrialist) bought it," he said.

"On the other hand, the quality at Yquem and Cheval Blanc has not been as generous since the takeover," Staples added.

Another factor is that the pull from rich business buyers is being met by the push of French taxes, which, as Cazes pointed out, do not favour the family.

"Families are tempted, sometimes forced, to sell due to wealth and inheritance tax," he said.

And with the skyrocketing prices being paid, an increasing number of families are predicted to find themselves in the same position.

"Inheritance tax is based on the value of the vineyard, not on the profitability," explained Quie.

"And the value of the vineyard is linked to what they call 'recent transactions' in the area."

Quie speaks from experience. Her next door neighbour, Rauzan Segla, was bought in 1994 by French fashion house Chanel, who at the time was reported to have paid EUR 35 million euros.

Copyright AFP

Subject: French news

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