Christophe Salin is president and CEO of Domaines Barons de Rothschild (Lafite), which includes the flagship Chateau Lafite Rothschild in Pauillac. Not only is it a first growth, but it led the astonishing run in prices for Bordeaux wines from 2009 to 2011, largely thanks to Asian demand. The company also owns chateaux in Pomerol and Sauternes, as well as Viña Los Vascos in Chile, Bodegas Caro in Argentina, and Domaine d’Aussières in Corbières, Languedoc.
MEININGER’S: You come from Champagne. Was your background in wine?
SALIN: I studied in a business school and my first career was in construction. I studied in Germany and England and went to live in Iran and South Africa and Nigeria. And then I met (Baron) Eric de Rothschild. When I met him, he didn’t know I was born in Champagne. I am fascinated by [Baron] Eric de Rothschild and his aesthetic vision, so I thought I would join him for a couple of years. That was 1985 and I became the CEO of the company in 1990.
MEININGER’S: Working in wine must be totally different than working in a business like construction.
SALIN: To achieve the best – to buy land and farm for a long time – and in trying to make the best sustainable company, we farm land and people and we make vintages after vintages. We have sons of sons and grandfathers working in the same company. That’s what I learned in the first month: never think short term. Think long term – provided the shareholders give you the possibility.
MEININGER’S: The name ‘Rothschild’ is one of the most famous in the world, both inside and outside wine. How much difficulty do you have not only with outright counterfeiters, but with imitators?
SALIN: This is basically the difference between counterfeiting and trademark infringement. Since the late 1970s, the Rothschild family has been involved in defending the name ‘Rothschild’. It hasn’t been properly used, mainly in finance and, from time to time, in the wine business. To add ‘Rothschild’ to any product gives a hint of luxury. We have a past since the late 1970s fighting against trademark infringement.
In my history with the company defending ‘Rothschild’ and ‘Lafite’, I haven’t seen a really good counterfeited bottle of wine. I suppose it exists. I’ve seen many other luxury goods being counterfeited. The main problem we have had in the past, and which we have today in emerging markets, are trademark infringements. Why new markets? First because the consumer is not yet educated or knowledgeable and second because they play with the rules of trademark registration. I was complaining to someone from the ministry in China and he said: “Have you registered the names?” and we said, “of course not”. Defending intellectual property goes back decades in Europe, but is something new in China. That means education first and fighting second. But what we are fighting is trademark infringement.
MEININGER’S: So what steps are you taking to fight this?
SALIN: We are being helped a lot by the Chinese government. ‘Lafite’ became a notorious brand and a common name to describe high-end wines.
We spend a lot of time and money with the importer to educate the sommeliers, and the consumers about who we are and what is our logo, where we make the wine and how to recognise a bottle of wine that comes from us. In the past six years we have spent a lot of money fighting with the police, and with the Chinese body in charge of fighting counterfeits. We have more than 20 suits and we’ve been winning a lot of them. The Chinese government see us as protecting the consumers against being misled by counterfeit goods. They’ve been real partners.
As far as the police are concerned, they are very quick. If you get a sales guy or a visitor saying that in a province they’ve seen strange goods, the police can be there the next day. They put everybody in jail before talking to them. We are really being helped a lot. The name ‘Lafite’ is so well known that it is protected, even in some classes of goods that we do not manufacture; with hotels and wood and so on. I can give a good thank you to Chinese officials.
They are very diligent and they do it more and more with luxury brands, because they will have to protect their own brands one day.
MEININGER’S: What kinds of changes are you seeing them make?
SALIN: At the border, for instance, they are now more serious about imported wines. They have databases, basically for tax, but as well for pricing. If they see a cheap bottle of Bordeaux, they know it can’t be true. They’re fast learners and they want to show the rest of the world that they play by the rules. The contacts I have are people who are very well informed. They travel a lot, and they know what’s happening on the markets. They know the origins, they know the pricing.
We get a lot of messages from young Chinese, to come and work with them. We try our best to welcome them. We employ some Chinese people now.
MEININGER’S: You are now producing in China. Do you think China really has the terroir to produce great wine one day?
SALIN: We must taste the wines first. We had the first crop last year that was quite experimental. I don’t think we’ll get the real crop before 2015. Then we will decide what sort of assemblage we want. It will be Chinese and high end. I usually say we’re going to sell 100% in China and the rest overseas.
MEININGER’S: The Chinese government is cracking down on the gifting of luxury goods, which is having an impact on the luxury wine market. What impact are you seeing?
SALIN: It’s too early to say. The good point is – and you see it in all the emerging countries – since they didn’t have the education we had in the UK and the rest of Europe to drink wine, all these emerging countries start drinking wine with big money. They buy the big labels. In the following five to ten years, they travel a lot and they realise you can drink good wines without paying big money. In one to two years you could see new consumers in China. They would maybe start with Bordeaux and then learn about other regions of France, and then about much cheaper wines, like wines of Chile, which are good and drinkable. We make some of them, and I’ve seen the trend of our Chilean wines growing by two digits. We have lost on top Bordeaux wines, but we have gained some market share on cheaper wines.
We can see the Chinese market starting to reach a first step of maturity: increase of sales of affordable wines; correction of abnormal increases of price for top wines. Depletion is still fast growing.
MEININGER’S: Bordeaux is the benchmark by which wines are judged, and yet Bordeaux itself has failed to develop successful brands. Why is this?
SALIN: Bordeaux is well known all over the world, but go back 20 years ago when I was travelling to China. Bordeaux was not established. I don’t know what made Bordeaux so successful, maybe the taste, but also maybe the classification, especially the 1855 classification. When you start liking new goods, you need some references. For example, in some places in the world the great tasters like Hugh Johnson and Jancis Robinson were references for these new people provided they speak English. In China they don’t speak English and for them the fame of the top Bordeaux bottles made it easy for Bordeaux.
MEININGER’S: Are you going to stay in the en primeur system?
SALIN: We do still think the futures campaign is a really good tool for promoting the wine in Bordeaux. But never say never. We have four chateaux and these wines are being distributed by the negociant and we have four estates, three of which are being distributed by our distribution company, DBR distribution. We are on both sides, which is very, very interesting, so we are more aware of the wine markets and economies in the world. For the four chateaux, the negociants organise it as it’s been done for centuries, and for the estates we operate with one exclusive importer per company. Half is global and half is local. You don’t sell in Japan the way you do in the US. We’ve learned from that and that’s cross-fertilised our discussions with the trade in Bordeaux.
MEININGER’S: Sometimes the issue of wine bundling comes up with the great chateaux – that they will only sell their best wines if merchants take lesser wines as well. Does Lafite Rothschild do this?
SALIN: We do not do it. I heard some English wine merchants were doing it because of a lack of imagination. It wouldn’t be intelligent to sell the wines as a package together. They need to live their own life. The prices can go up and down. It’s not like selling some manufactured goods where you’re going to try and increase every year.
MEININGER’S: Another area where Bordeaux has been surprisingly limited is in wine tourism. Do you see true wine tourism developing in the future?
SALIN: For the first time in my life, I’m prepared to build a visitor’s centre. It has not been the habit in Bordeaux. We are not very modern about that. But there are a lot of organisations in Bordeaux taking care of tourism besides the chateaux.
MEININGER’S: Where in the world is most exciting for you?
SALIN: The most exciting are the countries where we don’t already sell a lot. Like India, and couple of countries in South America. We work a lot on the steady markets, which are Western Europe, the United States, and I would say Japan and China. Do you prefer to see a new movie, or see Gone With the Wind for the fifth time? I like both. I devote my time both ways, to sustain the existing markets and to think in advance about the next market. Do we want to sell wine there or produce wine there? We are more a producing company than a marketing company. But when you make wine you have to sell it.
MEININGER’S: What about Japan?
SALIN: We’ve been dealing with Japan since 1985. I often go to Japan. We are even advising our importer, because they own some vineyards and are now achieving a real good level of wine. It’s very, very small, but they’re making great wines and more and more of the young generation drink wine at home and with friends instead of drinking hard spirits. It has really changed.
MEININGER’S: Is anything on the cards for Lafite Rothschild in terms of new acquisitions?
SALIN: Yes and no. Maybe in North America, because the market is big and we own a distribution company and we are in need of an American wine. Not yet but very soon.
MEININGER’S: Given the power of the Lafite name, would you consider some sort of brand extension? e.g. into a line of Lafite cigars?
SALIN: Basically when we make something it has to do with an acquisition. We want to own our land. So no new branding without acquisition. We are farmers; we like to get up on our own farm, we like to get up in our vineyards. It takes time. We are happy with what we are doing. But why not be in Italy or Spain one day?
MEININGER’S: It’s interesting to hear you speak about being a farmer, when you originally came from really big business, like construction. Did you find it a culture shock to move into wine?
SALIN: My first surprise was that as far as the size is concerned, we’re working in small-size companies. In the quality wine business, you get maximum mid-cap-size companies. Until 20 years ago, this was a family business. Now it’s got new investors – is this for the best? If you take a year like last year, which was difficult, it’s really hard to be long-term oriented. But first, we are farmers. In Chile when I say that, they say ‘yes we are farmers, but we are not stupid’. We keep common sense. Wine is not just mercantile. We do not forget to be profitable. You cannot forge a long-term group without being profitable, but immediate profit is not the goal.
MEININGER’S: The domestic market in France is trending downwards. Is it possible to be an internationally successful company in the long term, if the domestic market is weak?
SALIN: We are not really being impacted by the weakness of the French market. That has to do with the average price on the French market, and we are above this price. We love to have French consumers, but if you consider the chateaux, it’s a very special category of people who buy. We don’t sell a lot of cheap wine in supermarkets, where 85% of wine is being sold.
MEININGER’S: What are the challenges of selling in France?
SALIN: The Loi Evin [wine law], where they make a big confusion between the world of spirits and wine and education and public health. It’s a really silly law, because when we educate our children to drink wine they’re going to be moderate drinkers, compared to the generation drinking spirits. It’s something when you realise the wine economy brings export, which is employment, which is taxes, to the French state. We don’t get a lot of subsidies – DBR doesn’t get any subsidies. The French government is rather foolish the way they treat this part of the economy most of the time. We bring happiness.
MEININGER’S: What did you think of President Hollande’s decision to sell the presidential cellar?
SALIN: Ridiculous. The French president must be an ambassador for French wine, even if he doesn’t drink. The tradition is for a president to offer to his guests the best of France: Sevres porcelain, real manufactured goods and top cuisine.
MEININGER’S: When you look around the wine world today, what excites you the most?
SALIN: The most exciting place for me is the Languedoc. We were asked by Crédit Agricole bank to come and help them. We acquired Domaine d’Aussières in 1999 and we had to learn about the soil and the grapes. The first vintage was 2003 and after more than ten years, I can say it’s a success. The acquisition was not just for the mercantile aspect, but also to give some hope to the local viticulturalists. Most of the time they have difficulties to produce top wines and then when they make beautiful wines, they have difficulty selling it. Production and distribution is an even bigger problem. We had to work on the quality and production. So far it seems to have gone very well, with some grapes we don’t farm in the rest of the world. It’s a good answer in a modern way to the wines of the New World; the Languedoc is not the New World, it’s the Old World with new techniques and new grapes and it shows that France can really compete against the international producing companies.
