Vineyards, Highly desirable estates

It is time to challenge preconceived ideas. Some people seem to think that foreign investors are taking over French vineyards, one of the most beautiful jewels of the ‘Made in France’ brand. But nothing could be further from the truth. A study of foreign acquisitions, carried out by the Vinéa Transaction network, came to the conclusion for the first time that such acquisitions represented only 2% of the market. Furthermore, it all depends on the production region.

AN IRREGULAR INTERNATIONAL PRESENCE

The Vinéa study highlighted ‘a significant reduction in foreign purchases over the last few years’, although there was no real impact on transactions, as French buyers are once again starting to invest in vines. Another conclusion of the study was that ‘there are significant regional disparities’. ‘Bordeaux and the Mediterranean Arc are the targets of 90% of foreign investments’. The Bordeaux region, the country's leading wine-producing region, remains the pinnacle for image and excellence. Almost 5% of its land is owned by foreign entities, i.e. 5,000 hectares and some 200 estates and châteaux. Provence remains just as attractive a region, with 10% of its properties owned by foreigners. The world-famous town of St Tropez also retains its extraordinary appeal. In Languedoc-Roussillon, the market, which was almost non-existent before 1990, grew significantly between 2000 and 2005 but has since collapsed. The Rhône Valley has experienced mixed fortunes. In the southern part, on the left bank of the river, nine out of ten acquisitions have been by foreign buyers, 85% of them in the Vaucluse area. The north, on the other hand, remains almost totally French-owned, as does the Loire Valley, which has been adversely affected by its lack of well-known appellations. The 2008 crisis naturally had a devastating effect, with many investors from Great Britain, the country with the greatest appetite for French vineyards, returning home across the Channel. Demand from China, on the other hand, has been thriving for the last five years, but has been largely restricted to the Bordeaux region. In this region, which considers the vine to be its most noble legacy, 70% of foreign property owners come from the world's second-largest economic power. Welcome to the 19th century…

BORDEAUX, 'THE LABEL'

The estate agents Maxwell-Storrie-Baynes in Bordeaux has recently concluded several transactions with Chinese buyers. The Château de Birot is one of them. This Cadillac Côtes-de-Bordeaux AOP has now left the Fournier-Casteja family and joined the Chinese hotel group New Century. Château Renon, another Côtes-de-Bordeaux AOP, was taken over by a Chinese entrepreneur from Beijing who is a member of the Saint-Emilion Jurade, an ancestral Confrérie des Vins. The spectacular quality of the historic building worked its magic on him, as did the formal garden and the stables. But that is not all, as according to Karin Maxwell, ‘Chinese buyers are more knowledgeable than they were in the past. Most of them have lived in Europe and many of them have businesses such as hotel chains. Their acquisition is not just a dream, it is a well thought-out project.’ This British wine enthusiast, who began her career exporting red Bordeaux wines to her native country, recommends several different appellations that she considers to be good value for money, e.g. Fronsac, La-Lande-de-Pomerol and Côtes-de-Bordeaux-Castillon from the area close to Saint-Émilion. Property prices start at € 600,000 to € 700,000 for less than five hectares, a charming house and a wine warehouse in relatively good condition, while the more established AOP cost between € 1.5 and € 3 million. Having said that, prices are increasing rapidly, ‘We have just sold a beautiful but relatively rare style of château just outside Saint-Émilion for over € 5 million,’ said Henri Courau, from Emile Garcin Gironde. The new owner, a major French industrialist, fell in love with the terroir and with the château surrounded by 20 hectares of vineyards.’

 In the Var countryside, Delon father and son have just fulfilled their dream of owning a wine-growing estate. They chose Château Saint-Baillon, a famous name in Côtes-de-Provence reds, the symbolic colour of wine. The château also produces two excellent rosé vintages which are sold both in France and abroad. It is impossible to ignore rosé wines in Provence, as they are characteristic of the region. ‘We were attracted by the 16th-century country house and the 200 contiguous hectares, 23 of which are vineyards and 170 forest. The traditional way of working the land, introduced by the former owner, also suited us although it is not organic. It was a real sleeping beauty with huge potential just asking to be roused’, explained Marie Delon, a first-time wine-grower and one of increasing numbers of women in the traditionally masculine world of wine-production. At a conservative estimate, the property cost over € 5 million, on top of which major investment was required to replant and restructure the two wineries. ‘For us, taking over the property was first and foremost a passion. We live in beautiful surroundings and create a product that varies from one season to another. It is exciting at every level.’ Passion: the word fully expresses the reasoning, or lack thereof, that leads people to live amongst and for the vines. But the high prices of the estates, particularly those close to the Provence coast, are not within everyone's reach. ‘You need a minimum of € 5 to € 10 million’, according to Thibaud Desprets from the estate agents of the same name. ‘For example, our portfolio includes a beautiful 14-hectare Côtes-de-Provence vineyard with a country house, a woodland area and a wine-making cellar, just a few minutes from the beaches of the Gulf of St Tropez. The price is well over €10 million.’

VALUING A VINEYARD

The profession of 'grape trader' has just appeared in the Rhône Valley, an import from Bourgogne. Samuel Montgermont, a Burgundy resident who founded a trading company in Châteauneuf-du-Pape, is one of the first people to hold this position in the Rhône corridor. ‘We establish contracts with wine-makers for the purchase of grapes and introduce vineyard managers’, he explained. Today's traders are much more than just bottlers. They research the quality of the raw materials, and it is in this sense that the profession of grape trader will develop.’ The wine-growing industry is changing, as the historic boundary between producers and traders becomes increasingly blurred. There is an increasing tendency to outsource and most wine-growers can now call on a team of experts and service providers. The actual purchase of the property remains more delicate, as it is important not to overpay. For José Canadas (Lord and Sons), the best type of acquisition i.e. a farmhouse that needs renovation, is becoming extremely rare in this region where increasing numbers of Germans and Swiss have settled over the last 50 years. ‘We have for sale a contiguous estate with 22 hectares of Côtes-du-Rhône-Villages and a property that needs restoration. It is worth €1.6 million. If it were restored, it would cost double that and would be overvalued. This type of property is rare.’

 IS IT POSSIBLE TO LIVE FROM YOUR VINES?

First-time wine-growers are often former city-dwellers looking for a pleasant location in the sun, surrounded by vigorous and vibrant nature. They launch themselves into a great wine-growing adventure, whilst continuing to work as consultants in their former jobs. Business leaders form the other battalion of first-time wine-growers and are often ready for a complete career change. Once they reach 60 or 65 and have sold their business, they can finally fulfil their life-long dream. ‘Over the last 18 months’, explained Michel Veyrier, founder of Vinéa Transaction, ‘we have witnessed a shift from foreigners who have taken a step back to French buyers who can always find a good reason to purchase a wine-growing property. The trend is for small 10-hectare properties whose vines and wine-making are managed by service providers.’ Is it possible to live from your vines or even to successfully run an estate in France and an international brand? There are risks, such as ice, sleet and immature soils. In Alsace, five minutes of hail have just destroyed a potential 350,000 bottles of wine and a € 7 million profit. However, ‘it is perfectly possible to successfully manage a vineyard’, admits Bernard Magrez, a Bordeaux trader who now owns several dozen châteaux and grands crus. What does he think are the keys to success? ‘Producing a good wine that enthusiasts like and selling it at a price that is in line with its quality and appellation. Also, and this is the most important factor, it is essential to choose the right commercial circuits, whether those of Bordeaux traders, e-commerce or maybe even an efficient direct sales organisation. And, above all, bear in mind the following words, 'It is not because the wine-grower likes the quality of the wine that the customers will automatically like it too'.’