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The Dassault-Rothschild relationship

A month or two ago, during the primeurs, I noticed something very curious regarding one of the ‘bundling’ deals which, in case you are unfamiliar with the term, is where the sale of one popular wine is tied in with the sale of another less popular wine. The first example to spring to mind is the Rieussec-Lafite relationship, whereby the sales of Rieussec (a high-quality Sauternes, but still a difficult sell in today’s sugar-averse market) are tied to sales of Lafite and Carruades. If you’re a merchant looking for some of the latter wines, which should turn a handsome profit, you have to take some of the Sauternes as well. Bordeaux négociants deny the tie-in is that strong, but the British merchants I have spoken to about it are pretty adamant the system exists as described.

During the Bordeaux 2011 primeur campaign Nick Stephens wrote of the Lafite bundles “to receive any sort of allocation of Lafite UK Merchants are being asked to commit to buying Rieussec, L’Evangile and Dassault“, Initially I suggested to Nick on Twitter that he meant Duhart-Milon (another Rothschild property) rather than Dassault, which is owned by the Dassault family, who made their considerable wealth in aviation engineering. But as it turned out nick was correct, and I was wrong; there seemed to be an unexplained relationship between the Dassaults and the Rothschilds, although no-one quite knew why or how.

Suddenly, all has become clear. It’s all down to a business deal of course, in this case relating to something I wrote in my recently published Dassault profile. There I wrote “rumours that circulated in 2010 that he was about to buy La Croix de Gay and La Fleur de Gay from Alain Raynaud seem to have amounted to nothing“, but it is now clear there have been developments. Alain Raynaud, seeking an exit from his part-ownership of the Croix de Gay/Fleur de Gay properties, has sold his 6-hectare share in the estate to the Rothschild family, leaving just 4 hectares in the hands of his sister. The Rothschilds, however, faced some competition from Laurent Dassault, who was keen to acquire a Pomerol property, but the Rothschilds gave him a sweetener to secure the Croix de Gay vineyards (which will be absorbed into L’Evangile, the Rothschild property in Pomerol). Dassault gained a 5% stake in L’Evangile and Rieussec (he already owns a 5% stake of Cheval Blanc, L’Evangile’s neighbour) and……the clincher perhaps……tied distribution of his own wines with those of the Rothschild family.

So that explains the 2011 Dassault-Rothschild bundling, and we will no doubt see more of this in future campaigns and sales. It also looks like we will also see increased production of L’Evangile in the years to come, and perhaps a lot less Croix de Gay/Fleur de Gay, the Raynaud estate having just shrunk in size by 60%! I will update my Dassault profile as soon as possible. My Croix de Gay and L’Evangile profiles are still works in progress, shall we say!

6 Responses to “The Dassault-Rothschild relationship”

  1. Routes to market will become ever more diverse with traditional marketing systems suffering. In many ways this should be a good thing (no wine drinker likes 3 or 4 people taking a cut before their wine reaches their glass) but tied distribution like this can be equally effective at denying customers access to the wine they want at a reasonable price.

  2. I don’t think bundled deals are good for anyone in the long run Steve. Brand image is damaged, the level of pricing for the bundled wine is perceived to be lower than perhaps it should be as it is slashed and flogged off by merchants who never wanted it in the first place.There’s a short-term advantage for the consumer, but ultimately something – quality of the bundled wine, perhaps – is bound to fail.

    Perhaps I am naively idealistic, but there are plenty of willing wine drinkers out there, and Bordeaux is hardly short of négociants and merchants to do the distribution and selling. If every wine were made to the highest quality level, and then priced appropriately (“priced to sell”?) then there would be little need for bundled deals.Both Rieussec and Dassault would sell, at the right price.

    To me, bundling just seems like a way to maximise profit from the sale of a consignment of Lafite or Carruades (for example).

  3. This goes on all the time, where merchants need to buy certain amounts of wine from wholesalers, or wines that they often want to get rid of to get the prized allocation of other wines.

    The interesting part is that at the level of the final sale there is not much profit for the retailer. They often need to jump through hoops to get wines to keep up their customer service relations with their clients.

    Just buy after release when you taste the finished product. You may have less choice, but I’d rather get something I have tasted then speculating and paying outrageous prices for classed growth etc…

    I have a UN ber of 2005 in the $11-20 range that have reached their maturity yet, who needs the other stuff.

  4. That was ” a number of 2005…”

  5. I have had the feeling now for more than twenty years that Bordeaux (and Burgundy, to a lesser extent) is being run by bankers. And we all know how THAT works 😉

  6. Hi Ralph. As you will see from my more recent post on Calon-Ségur, Bordeaux seems to be run by insurance agents, not bankers! 🙂