The appellation trail

Antoine Leccia is very unusual in the European wine industry in holding both a French qualification as an agricultural engineer and a degree from Harvard. AdVini, the business of which he has been CEO since 1992 began life as Jeanjean, a family-owned merchant in the South West of France. Today, it has grown to become a major owner of 2,500 hectares of vineyards and wine estates across France and South Africa, with annual revenues of €250m ($274m). Among its brands are Laroche, Ogier, Cazes, Antoine Moueix, Rigal, l’Avenir and Ken Forrester. More recently it acquired the Burgundy négociant firm of Champy. Traditionally largely focused on sales in France, AdVini has built exports from 40% to 50%. The Jeanjean family still holds 46% of the stock, but its listing on the Paris stock exchange gives the business the potential to grow by acquisition. One of the most respected members of the French wine industry – and president of the Federation of Wine & Spirit Exporters – Mr Leccia rarely gives interviews.

MEININGER’S: Your business has focused on appellations at a time when others are looking at less regionally grounded designations like Vin de France.
Leccia: More than appellations, we look at terroirs and territories in the broad sense of grape varieties, climate, men and their history, and that’s not something that’s simply linked to an appellation. For example, we sell a Vin de Sable, made in the sandy coastal soil of the Camargue. It’s an IGP, but will soon be an AOP, but in any case, you are talking about people who’ve been living and working in the region for ever, and vines that resisted phylloxera which doesn’t survive in the sand, and unique ‘grey’ rosé wines. And it’s a real success for AdVini. That’s the kind of story that interests me. And territories can have greater value than brands. If you look at Chile, it is struggling to escape from brands that have kept the average price of a case of wine at $22.

MEININGER’S: You have a joint venture with Santa Carolina in Chile.
Leccia: Not any more. We have never been able to make good margins.

MEININGER’S: But you do have l’Avenir, le Bonheur and Ken Forrester in South Africa.
Leccia: Yes. And there is huge potential. It’s a country of people who want to progress and learn. There’s a culture and an engagement there that is astonishing.
MEININGER’S: L’Avenir, your first business in South Africa came as part of your purchase of Laroche. What prompted you to begin your sequence of acquisitions?
Leccia: It would be a lie to say that it was a strategy. I was in charge of the [Jeanjean subsidiary] négociant house of Ogier in the Rhône, and I realised that to buy good wine in Châteauneuf du Pape, you had to go to the café in the morning and meet the vignerons who are probably the most wonderful and most difficult in France. You had to be genuinely rooted in the region. Through Jeanjean, we had Châteauneuf and Provence wines which we sold in France and exported, but I realised that what we were selling was not connected to the best wines of the appellation – and not made from grapes grown in the best vineyards. Having roots in the region was necessary for us to make wine whose value was appreciated by the consumers and professional buyers.
Over a few years, by becoming fully implanted in the region and having better wine, Ogier grew to become the most profitable part of the Jeanjean business. And we asked ourselves if there weren’t other regions where we could do the same thing.

MEININGER’S: What came next?
Leccia: We bought Domaine Cazes in Rivesaltes in Roussillon – a very different area with different talents. Bernard Jeanjean said to me, unless you are a Catalan, you won’t achieve anything, because these people are unmanageable. The wines are biodynamic and still made by Emmanuel who is the fourth generation of the Cazes family.

MEININGER’S: Apart from Cazes’ biodynamic certification, how ‘green’ are the rest of the vineyards?
Leccia: One hundred percent of the South African vineyards are certified sustainable and 74 percent in France already have an HVE – High Environmental Value – sustainability certificate, which includes biodiversity. Seventy-six percent is either already organic or in conversion, which means over 1,700 hectares.

MEININGER’S: How independently are the businesses run?
Leccia: Each manager runs their own business and benefits from its success. And from AdVini’s distribution. But it took time to understand that potential. When I was running Ogier, I didn’t want anything to do with the other wines of the group, because to sell Languedoc wines was to be dragged downwards. But when I had three sales staff, it was difficult to pay for a fourth. So when I took over the group, the first idea was to keep the production anchored in the regions, but to share the sales forces across all the businesses. The next challenge was to understand how to segment our clientele and how to deal with the supermarkets and the specialists - to be selling the right wine to the right people.

MEININGER’S: Bordeaux is in a difficult state at the moment with the number of chateaux dropping almost daily. How do you feel about that?
Leccia: It’s not a matter of how any chateaux there are in Bordeaux, but how, can we as merchants work together with them to create a shared vision over how to add value to what they do and to distribute their wine across the globe. Of course, if they want to try to try to go it alone making and selling 100,000 or 200,000 bottles they will struggle, unless they can find a local market for their wines. We come back to the power of distribution. No one wants any of the 6,000 chateaux to disappear. We want to create a more efficient market for everyone.
It’s why we work with cooperatives. I did my studies in Montpellier and remember in 1987 tasting the white wines of Picpoul, which by March or April were already turning orange because of the way they were produced. They were selling at the equivalent of €40 or €50 per hectolitre. With JeanJean, we invested in cooling equipment and improved the quality – and today, we sell half the wine in the appellation. Of course the quality is good, but above all there’s a great cooperation between the product on the one hand and high quality distribution on the other. Basic Picpoul sells for €180 per hectolitre, and everyone is earning a living. When I hear people saying that there are too many producers, it’s heresy!

MEININGER’S: How do you communicate with the consumer?
Leccia: We don’t have the means to touch them directly as much as we’d like. The first thing we have done is to try to distinguish in the minds of our consumers the authenticity of what we are doing with our estates. And of course, we follow the needs of our consumers. If you are trying to sell Corbieres in China, you don’t want too much tannin. So we have certain cuvées that suit certain consumers. But we don’t give up our soul or our culture or the typicity of the wines. How do we communicate about these wines? We work with the critics, we hold tastings, we go to as many events as possible and we focus on B2C, receiving more and more people. We have over 100,000 direct customers, including the restaurants that serve our wines.

MEININGER’S: And you’ve bought some other B2C businesses.
Leccia: We own the Club Français du Vin direct-sales business with around 50,000 members, after starting with 15,000, and a wine school where we’ve taught 18,000 how to taste. We also bought a business called My VitiBox which allows people to get two bottles of wine selected by the former sommelier of la Tour d’Argent every month. And it allows grandfathers to introduce wines to their great nephews.

MEININGER’S: How much are you selling directly?
Leccia: Around €15m to €20m. Less than 10 percent of our turnover. Probably eight percent.

MEININGER’S: And how will that grow over the next five years?
Leccia: I think it will double in terms of volume of activity. But we’re going to continue to develop B2B, through our international distribution. Our market share is so small that we’re bound to grow it.
The important thing is to grow cleverly. Look what we did with the Châteauneuf du Pape Clos de l’Oratoire des Papes, for example, it allowed us to show that the consumer was ready to accept the price we were proposing. So we went, over 15 years, from a retail price of €11 to €40. The distributors wouldn’t have followed us if we hadn’t done the work to support it. And it allowed them to capitalise on a brand that now sells for €40. The same is true for the specialist shops. Even when you only have a small market share, you can achieve a lot – as we did with a small pop-up tasting area at Charles de Gaulle Airport last year as part of our effort to promote travel retail sales.
We were the first non-sparkling wine producer to do it. It worked brilliantly. The engagement rate was 50 percent and people spent 20 percent more than if they’d gone straight to the shop. It was a spectacular result, but it’s costly, and we don’t generate the same kind of margins as spirits and cosmetics. But you can do pop-ups elsewhere. And we have classic tasting vans at Domaine Cazes and at Laroche in Chablis from which we can serve all our wines at the right temperature, from enomatics. It’s a different way to show off our products.

MEININGER’S: What about restaurants?
Leccia: We have two in Chablis and two in Roussillon. We haven’t opened restaurants in major cities like Lyon and Paris. It would be a good way to show off the entire AdVini range– which is what we do with the Club Francais du Vin, by the way – but we don’t have the means to do that. But we have partners in the Netherlands who have set up a restaurant that only sells Laroche wines. And there’s a similar initiative in Canada under the Jeanjean brand.

MEININGER’S: How important is wine tourism?
Leccia: It’s a sector we are developing and continuing to develop. Domaine Cazes won the top wine tourism prize in France for the Table d’Aimé restaurant and the tasting facilities.
People have a real need of good experiences. Recollections of memorable experiences are the reasons for making me buy Champy. When people see the shop after visiting the Hospices de Beaune, maybe it will prompt them to visit the cellars. But what makes Champy interesting is the experience we can give the consumer. Now, we have virtual reality headsets that allow people to ‘visit’ the domaines, but we also can use digital to understand how to target the right consumer with the appropriate information and the appropriate product.
Something that has always struck me is that when you give a friend a bottle and ask him how much he’d pay for it, he’ll always name a price that’s a lot higher than the one it will have been sold by a retailer. Distributors don’t have the notion of the quality of what they are selling. Or not sufficiently anyway.

MEININGER’S: But B2C will still only be a small part of the business?
Leccia: We are building B2C but we have to live, and the traditional big retailers still represent 50 percent of our sales, so we have to respect them. Of course, distribution is going to evolve, and it will vary from region to region. There will always be people who want to buy a bottle from the supermarket or a case from the specialist merchant. Will Amazon and online platforms take over from all of that? They’ll take their share of the market, but it will all fall into balance.

MEININGER’S: Presumably you sell the same appellations, if not the same wines, to the supermarkets and the specialist retailers. How do you differentiate between them?
Leccia: Price is fundamentally important. There are supermarkets that work very hard on quality, as I know from tasting their wines regularly, but it is difficult for us – and other wine businesses – to position ourselves at those price points. The margins aren’t good enough for us to survive. We have to be clear what we can sell to them. But I think there is a real segmentation of the market. I don’t think it’s the same consumer who buys in supermarkets and from specialists.

MEININGER’S: You have increased your exports from 40% to 52%. What are your main markets?
Leccia: Europe has traditionally been half, with the UK being our biggest market.
For the moment we’ve seen no effect from Brexit. Obviously everything depends on the confidence of the consumer and the value of the pound, but the reality is that we risk seeing a fall in sales to the UK in the short term, and that’s a market that takes about 15% of our sales. Germany should be better than it is, but Belgium and the Netherlands are good – as is Scandinavia. Eastern Europe are strong too and Russia has been growing over the last year, but we are far from the figures we used to see in Russia a few years ago. The US is growing, as is Canada. The 25% tariff could cause us problems in the US, but it hasn’t done so yet. We have to see what happens on the shelves as retail prices rise.

MEININGER’S: How big do you think AdVini will be in five years?
Leccia: We’ll have doubled in size.

MEININGER’S: How will that happen?
Leccia: Through acquisitions in France and possibly elsewhere in Europe, but not in the New World outside South Africa. It would cost a billion euros to establish ourselves in other New World countries and we’re not that big. In the wine world it is often the opportunities that create the strategy rather than vice versa.
But we need to consolidate the regions where we’re already present because the size of your distribution is critical to your success. Advini doesn’t have the critical mass, not in terms of production, which you can manage in the regions, but in terms of distribution. So, we could double or triple our sales in the UK for example, given the size of that market.
We have bought brands and developed them, but we have also created brands, like Gem rosé for example, whose bottle shape came out of a competition for young designers. By being a bit smarter, by adapting the products better, one can continue to grow organically. There are wonderful opportunities everywhere today, thanks to the ‘atomisation’ of the wine world and a weakness of distribution.