Winner of the 2014 Meininger Wine Entrepreneur Family of the Year award, Joseph Helfrich is one of the most powerful players in the wine industry, and yet his name is one that is unfamiliar to many otherwise well-informed professionals. Grands Chais de France, the business he founded in 1979 and still runs with his wife Laurence and children today, sells more than one bottle of table wine out of every six that are exported from France. The turnover of the business is now close to a billion euros and global sales are in the region of 40m cases.
Based in his native Alsace, Helfrich positively relishes the lack of recognition, preferring to allow the spotlight to fall on a portfolio of globally successful brands that includes Arthur Metz, Calvet, Cruse, Dulong, Lacheteau, Pasquier Desvignes, Domaine de la Baume, Blanc Foussy, and, of course, France’s most successful exported wine, JP Chenet. This is his first major interview.
MEININGER’S: What kind of company is Grands Chais?
HELFRICH: It is many things. The biggest wine company in France, the biggest exporter, the biggest wine producer… but we’re also a very big land-owner, with 1,500 ha of land spread around various regions of France, in the Loire, Beaujolais and Burgundy and the south. That spread is an advantage, as is the fact of having small and large areas and brands. We have some 160 properties. And, with Dulong, Cruse and Calvet, we sell a lot of Bordeaux. So we have around 10% to 11% of the market for entry-level Bordeaux. And then at the other end of the scale, we have the Grands Crus. And we even import a little New World wine to sell under our own brands – but it’s a tiny proportion.
MEININGER’S: Do you mostly sell in supermarkets?
HELFRICH: We are very big in supermarkets globally, but we also have around 1,300 SKUs in HoReCa in seven markets. One of our biggest strengths is logistics. At Petersbach in Alsace and Landiras in Bordeaux we can be very flexible in what we can deliver to a small or big customer. We aren’t revolutionary. Quite simply, we evolved more quickly than the rest of the French industry and we understand how retail distribution works in each market, the role of each of the major supermarkets and the discounters, and the importance of brands.
MEININGER’S: And you also do some distribution for other producers?
HELFRICH: It’s part of the pattern of giving customers what they want. So we distribute Chapoutier wines in Africa – where we have 20 people working now, by the way – and Gaja wines in France.
MEININGER’S: Where do you sell most of your own wine?
HELFRICH: Twenty-four per cent goes to France, but we’re responsible for 16% of all French exports, apart from sparkling wines. Our value share depends on the vintage, but it’s around 10%. A good vintage in Bordeaux can make a big difference to the value!
MEININGER’S: How do you approach your different markets and
products?
HELFRICH: We have a lot of local expertise. You have to understand all of the different routes to market, from the restaurants in one country to discounters in another. And, for example, the fact that the generally high prices in the UK mean that the wines sold by discounters there are of a higher quality than in some other places. The question is: do I have the wine in my cellars? And is what I have adapted to the market where I’m selling it? So, for example, I have a New Zealand-style Sauvignon Blanc made in France called Kiwi Cuvée that I sell in the UK, which is very different to the typical examples I produce in the Loire.
MEININGER’S: You launched Grands Chais de France in 1979. Did you plan it to be an international business of the kind it is today?
HELFRICH: My father was a spirits producer who’d started his business in 1956 and I was the eldest of six children so I left school to help him. As I travelled to other countries I discovered that we absolutely had to have some Cognac. At the time there were laws that made it very hard for the same company to sell brandy and Cognac, so I started a new company with very little money – 5,000 francs - called les Grands Chais de France. We created a distinctive bottle very quickly and then I got together with Peter Heering in Denmark, who distributed a product – a cream liqueur, a bit like Baileys – into a number of countries. I soon realised that there were some advantages to wine over Cognac, so I started to buy, bottle and sell Alsace wine, especially in Scandinavia. That was in 1981 and we grew into a number of markets quite quickly.
MEININGER’S: What was your point of difference?
HELFRICH: The advantage of Grands Chais was that we worked directly with the retailers and understood what they wanted, in France as in Germany, the UK… In each country we developed an understanding of the price consumers would pay, including local duties and taxes – and how to get the wine to them efficiently.
MEININGER’S: How important was timing?
HELFRICH: Many of the things we’ve done, we couldn’t do now. We arrived at a time when the market was developing. I didn’t invent anything. It was a matter of bringing together a number of things. We had to be ahead of our competitors; we had to work with people whose businesses were growing – and that was the supermarkets and hypermarkets. I was also very focused on creating a range of wines and very effective, centralised logistics – otherwise, you have stocks of wine all over the place. So I bottled everything here in Alsace, which worked just up to a certain price level. But I realised that I had to offer a range of regions. It was a combination of product, logistics and brands.
MEININGER’S: Why were brands so important?
HELFRICH: We very quickly understood that, for export markets, it was brands that were needed. France had very few real wine brands. In the 1980s, the socialist regime in France had killed the brands and they’d been replaced by regional wines with no identity. That explains why France lost a lot of its market and has taken so long to catch up. Brands are still seen as negative.
MEININGER’S: How important is the JP Chenet bottle shape to the brand and how long did it take to get it right?
HELFRICH: A recognisable bottle is hugely important, obviously. I designed the bottle in a day. It was a Monday public holiday after Pentecost and it was quite simple, the first idea we had. The challenge was technical, because making sure that the neck is in the right place for the cork to go in properly on the bottling line wasn’t obvious.
MEININGER’S: The first releases of JP Chenet were Vins de Pays Cabernet Sauvignon and Chardonnay in 1984. Varietal wines were almost unknown in the French market. What drew you to launch them?
HELFRICH: I could see what was working from the New World. When I started JP Chenet, I made the same stupid mistake as everybody else. I used appellation contrôlée wine and I realised within six months there was no point. No one cared. So in 1985, they went to Vin de Pays. A competitor had 22 different styles – grape varieties –and I thought, that’s crazy. The consumer won’t know where to start. You need to be simple and clear and to have a bottle that everybody knows.
MEININGER’S: You moved into bag-in-box for JP Chenet in 2000. How has that affected your sales?
HELFRICH: Bag-in-box was obvious and it has been a huge success, especially in France. We had to do it. But again, there was a technical challenge: the shelf life. So we spent a lot of money developing our own box. We actually manufacture the bags ourselves as the wine goes in, to be sure that there is no air. It guarantees that the wine stays fresher, but it took a lot of work. Bag-in-box is for whom? It’s for a different consumer. In France the tradition is that you empty a bottle with a meal. But the bag-in-box user is someone who comes home and just wants a glass. He has a red while his wife has a white and the next day what’s left is oxidised. The bag-in-box is perfect for him. What’s our job? To understand that there are consumers X, Y and Z and to give each of them what they want. And unless the wine market adapts to understand that concept, it’s dead.
MEININGER’S: How do you feel about grapefruit and cola-flavoured wine?
HELFRICH: Sometimes I’m too much of a wine man. And sometimes I miss things, I missed the grapefruit-flavoured wine trend for example. Will it last? Who’s to say? It’s been going successfully for four years, so why shouldn’t it last? It’s not a wine… I also missed out on the spritz trend in Germany. But our Ice ranges [sparkling wines to be drunk on the rocks] will work. On a hot day, I’d rather drink a sparkling wine with ice cubes than one flavoured with grapefruit.
MEININGER’S: You have a lot of individual estates, including seven Muscadet estates in the Loire. Does this make commercial sense?
HELFRICH: We need those kinds of regional brands for France, but not for the export markets. I adapt to what each market wants. I’m not a revolutionary.
MEININGER’S: Why has France lost its way in export markets?
HELFRICH: What has hindered the French? The appellations. You have over 50% of the wine with a regional appellation. You can’t pretend that half your wine is of absolutely top quality and then sell it at low prices. The trouble is that people buy these wines and they are disappointed. And the role of the brand is not to disappoint. When a consumer buys a Coca Cola he expects it to taste like Coca Cola. And he can only get any kind of consistency from wine if it’s vinified properly.
MEININGER’S: What was the problem with the winemaking?
HELFRICH: France underestimated Chile, Australia, the US etc. We have the best terroir, experience and people, but when it came to vinification we didn’t want to evolve. We were asleep on the job – for years. I’m not an oenologist but I understand the importance of the raw ingredient, so we either vinify ourselves or work very closely with our partners to ensure that we get exactly what we want. In Bordeaux, the companies selling branded wine buy ready-made wine, because that’s the way they’ve always done things, but that doesn’t give them control over the consistency of the product. We vinify 45% of what we produce and have local teams overseeing everything. We were the first [big company] in Bordeaux to analyse the berries during the growing season.
MEININGER’S: What proportion of your investment goes on R&D? Do you think that R&D is sufficiently appreciated in France?
HELFRICH: The problem in France is very simple. French producers think they are competing with other French producers. I know I’m competing with the world. How big is the French share of the global market? Twelve and a half per cent, down from 30%. So you have no choice but to look at what’s happening elsewhere. It’s multi-dimensional. We have six people working on New Product Development (NPD) full time. They could be looking at an entirely new product to launch with our partners Changyu in China or something to do with an AOC wine in France for the French market. If we have the liquid in our tanks, we could get a new product onto the market in five weeks. But we are also working on a project for a discounter which won’t go onto the shelves until 2016.
MEININGER’S: The US seems to be very focused on female-market wines such as Little Black Dress, Cupcake and Chloe. What are your plans, if any, to compete in this sector?
HELFRICH: It has been stupid how little attention France has paid to brands for women. Women buy brands and women buy more wine than men. But we need to think of brands for men as well. That’s precisely the sort of thing our NPD team is working on. Rosé was a style that in France was seen as a style for women. And that’s changed and is changing with styles and packaging, And that’s also something we’re looking at with our Ice sparkling wines.
MEININGER’S: US companies like Gallo, Winery Exchange and the Wine Group seem to be readier to risk failure by launching a lot of different brands. Are you more conservative in your approach?
HELFRICH: The American launches 10 things to have two successes, I can’t allow myself to get it wrong five times. I don’t have the margins he has. He can put $50,000 into a product. If it doesn’t work, he can replant. We can’t work like that and we don’t need to work like that. I prefer it when things don’t go wrong and then you don’t have to deal with failure.
MEININGER’S: How much effort are you putting into the kind of social media, of the kind that is used in the US, creating links with individual consumers for example?
HELFRICH: We don’t have the means. America is a different world. There will come a time when we we’ll be obliged to do it, but not at the moment. Where are we strong? Where others are weak. In export markets, we learn from the people we work with. In the UK, I don’t speak English, so I have an English team. When it comes to things like social media it’s up to our markets to tell us what they need.
MEININGER’S: You mention logistics very frequently.
HELFRICH: Retailers need good logistics, and we’re leaders in that. It’s no longer a choice, it’s an obligation.
MEININGER’S: Could you run this business as a publicly listed business?
HELFRICH: I couldn’t be dependent on the stock exchange. When the Americans set out to invade France in World War 2, they didn’t have to tell everybody what they were planning to do.
MEININGER’S: Is there a simple Grands Chais message?
HELFRICH: Our role is to understand the client and not to disappoint them. You can’t change the world.
