In many ways, a grape vineyard is a precious but precarious piece of agricultural property waiting for disaster to strike – spring frosts can wipe out a vintage, summer hail can riddle grapes and vines like a machine gun, droughts will over-stress vines and diminish the size of the crops. In especially arid areas such as California and parts of Australia, wildfires have recently destroyed multiple vineyards and wineries. In addition, nature is always creating a new insect or plant disease to decimate vines and crops, while fruit-loving wildlife, from birds to boars and deer to raccoons, is increasingly emerging from the forests to devour rows of fruit.
Even when the crop comes in on time and the fruit is delicious and plentiful, wineries that own the vineyards or buy grapes from them have to worry about business competition, changing trends in social drinking and political intrusions such as tariffs.
As a result, wine estates would seem like the last places for which an insurance company would want to issue policies or to which a bank would want to make loans. But in France, both financial institutions are partners in anticipating disaster, and doubling down on their bets by owning and operating wineries, including some of the world’s best-known.
The why of ownership
They are doing so for a number of reasons: as an investment decision; for the prestige of having a stake in the luxury business; and to gain proprietary intelligence from being in the same business as some of their customers. The New York Times also reported that, in the 1980s, French insurance companies were required to invest part of their assets in French real estate, resulting in a series of investments in commercial real estate, forests and wineries.
More and more, the famous vineyards of Bordeaux and Burgundy are no longer family-owned or, when they are, it’s by larger family corporations that buy up floundering small-family properties. Partly this is due to French inheritance laws which make it difficult for estates to pass intact from generation to generation. As a result, the Bordeaux newspaper Sud Ouest reports, about a quarter of the 82 grands crus class properties in Saint-Émilion have changed hands since 2012, mainly purchased by insurance companies and more-successful neighbouring châteaux, or by luxury conglomerates and foreign investors.
The French-based multinational insurance group AXA was one of the first to get into the business of owning wineries, according to Christian Seely, managing director of AXA Millésimes, a division of the company that owns eight wineries in four countries. “The founder of AXA Millésimes [Claude Bébéar] loved wines and was very knowledgeable about them,” Seely says, “so in 1987 he started creating the AXA Millésimes group of blue chip wineries with Jean-Michel Cazes as the first director.” AXA’s first purchase 32 years ago was Château Pichon Baron, a second-growth estate in Pauillac.
“It was a good time to buy vineyards with historically great terroirs that were not in great physical shape but that had a high quality potential that was not being properly exploited,” Seely says. Over the next two decades the company added Château Pibran, also in Pauillac, Château Petit-Village in Pomerol, Château Suduiraut, a first-growth in Sauternes, Domaine de l’Arlot in Burgundy, Domaine Quinta do Noval, a Port and table wine producer in the Douro Valley, and Domaine Disznókő in the Tokaj region of Hungary. It sold its less-prestigious Languedoc property, Belles Eaux, in 2016. Last year, AXA leaped across the Atlantic to purchase the aptly named Outpost winery in the Howell Mountain sub-region of Napa Valley.
Anne Le Naour is executive director and winemaker for the Grands Crus group of Crédit Agricole, the world’s largest cooperative financial institution, which owns six French wine properties, five in Bordeaux and one in Burgundy. “As the leading financial partner of both French agriculture and the French wine industry, owning several estates enables the Crédit Agricole to profit from cutting-edge expertise and rare preparation for dealing with problems which its wine industry clients encounter,” La Naour says. Her portfolio is headed by châteaux Grand-Puy Ducasse and Meyney in Bordeaux, and Clos St. Vincent and the agritourism attraction Château de Santenay in Burgundy.
Last year, the SCOR Group’s insurance division made news by purchasing high-profile Château Troplong Mondot in Saint-Émilion for a reported price of €178m ($200m), or about €7m a hectare – about double what per-hectare costs for comparable properties had been. And while SCOR was buying, another insurance firm, Maif, sold its well-regarded Château Dauzac estate in Margaux, yet retained two other Bordeaux properties. Other financial services firms that own Bordeaux châteaux include CARMF, AG2R La Mondiale (also known for its professional cycling team) and Compagnie Européenne de Prévoyance.
Christian Seely is the son of British wine merchant and Bordeaux wine authority James Seely, and has spent most of his career with AXA. “In 1993, AXA purchased Quinta do Noval, and since Jean-Michel was busy in Bordeaux, they parachuted me into the Douro as managing director,” he says. The Port house fulfilled the three requirements the insurance company was searching for in wine estates – great terroir, a great history as a wine producer, but a property that had fallen on hard times and needed its reputation resuscitated. And the price was right. “AXA with its properties has always had a visionary, long-term attitude,” Seely says. Additionally, it owns a Bordeaux négociant, Compagnie Médocaine des Grands Crus.
AXA’s management of its freestanding division is relatively hands-off. “I have two board meetings a year,” Seely says, “although I talk regularly with board members about what we are doing.” In other words, as long as Millésimes operates profitably with good sales growth and a reputation to match, management lets well enough alone. Last year, AXA Millésimes reported healthy sales of €84m.
Owners from outside wine
As many large French businesses are family-owned – even insurance companies – sales and purchases of wine estates increasingly depend on whose fortunes are on the up or downswing, or who see an opportunity to cash out. For example, the Guillard family, which owns the insurance group CHG Participation, in September 2017 purchased noteworthy Château Fonroque in Saint-Émilion from the Moueix and Curat wine families. Although the Guillards owned luxury hotels, it was their first investment in wine.
“Unlike with Christian and AXA, we were set up with our P&L in the estate and not a part of Maif,” says Laurent Fortin, general manager of Château Dauzac. The insurer in early 2019 sold Château Dauzac to a family-owned conglomerate – Samsic, a business services group owned by Christian Roulleau. “We managed our own cash flow and secured loans as needed,” Fortin says, “but it was recognised that we needed a different type of owner” – one ready to make long-term investments – “and there were rumours for months that we would be sold.” Those rumours included purchase by forward-looking Bordeaux châteaux such as Smith Haut Lafitte, whose owners had previously been in the groceries business.
Crédit Agricole has a mixture of tight and soft controls on its Grands Crus division, Le Naour explains. “We have a budget per property,” she says, “and each estate has its own projects and own objectives. I would even say each estate has its own vision and strategy.” Each property also has a dedicated technical team, but that team gets direction from Le Naour and her headquarters group. “This allows us to create synergies, such as centralisation of administration functions… and a sustainable
environmental strategy,” she adds. As for creativity, “estate directors cannot make wines in their own styles.”While Crédit Agricole properties are centrally controlled, sales and marketing depends on each property’s status. The most prestigious are sold as futures en primeurs and through La Place de Bordeaux, while lesser-known châteaux are sold through individual distributors with prices set when the wines are ready to be shipped. Crédit Agricole declined to provide annual sales figures for the group.
Owning wine estates confers prestige and is important in another way: it gives the public and employees the pleasure of knowing the company has a prominent stake in a well-regarded luxury business. As Seely notes, the Millésimes division was founded by a man who loved wines and wine estates. La Naour adds, “Obviously, owning a winery is a great emotional leverage to use when it comes to entertaining or inviting clients. The Château de Santenay in Burgundy is an oenotourism site, and it welcomes from April to November our clients, shareholders or company [personnel] for team building.”
Just as AXA has recently purchased an American winery, Le Naour says Crédit Agricole is also expanding its property holdings in Burgundy and recently acquired new plots in grands crus vineyards. The rewards, the actuarial community has decided, remain worth the risks.
