Inside La Place de Bordeaux – Episode One
So You Think You Know La Place?
What is La Place de Bordeaux? Does la Place only deal with fine wines? What’s the relationship between la Place and the En-Primeur system? How transparent is the Place?
We speak to leading experts to understand their perspectives on La Place: Jane Anson, Mathieu Chadronnier, Tom Portet, Valentin Lillet, Axel Heinz, Christopher Lynch, Christian Wylie and Philippe Newlin. In conversation with them, we discuss the fundamentals of this unique distribution system, and discuss some of the most common clichés about La Place de Bordeaux.
Areni Members can also Five Things To Know About La Place, an analysis that summarises the main takeaways from this episode; this is a perfect tool for wine students of all levels and for wineries and professionals looking to work with La Place de Bordeaux.
In Conversation with Mathieu Chadronnier
We were very privileged to interview numerous fascinating personalities for this podcast. Along with each episode of this series, we will be sharing the transcript of one of these interviews.
To kickstart this series, our first interview is the one we did with Mathieu Chadronnier, CEO of the CVBG, one of Bordeaux’s leading négociants house. In this interview, Mathieu goes in depth about the origins of La Place and how it has grown and changed in recent years. He also discusses the role of a négociant, and the challenges and opportunities they face.
Mathieu Chadronnier is CEO of CVBG, one of the major négociants of Bordeaux. He’s been part of CVBG since 2001, where he’s watched fundamental changes unfold in the world of fine wine. He spoke to Areni Global for our series Inside La Place de Bordeaux.
Areni Global:
How would you define La Place?
Mathieu Chadronnier:
I think the simplest way to put it is to describe La Place as a marketplace. If I was allowed to use more than one word, I would say a distribution platform. We could extend the definition to an ecosystem, but essentially it is a distribution platform. The best wines meet clients from all over the world who are focused on these products. It’s supply and demand supply. It was historically centered around wines Bordeaux. Today, it’s not only Bordeaux wines, but the best wines from the whole world. La Place is where the offer is consolidated and then the wines are dispatched all over the world.
I think the simplest way to put it is to describe La Place as a marketplace. If I was allowed to use more than one word, I would say a distribution platform. We could extend the definition to even an ecosystem, but essentially it is a distribution platform.
Mathieu Chadronnier
So what goes into the marketplace is wines. What goes out of marketplace is wines. What takes place within La Place?
Maybe we should start by talking about the players. It’s a trio: the châteaux, the courtiers and the négociants. Each has a specific role or mission. The châteaux’s mission is, of course, to produce wines that are defined as great for multiple reasons, but one of them being the fact that they express the unique identity of the regions. As for the courtier, there are many ways to describe them. In one word, it would be the “link”, for they indeed create and nurture a link between the producers and the négociants.
It’s easy to understand when you take it back 150 years ago when we didn’t have the telephone and you had to ride horses across Bordeaux to get the information. But today, communication is a bit easier.
We do have the telephone and we don’t ride horses so very often, but I like the fact that you would mention this. What is difficult to grasp is how radically different things were. In the 19th century, when everything was slow, everything took time and in a way forced people to be more efficient because there was no room for back and forth communication. There was no possibility to extend discussions over multiple occurrences because if it’s one day to go to the Medoc, and it’s one day to go back.
In the 19th century, the négociant was essentially looking north or west. Bordeaux is a port city. The river banks where we enjoy jogging today was a busy commercial port, and this is where the wines were loaded on ships to the UK, to Northern Europe, sometimes to the US. So the négociant was looking outwards at commercial routes and the courtier, looking inland, was the link between the négociant and the producer. The courtier was the one who would actually go and visit the vineyards.
Today it’s a bit different because of course the négociants go and visit the château, go see the vineyard, go taste the wine in the cellar. So the reliance on the courtier is not quite as much about understanding the vintage and the quality as it used to be. The courtier is really acting as a market weather station for the producers and for the négociants. Because the courtier speaks to the négociants all day long, they have a very fine understanding of the current market situation. Because they speak with the producers all day long, they provide the négociants with a very fine picture of the supply situation at any point in time. And because they have a frequency of contact with both the négociants and the producers, they do remain such an indispensable element of the chain.
Because the courtier speaks to the négociants all day long, they have a very fine understanding of the current market situation. Because they speak with the producers all day long, they provide the négociants with a very fine picture of the supply situation at any point in time. […] They do remain such an indispensable element of the chain.
Mathieu Chadronnier
Does the “Place” refer to a physical space?
In the past, the negotiation were essentially concentrated on the Chartrons. Why? Because the Chartrons is by the riverbank and they had their cellars close to where the ships would be loaded. But no, la Place does not refer to any physical place. But “Place” in “la Place de Bordeaux” really refers to the idea of a marketplace.
It’s not linked to a particular location.
Not the same way as you have the New York Stock Exchange that is an actual building. Going back to the trio forming the Place: the négociant is the one who offers professional clients around the world a consolidated and simplified access to the great wines. Consolidated meaning that you can get all the wines you are looking for from one location or one supplier, which makes it considerably easier than having to go to each producer individually.
On the other hand, the négociant is a distribution vehicle that is uniquely far reaching. One négociant can potentially help you get your wine in 60, 70, 80 different countries through just one company. It is also unique in how finely granular it is because you’re not looking at having just one or two clients per country in terms, but rather 10 and sometimes hundreds of potential clients in any country. And it is truly rare to have a distribution vehicle that is both really far reaching and so finely granular in terms of the types of distribution that it will give you access to.
Another element that is very important about the négociant is that they consider inventory as an investment. In the world of distribution, inventory is usually a necessary burden and something you want to streamline to the best you can. Inventory is a very substantial investment for all the négociants. We buy the wines from the châteaux, and once we’ve purchased the wines, we sell them on to clients across the world.
What are the major changes you’ve seen in La Place?
There are definitely three. The first one is the opening of new markets. I started in the business at the end of 2001 at a time when a good number of the markets where we operate today were not open to us. The biggest and most defining new market that we have seen opening is China in 2001. We were selling a good amount of wine in Hong Kong, but we were not selling wine in China. What we consider today as Greater China was probably a tenth of what it is today.
When I started, as a business we were selling wine in 35 to 40 countries, and today we sell wine in 85 countries. In the last 25 years, the market has become truly global. So that is one really very significant change I have seen in my work life.
When I started, we were selling wine in 35 to 40 countries, and today we sell wine in 85 countries. In the last 25 years, the market has become truly global.
Mathieu Chadronnier
The other one is the revolution in how we operate that has been introduced by full market transparency.
In the 1990s when email was not very widespread, the most communication was by fax. WineSearcher did not exist. Prices were more difficult to compare. Transparency has been a radical change in how we operate; the ability of the consumer in any restaurant, in any shop anywhere in the world, to pull out an iPhone and check prices online. It has compressed margins, but it has also brought more confidence and encouraged diversity in buying. So change number two would really be market transparency.
And number three would be the evolution of the relationship between négociants and producers, which has evolved from being essentially transactional to be much more collaborative. It’s not just about buying the wine — even though it does remain about buying the wine — but it is also helping producers develop their brand, raise their awareness, ensure that their message is spread consistently across the different markets.
I think technology has helped bring transparency to the market, bring confidence, and in the end increase the size of the market. And as the market grew, the challenges for producers to continue and grow their brands became different. So I see that more as an evolution of a market that remains relatively recent into a more mature phase than as a direct consequence of technology.
Fine wine is not just about production, but it’s the way it’s distributed. It’s also is very special way of engaging with the consumers.
It begins and ends with the product, but the path between production and consumption has evolved. So yes, it does involve a much finer distribution and more global distribution, but also different ways to engage with the consumer. The story you want to tell about your wine, or rather, what is the story that went into the creation and the elaboration of this wine has become much more central. Distribution alone or the story alone will never do it because it really does begin and end with the wine itself and its unique ability to enchant. But in developing the brand, and as the market became more mature and professional, more layers became involved.
Forty years ago, how many fine wine producing regions existed? How many were exporting a significant proportion of their production? Very few. Today there are many. And this diversity also means that every producer needs to think more thoroughly about what their unique value proposition is.
We have to be experts of both products and markets. How do we become market experts? It’s by having a team in the key markets. So we have people in Tokyo, in Singapore, in Hong Kong, in Shanghai, in the UK, in New York, and people in Bordeaux covering most of the geographies. They are people who not only know their markets extremely well, but who are in constant interaction with our clients, which helps understand market trends and market conditions. So being experts about our market is really something that we build every single day. And then you cannot be in this business if you do not know wine. It would be a misconception to think of ourselves as critics because we’re not wine critics. But if we’re not truly and genuinely experts about the wines, then there’s something fundamental that we’re missing and we cannot share the stories of the wines we sell with our clients. Being expert is knowing the product itself, tasting the wines extremely regularly, but it’s also knowing the places, the people and understanding the stories that go behind.
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How do négociants make money?
On the margin taken on the products we sell, a distribution margin.
When we prepped together, you had that sentence that stuck with me which is that négociants don’t negotiate. Why?
Well, most people reading this would probably disagree with me, so I’ll clarify. I do consider that if a discussion about the pricing of a new release of any wine ends up being solely a negotiation on price, it would be the result of a failure. It would mean that the producer an ourselves don’t look at things through the same lens, and that there’s something not functioning in the relationship.
In your job as a négociant, what major changes have you seen?
In terms of how we operate — and in addition to what we mentioned earlier — 25 years ago we were only selling wines from Bordeaux, and today we are selling wines from most fine wine producing regions of the world.
When did that start?
It began in 1998 with the release of the inaugural vintage of Almaviva 1996. The expansion beyond Bordeaux is a fundamental change that we have seen in the last 25 years.
Another big change is how technology has become central to how we operate. If you take into consideration the number of countries, the number of wines and the number of clients and the fact that you want full control and precision in how and where the wines are sold, that can only be achieved through robust information systems. So having developers working full time for us would have been somewhat of a foreign thought 25 years ago and is day-to-day now.
Another element that I have seen the last 25 years is just how much more interaction we have with the producers. And understanding their marketing strategies, when marketing was a strange word in the realm of fine wines 25 years ago.
You were saying that one of the biggest changes is the beyond Bordeaux wines. Is it a totally different way to work?
There is a regional aspect to culture. Hence, by working with porducers from different regions, we now work with different cultures. If you’re in Bordeaux and you’re a producer in Bordeaux, you’ve always sold your wines through La Place. If you’re a producer in Napa (and you’re not Opus One), you’ve been working with La Place for five or six years, maybe 10, meaning that your brand had a distribution life before and that was very different. So the distribution background of the producers not from Bordeaux is very different. And then it’s as simple as French and Americans are different. I wouldn’t say it’s better. I wouldn’t say it’s worse. It is simply different. And there is something extremely enriching in that difference.
Fine wine is a cross-regional category. So if we want to remain experts, that expertise has to be developed across multiple regions, because this is the reality of the market today. And in the end, we service better our clients by easing their access to wines across more regions. And why is this relevant? Because at the end of the day, the consumer is the same.
Fine wine is a cross-regional category. So if we want to remain experts, that expertise has to be developed across multiple regions, because this is the reality of the market today. And in the end, we service better our clients by easing their access to wines across more regions. And why is this relevant? Because at the end of the day, the consumer is the same.
Mathieu Chadronnier
What are the main challenges you encounter?
That’s never an easy question. I would probably begin by saying that even though we’re not producers, we’re affected and concerned by climate change. A clear challenge for us is how do we adapt to new responsibilities? By that I mean how do we factor in the imperative to reduce our CO2 emissions in how we operate.
How do we continue to elevate the culture of wine in the world today where consumption of alcoholic beverages is diminishing? We strongly believe that wine plays a special role in society. It’s not any alcoholic beverage. Wine is civilizational. But how do we pass that on? How do we recruit younger consumers and how do we factor in societal forces into those challenges?
The fact that in every mature market consumption is decreasing is a reality we have to face and how do we adapt to it? And again, how do we maintain the uniqueness of fine wine and its relevance in a world that is moving away from some of these products?
To finish this interview, I wanted to ask you about your year. How is your year organized?
En Primeur remains the single most important moment of the year, year in year out. En Primeur represents a third of our business and no other element of our business represents as much.
Beyond Bordeaux is somewhere around 20% and the rest being back vintages and some wines that are not released En Primeur.
As part of the En Primeur, we taste the wines from March to April. We welcome our clients from all over the world at the end of April, and then the wines are released in sequence from early May to the end of June. So that takes up a full three months of the year. And that remains, especially in Bordeaux, the highlight, because usually 6,000 visitors come from everywhere to taste the new vintage and to prepare for the campaign before En Primeur.
Then, for the Beyond Bordeaux wines, we have a release campaign in March and one in September – this one is the second biggest campaign of the year. So those are the three highlights of the year.
This interview is part of Inside La Place de Bordeaux, a limited series podcast that goes inside this historic institution. You will find the whole episode here. To be the first to listen to the whole series, subscribe to Areni Global podcast channel on Spotify, Apple podcasts or any major podcasts platforms.