First published in Wine Business International, 2007
MOUTON ROTHSCHILD
Jane Anson
Shareholders and owners of all Bordeaux property perhaps all owe a debt of gratitude to Mouton Rothschild. Today, a first growth with a turnover of €187 million and a solid strategy of privately-owned chateaux, international joint ventures and mid-range commercial brands, Mouton Rothschild is firmly established as Bordeaux aristocracy. But in 1924, it created a scandal that changed the entire way the region conducted its business.
Until the arrival in Pauillac of Baron Philippe – under whose stewardship the property really took its place commercially and symbolically – all wine in the region was sold in barrels to the local négociants, who then put their name on the bottle, usually in far more prominent lettering than the chateau, to ensure the commercial upper hand.
Only 20 in 1924, when he inherited a joint share in the vineyard, Baron Philippe believed that these merchants were undervaluing his wine, and decided to bottle the entire vineyard’s production at the estate, thus shifting the balance of power. Bottling on site meant the cost was higher for the producer, but so was the prestige, and the four (at the time) first growths followed suit swiftly afterwards (in fact, the Baron’s cousin at Lafite put up the most resistance initially, citing long term contracts to merchants).
This established a pattern of firsts at Mouton; it was also the first chateau to install, in 1926, a large main cellar for barrel storing its wines, and to commission Parisian stage designer Charles Siclis to provide dramatic lighting within (something that no self-respecting chateau is without today). Baron Philip was also the first (and in fact still one of the very few) to commission different artists to create his wine labels each year. The first, commissioned in 1924 from artist Jean Carlu was of the symbolic ram’s head with the five arrows of the Rothschild family, while the latest, for the 2004 vintage was created by England’s Prince Charles.
In the 1930s, long before the idea of second wines had come into normal currency, the Baron created a second wine for Mouton, and named it Cadet de Mouton. It quickly became Mouton Cadet, first a blended wine, then a branded wine (again the first of its kind in Bordeaux) and is today the largest selling French wine brand in the world, with over 15 million bottles sold each year. The property had not received First Growth status in 1855, an oversight that Baron Philippe described as a ‘monstrous injustice’ and spent his life trying to rectify. In 1973, after years of intense battling (again, opposed initially by the Lafite branch of the family) Mouton was finally elevated to first growth status.
Serena Sutcliffe, head of wine at Sotheby’s has ascribed the elevation to the fact that, ‘The French government and the Minister of Agriculture recognised that it had fetched the prices of the other First Growths for decades, and it was making wine at the same level. They decided that Mouton’s exclusion was a complete anomaly. It was bringing the classification into disrepute not to officially recognise Mouton.’
Today the company is run by his daughter Baroness Philippine de Rothschild, with the structure is divided into three – chateaux, joint ventures and brands. The team at Mouton include Managing Director Hervé Berland; Director and Estates Winemaker Philippe Dhalluin; Technical Director Éric Tourbier, Marketing Director Xavier de Eizaguirre, and Pierre Guinchard, Financial Director. The branded wines are headed up by Xavier de Eizaguirre, President of Baron Philippe de Rothschild SA.
The chateaux, as with all the first growths, have seen enormous rises in prices and expansion in markets, with Berland commenting, ‘Ten years ago, our main markets were the UK and the US, while today the share of each of those has perhaps slipped al little, but new markets in Taiwan, China and India have taken their place. We are much less dependent on specific markets today; it is one of the real benefits of globalisation.’
The last few years have, however, seen an overall drop in production (although not in turnover) from 2.1 million cases to 1.95 million. This results from weaker sales in the branded wines, as the Bordeaux mid market price point continues to lose ground internationally – sales of Mouton Cadet in the US have reportedly dropped 300,000 cases per year since 1992. In Chile, the company also has its own sole brand Escudo Rojo, produced by subsidiary Baron Philippe de Rothschild Maipo Chile, and that has been a success. In fact, Escudo Rojo (‘red shield’ or Rothschild, in Spanish) sold about 100,000 cases in 2006, about 12,000 in the US and De Eizaguirre expects sales to reach 250,000 cases worldwide and 100,000 in the US in the next few years. To encourage this, the company signed an accord in late 2005 with North Lake Wines, a subsidiary of Constellation Wines, to become the sole importer of the Baron Philippe de Rothschild brands in to the US.
International joint ventures have been a key part of the strategy, since the formation in 1980 of Opus One in Oakville, California with Robert Mondavi. In 1997, the chateau began working with Concha y Toro of Chile to produce Almaviva, a quality Cabernet Sauvignon-based wine in the Maipo Valley.
Both Opus One and Almaviva started as 50/50 joint ventures, 100% family owned. For Almaviva, both partners invested US$1.5million, with Concha Y Toro also providing 40 hectares of their best vineyards. While this is still run along the same lines, the partnership with Opus One has been transferred to Consellation Brands since 2004. Hervé Berland, comments, ‘We never considered anything other than continuing to work with them. Why sell a treasure like Opus One? The only real change is that the management of Opus One became more independent. They are effectively autonomous today, although I do have an advisory role.’ Opus One sell its wines directly to distributors in the US market, where previously sales went through the Robert Mondavi network. Outside the US, Opus One is now distributed uniquely by selected Bordeaux negociants, the first California wine to be so represented.
Berland continues, ‘Almaviva is a more active day to day management, and I play a bigger role in its commercial development. But this is a comparatively young brand, and no doubt that will change. Joint ventures are not easy at a distance, but overseas it makes sense because the knowledge and experience a partner can bring is important. We have no plans to do a joint venture in France; these are terroirs that we know and understand.’
The Portfolio
Chateau Mouton Rothschild
Château d'Armailhac
Chateau Clerc Milon
Domaine de Lambert
Domaine de Baron’arques
Baron Philippe de Rothschild, SA (Mouton Cadet, Escudo Rojo and other wines traded under Baron Philippe de Rothschild, SA)
Almaviva (with Concha Y Toro in Chile)
Opus One (with Mondavi / Constellation in California)
Baron Philippe de Rothschild, SA
One of the few remaining purely family-owned companies in Bordeaux, of which Baroness Philippine de Rothschild is the majority shareholder. The major brand is Bordeaux’s oldest and largest; Mouton Cadet, which sells 15 million bottles annually.
Mouton in Figures:
600 employees worldwide
Total production 1999 €170 million / 2.1 million cases
Total production 2006 €187 million / 1.95 million cases (1.65 million cases of brands, plus chateaux wines, 80% export)
Mouton Cadet : 15 millions bottles sold each year across 150 countries (75% export)
Almaviva : 1996 3,500 cases. 2006 10,000 cases (92% export) with a turnover of US$4.5 million.
Opus One: 2006 25,000 cases (70% US, 30% export) with a turnover of US$30 million.
Mouton Rothshcild: 16-18,000 cases, 85% export
Clerc Milon: 12-15,000 cases, 85% export
d'Armailhac: 16-18,000 cases, 85% export
Petit Mouton: 56,000 cases
BOX: Baronness Philippine
Married to French theater director and actor, Jacques Sereys in 1961 – now divorced, Sereys remains on the board of Baron Philippe de Rothschild S.A. Three children, Camille, born in 1961, Philippe, born in 1963, and Julien, born in 1971. Her personal wealth is estimated at €190 million by Le Nouvel Economiste.