How to Succeed at Fine Wine Distribution: In Conversation With Mathieu Jullien

Mathieu Jullien  is the Marketing and Sales Director at LVMH’s Vins d’Exception, which consists of four top estates, in Burgundy, Bordeaux and California. Previously he was General Manager, Europe for the Wine Source Group, and before that he spent five years at Enotria & Coe in London.

Areni Global:

Can you tell us a bit about Vins d’Exception and why it was created?

Mathieu Jullien:

Vins d’Exception is the home of four exceptional estates that belong fully or partially to the LVMH group. Those four estates are Domaine des Lambrays in Burgundy, Château d’Yquem and Château Cheval Blanc in Bordeaux and Colgin Cellars in California. Vins d’Exception was created because those estates are exceptional.

The main objective is to look after these most exceptional terroirs, which belong to a private group, but who are almost considered as part of the universal patrimony. We are custodians. 

What’s your role in all of this? 

I joined the group in September, 2019. I was based in London at the time. Today I am talking to you from Paris, my office, but I was living and working in London. I was hired to set up the entity in September, 2019.  

My role is as commercial and marketing director, which is really towards managing the distribution side. Our marketing is the way we project our wines into the market and at what time we release, what volume we release, what pricing structure we put in place, and how well we prepare with our distribution partners.

I work in very close partnership and in constant communication with the management of each of the four estates. Together we  come up with commercial and distribution plan.

Do you have a global definition of what successful distribution is?

The high-level answer to your question is we want to make our four estates as desirable for their commercial offer as they are for their product. We are lucky to look after some of the finest wines in the world and they have been recognised for decades or even centuries as leaders in their field. We want to put as much effort, as much detail for the business side as for the product and heritage side.

By earning respect and by earning the confidence of the market release after release, the market should expect always a great commercial release from our estates.

What are the metrics for a good commercial release?

The metrics are several ways, but one is the promise is that it’s always more difficult to access our wines and always more expensive to access them. The first commercial release of the wine is always the best time to buy. It goes very far into the distribution chain, because the final consumers know that they shouldn’t miss the initial release to secure a case or two. So it’s engagement to the end of the chain. That’s one. 

Second is that price should go up on the secondary market. We are very careful about not going into the overheating, speculative mode but because of the law of the market of demand and supply, we believe that wine in our league should go up as its quality increases.

And I think another matrix would be how much quantity is available to the final consumer? Because a great distribution means that, at the end of the distribution line, there is not a lot of stock available. There are a few cases maximum available for each client who will hopefully share them and drink them. Where we see potential risk for speculation is when actors in the market have access to way too much stock than they can drink.

A great distribution means that, at the end of the distribution line, there is not a lot of stock available.

Mathieu Jullien

The secondary market is actually important, but there are excesses.

You don’t put all the wines through the same system and they don’t find their way to the consumer the same way. Can you tell us more about this? How is each property distributed?

It depends on the size of each country, but we’re distributed in about between 70 and 80 countries with direct importers in each country. They receive allocations from the domain. It’s very traditional in Burgundy to have distributors, importers and distributors around the world. For d’Yquem and Cheval Blanc, we rely on the same network of negociants that, together with the courtiers, form La Place de Bordeaux;  Cheval Blanc is released En Primeur. This year Cheval Blanc will release its 2023 vintage, which will not be available physically for two years, while d’Yquem will release its 2021 vintage. 

And Colgan relies mostly on the direct-to-consumer system, where private individuals will purchase directly — three to six bottles if they are lucky. The estate will ship to their door, and this is very much a domestic market. Colgan sells more than 80% of this production into the US.

The reason they are distributed differently seems to be that they are part of the classic wine distribution systems in those regions.

Absolutely, and I think it ties with what we’re trying to do overall. We know in quite a high level the details of the heritage and history of each of the estates, and we are trying to preserve the essence. That’s very important for me to convey the sense that Vin d’Exception is not a museum where we are putting these wonderful jewels in a glass cabinet. 

They are very much alive and kicking, but we have a deep respect for heritage. Basically the idea is that we need to improve our operation within a system and refine it to the maximum before we could even consider changing the system.

We are in the lucky position where we sell the entire production or the share of the production that we want to release, within a few hours. We started prepping for the 2022 vintage release almost the day after we released 2021 vintage a year ago.

The real luxury of our operation is that we are not under time pressure and because we’re not under time or financial pressure, we look carefully. It takes so much effort and attention to detail to make those great wines that we need to apply the same principle to distribution. A few weeks after the release of a vintage we’ll start looking at how we improve our distribution for the next vintage release. We meet either at the estate or in the markets with our distribution partners. We ask what can be improved.

It takes so much effort and attention to detail to make those great wines that we need to apply the same principle to distribution.

Mathieu Jullien

So Vins d’Exception represents the interest of the estates within the market and the interest of the market within the estate. 

Is your job done when the final client has bought the bottle or has drunk the bottle?

We don’t have the resources to ensure that each bottle gets drunk but our job stops when the bottle is open. And actually that’s the way we think, that’s the way we engage with our distribution. That’s why we support so many of their initiatives to organize wine dinners and occasions.

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The way I imagine the release day is that you send an email to all of your contacts and distributor and you say this is the price and this is how much you get. And then people confirm if they want it or not. Is that correct?

Yes, that’s correct. The difference in Bordeaux is that we would give courtiers details of the volumes and the price that they would share.

In each market, there will be one key importer, and they would have the responsibility for managing the release in their market. 

One of the fundamental principles of Vins d’Exception is that each estate stands on their own feet. We don’t give access to Lambrays because you buy Colgin. There’s no link whatsoever.

I want to focus a bit on La Place. I understand from what you said earlier, that you basically follow the same steps for all four wines, but when you press the button on that email, the next steps are different for the release of d’Yquem and Cheval Blanc. What is La Place for you?

Interesting question, because when I was in London in my first part of my career, I had no interaction with La Place. So I really discovered La Place over the last few years.

And how I define it is a very diverse number of fine wine merchants who used to specialize in Bordeaux wines only, and now all of them — or the vast majority of them — buy and sell and stock wines from all around the world. And they interact with estates through courtiers, which is an interesting aspect that we don’t have in the London model. And they buy the same wine at the same time, at the same price and they sell pretty much the same wine at the same time, at the same price. So they try to find an edge by having very different route to market and they tend to specialize in some channels or some geographies and to really hone that competitive advantage and develop it. So it’s very interesting to see that from outside. They all look the same I would say. And from inside actually they all have their strengths and their specific channels or markets.

How would you describe your relationship with La Place?

It’s a good relationship. It’s a relationship based on respect and trust. It’s all very much a human factor, because the negociants and courtiers, most of them are multi-generation and multi centuries. So they know that management comes and goes and they always tend to take the longer view and to remain faithful to an estate that they really admire or they want to keep being allocated. And they know that the estates will come through. Maybe sometimes a dry patch, but it’ll change. And so they look beyond the management to look at the fundamentals and they also invest a lot into the personal relationship. It’s a very interesting dynamic.

People don’t really understand the role of brokers and courtiers. Now that we send emails to people, you could send emails to a 100 people directly. Why do you keep working with courtiers in this day and age?

The courtiers are a great resource. They have the archives and, more than the archives, they have the deep memory of the Place de Bordeaux. They were there with a 360-degree view, with the last downside of the market or the last upside, and they’ve seen it all before. They’re able to give you their insights and if you speak to enough of them, even if it’s sometimes anecdotal evidence, it really helps to take a step back and make sense of the current environment by using the past.

I find them personally very useful. But what I have to underline is that it’s not just the decision of the chateau to keep working with the courtier. It’s a two-sided decision, because the negociants don’t want to get rid of the courtier either. 

How much is the courtier involved in setting the price. How much do you rely on their information to set the price?

Well the price is set by the owner, so it’s not set by the management of the estate. We make proposal and the owner decides. So when making those proposals, we need to support them with evidence. 

It seems that today the Place is very much in a more collaborative space then it was before.

Today, really, the power is with the top estates and with power comes responsibility. The system relies on the signal that is sent by the estate. If the signal is well calibrated, the chances are that courtier will do a great job and negociants will do a great job and everything will go fine. 

Consistent means we are in business vintage after vintage, release after release. 

We’ve gone in depth through your four distribution systems and actually I’m surprised at the end of that conversation to realize how similar they are in the way you work with those routes to market. Because again, the people you’re talking to are different, but you follow the same process and structure, right?

I give you an anecdote. The first thing I did when I joined: I took my position to travel around the world, meet distributors and write a report back to base and present this report. And the estates were quite surprised to learn about the distribution systems of the others because, as you know, there is a lot of heritage.

And so I remember very clearly that meeting, where they were asking questions to each other. We were just us in the meeting room and that’s how you do it. And in fact, the end of the meeting was the realisation that even if we use sometime very different roads, our bottles end up in the same cellar. 

But if you had to take your four types of distribution system, what would you say are the pros and cons of each of them?

Well, it’s the pros and cons of monopoly versus open market. So if you entrust the distribution to someone specific, it creates a double way dependency because you can grow more and more comfortable in the relationship. And there is this saying in the trade that the exclusive distribution rights for DRC doesn’t compel you to work harder for the estate. So I’m not saying that there is not enough effort going into that distribution, but it can lead to (complacency). While the open market distribution by its nature can be very dynamic, always exploring new avenues and new clients but can also, on the downside, destroy some of the value.

While in the open market, if you misprice your release very quickly, someone will discount it.

If you entrust the distribution to someone specific, it creates a double way dependency because you can grow more and more comfortable in the relationship. […] It can lead to (complacency). While the open market distribution by its nature can be very dynamic, always exploring new avenues and new clients but can also, on the downside, destroy some of the value.

Mathieu Jullien

Is there a scenario in the future where you would distribute all of your four wines the same way and maybe even do it yourself?

No, it’s not part of the plan because I think we would’ve done it already. We are too small to take care of our own distribution if we want to do it properly. 

That’s why we need to nurture the relationships with those independent experts that we call fine wine merchants that are our ambassadors all around the world. And that’s why we also need to make sure they make a good living by carrying our wines, because we need them. We need them because of their knowledge of our product, and knowledge of their clients. They have a role to play in the future of the reputation of our wines and the durability of our wines.

What’s the role of La Place in the future of wine?

La Place is in flux right now, and part of it is linked to the influx of wines that are not from Bordeaux, which has a deep impact, because when you are in the business of selling wine, you also sell advice. And when you are merchants from Bordeaux, you can give very insightful advice to your distribution about the wines of Bordeaux. When you start dealing with wines from all around the world, of course there are smart people, they train their staff, but I don’t think that you can give the same quality of advice from wines grown thousands of kilometres away from your base and where you don’t have daily interaction like you do for Bordeaux production. In the long term, I think that businesses are remunerated for their added value in the chain. And it’s for Bordeaux to prove that there is added value in that involvement with wines (that are) not from Bordeaux. It remains to be seen as far as I’m concerned. And again, the number one decider of what role La Place will perform in the future is what will be decided within the estates. If the châteaux are serious about making La Place work, La Place will perform.

This is an edited and shortened version of a much more wide-ranging conversation, which was done as part of our ground-breaking Inside La Place de Bordeaux series. You can listen to our series here.

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