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Couple Goes All In on French Vineyard
Author By: Karen Kitchener
Whatever possessed 2 normally sane, financially secure, 40 somethings to abandon well-established careers and risk everything buying a vineyard in Gascony? To-date, neither of us has owned up and taken responsibility for the bright idea that found us owners of 40 hectares of vines, woodland and sunflower fields in South West France. We’d always loved wine; drinking it, learning about it, attending those “mass tastings” so beloved of wine merchants, and spending holidays travelling around the wine regions of the world. What did we know about making and selling wine? Zip, zilch, zero……… On 1st March 2004, we handed over 1.261m euros for vines, arable land, orchards, buildings including a winery with 20 cuves and a large stock of Armagnac dating back to 1929, purpose built warehousing, a bottling plant, 3 houses and a variety of workshops and out-buildings. If you’re thinking stainless steel, floor to ceiling tiling and aerial walkways, think again – this is Cotes de Gascogne, no “Veblen goods” here!
With a hefty mortgage to pay and no other income to fall back on, we had to learn fast. We made the most of the brief transition period working with the domaine’s former owner (he’d bought a house up the road on the basis of remaining involved), before he lost his temper in one great, gallic explosion, storming off the vineyard, all future communications only taking place via our respective “Avocats”. It transpires he’d told clients, suppliers and neighbours that we were “gonflé”; he’d be earning a fortune from us for years to come as, being English, we had absolutely no idea how to make wine, and what’s more, would never learn. In retrospect, being thrown in at the deep end was a good thing – the former owner wanted us to shoulder the financial burden, deal with all the bureaucracy leaving him free to run the vineyard in exactly the same fashion as he’d done for over 20 years! Our basic strategy was to increase exports – the lucrative and well-educated UK market was our primary target. Simultaneously we had to review sales with existing clients; specifically our margins and their payment terms; we subsequently discovered it wasn’t economically viable to continue working with many of the existing clients; the former owner had inherited the vineyard lock, stock and (Armagnac) barrel so wasn’t encumbered by a mortgage. He had few improvement plans, he was happy to take a nominal profit each year and believed he’d lose his existing customers if he raised prices. Within months of our arrival, we changed our branding and packaging. Luckily for us, an award-winning designer based in London took pity on us and was happy to provide us with designs and be paid in wine and Armagnac! We also needed to increase “at the door sales” – good margins and the generation of extra clients for our B&B accommodation means this group of customers is key, especially during the months of July and August when Gascony is full of holiday-makers from the UK, Belgium, Holland and Germany. We’ve improved our visitor facilities at the vineyard and Nick is renowned for his “personality-filled” tours of the vineyard – we regularly have large groups of visitors who spend a day here; out in the vines, in the wineries, on the bottling line then in the tasting room. It soon became clear that winemaking would be a stroll in the park compared to finding distributors prepared to sell the wine. Thanks to the former owner’s bile, the domaine’s largest client decided to take his custom elsewhere and we were left having not only to fill this gap but also to find markets in our other target countries including the UK, Belgium and Germany. Even our combined experience of over 45 years in sales and marketing didn’t seem to be getting us anywhere. French banks are exceptionally risk averse and simply won’t invest in an independently owned vineyard like ours, no matter what the gearing is – here at Lauroux, our gearing is 25%. Coming from a property market as bouyant as the UK’s, we’re used to using the value of our property investments as equity and using credit as a business tool – here we’re don’t even have an overdraft so rely on customers’ prompt payment. We’ve been amazed and astounded disappointed at the responses from the hundreds of negociants, importers and independent merchants we’ve contacted over the past 4 years. Countless articles in newspapers, colour supplements and the trade press urge UK purchasers to support small, independent producers and to fully embrace the diversity the world’s wine producers have to offer. “We only deal directly with small-family owned vineyards” say the importers and merchants’ websites. “You are just glorified farmers” I was told by a Director of one importer in the South of England. “There’s no value in terroir, wines with character, sustainable winemaking or minimal use of chemicals in the vineyard” another told me, “our punters only need something cheap with a nice label”. The wine trade seems to be full of people who want to write about wine, get paid vast sums of money to taste wine, host television programmes or write books but who wants to sit on a plastic crate in a freezing cold chai at 2am filtering Ugni-Blanc? Oh yes, that “glorified farmer”. The glamour of the trade is appealing but many writers and broadcasters say we need to educate customers so that they “buy in” to the wine and are prepared to pay more for it. We’ve found that many people still don’t really know how wine is made even at a superficial level even though they are knowledgeable wine drinkers. Feedback from our customers shows that following tours, visits and our online diary (many customers follow our progress all year round), many have become more interested in wine generally and think more about the provenance of what they buy. That doesn’t mean that they are still not seduced by some of the bargain offers, but perhaps that they do mix it up a little! In our previous careers in IT, we could generally apply the “80/20 rule” to our client base but we were very surprised to find that this same 80/20 rule is alive and well in the wine trade. One of the 20% of “good guys” we’ve met since buying Lauroux is Jim Anderson, the owner of the Nottinghamshire and Derbyshire-based Le Mistral restaurants. Lauroux is Le Mistral’s house wine and there’s a whole page in their extensive wine list telling diners all about us, the vineyard and how the wine is made. Jim believes in “telling the story of the wine”, rather than simply “pouring and drinking”; he is very clear on the importance of training and retaining his staff, so visits our vineyard regularly with his staff and his family. Members of Le Mistral’s staff who’ve been here can talk honestly and knowledgeably about the wines. In addition to the Cotes de Gascogne wines, we also produce Floc de Gascogne – the local aperitif; a blend of grape juice and Armagnac, and of course Armagnac itself. We are, after all, in Bas-Armagnac - what is reputedly the best of the 3 Armagnac-producing areas. Making and selling Floc and Armagnac are additional challenges. We invested heavily in stocks of Armagnac when we bought the domaine – over £100k of spirits happily evaporating at approximately 1/2 º per year – know as “la part des anges”. Producing and selling Armagnac is a real joy and we are honoured to be part of a tradition dating back to the 14th century. We have Bas-Armagnac distilled 78 years ago in 1929, (incidentally the year in which Popeye and Tintin made their debuts). Distillation takes place each Winter with an officially defined start and finish date between November and March; we use traditional methods and an alambic still owned by one of our neighbours. Recent changes at the BNIA (Armagnac’s governing body), have resulted in massively improved marketing and therefore greater awareness of the product, we’ve seen sales in the UK (especially Scotland), steadily rising. We have many, many plans for the future. We have an option to buy a further 6 hectares of land from a neighbour and would like to plant this, ideally with Sauvignon which grows exceptionally well in this region. Planting vines represents a significant ongoing investment – between 9,000 and 12,000 euros per hectare and the grapes can’t be harvested for 3 years after planting. To farm the extra land, we’d need a new tractor, preferably with a cabin and whilst we really need more resource, the social charges paid by an employer are often as high as the salary itself. 2007 was an extremely tough year – the heavy rains, winds and dramatic temperature changes of Spring damaged vines and created perfect conditions for the spread of mildew. We harvested late this year and our yields were reduced by 50% against previous years. This means we’ll have a lot less wine to sell but we’ve still had to pay 100% of the salary bill, the diesel bill and the fertilizer bill this year!
With a hefty mortgage to pay and no other income to fall back on, we had to learn fast. We made the most of the brief transition period working with the domaine’s former owner (he’d bought a house up the road on the basis of remaining involved), before he lost his temper in one great, gallic explosion, storming off the vineyard, all future communications only taking place via our respective “Avocats”. It transpires he’d told clients, suppliers and neighbours that we were “gonflé”; he’d be earning a fortune from us for years to come as, being English, we had absolutely no idea how to make wine, and what’s more, would never learn. In retrospect, being thrown in at the deep end was a good thing – the former owner wanted us to shoulder the financial burden, deal with all the bureaucracy leaving him free to run the vineyard in exactly the same fashion as he’d done for over 20 years! Our basic strategy was to increase exports – the lucrative and well-educated UK market was our primary target. Simultaneously we had to review sales with existing clients; specifically our margins and their payment terms; we subsequently discovered it wasn’t economically viable to continue working with many of the existing clients; the former owner had inherited the vineyard lock, stock and (Armagnac) barrel so wasn’t encumbered by a mortgage. He had few improvement plans, he was happy to take a nominal profit each year and believed he’d lose his existing customers if he raised prices. Within months of our arrival, we changed our branding and packaging. Luckily for us, an award-winning designer based in London took pity on us and was happy to provide us with designs and be paid in wine and Armagnac! We also needed to increase “at the door sales” – good margins and the generation of extra clients for our B&B accommodation means this group of customers is key, especially during the months of July and August when Gascony is full of holiday-makers from the UK, Belgium, Holland and Germany. We’ve improved our visitor facilities at the vineyard and Nick is renowned for his “personality-filled” tours of the vineyard – we regularly have large groups of visitors who spend a day here; out in the vines, in the wineries, on the bottling line then in the tasting room. It soon became clear that winemaking would be a stroll in the park compared to finding distributors prepared to sell the wine. Thanks to the former owner’s bile, the domaine’s largest client decided to take his custom elsewhere and we were left having not only to fill this gap but also to find markets in our other target countries including the UK, Belgium and Germany. Even our combined experience of over 45 years in sales and marketing didn’t seem to be getting us anywhere. French banks are exceptionally risk averse and simply won’t invest in an independently owned vineyard like ours, no matter what the gearing is – here at Lauroux, our gearing is 25%. Coming from a property market as bouyant as the UK’s, we’re used to using the value of our property investments as equity and using credit as a business tool – here we’re don’t even have an overdraft so rely on customers’ prompt payment. We’ve been amazed and astounded disappointed at the responses from the hundreds of negociants, importers and independent merchants we’ve contacted over the past 4 years. Countless articles in newspapers, colour supplements and the trade press urge UK purchasers to support small, independent producers and to fully embrace the diversity the world’s wine producers have to offer. “We only deal directly with small-family owned vineyards” say the importers and merchants’ websites. “You are just glorified farmers” I was told by a Director of one importer in the South of England. “There’s no value in terroir, wines with character, sustainable winemaking or minimal use of chemicals in the vineyard” another told me, “our punters only need something cheap with a nice label”. The wine trade seems to be full of people who want to write about wine, get paid vast sums of money to taste wine, host television programmes or write books but who wants to sit on a plastic crate in a freezing cold chai at 2am filtering Ugni-Blanc? Oh yes, that “glorified farmer”. The glamour of the trade is appealing but many writers and broadcasters say we need to educate customers so that they “buy in” to the wine and are prepared to pay more for it. We’ve found that many people still don’t really know how wine is made even at a superficial level even though they are knowledgeable wine drinkers. Feedback from our customers shows that following tours, visits and our online diary (many customers follow our progress all year round), many have become more interested in wine generally and think more about the provenance of what they buy. That doesn’t mean that they are still not seduced by some of the bargain offers, but perhaps that they do mix it up a little! In our previous careers in IT, we could generally apply the “80/20 rule” to our client base but we were very surprised to find that this same 80/20 rule is alive and well in the wine trade. One of the 20% of “good guys” we’ve met since buying Lauroux is Jim Anderson, the owner of the Nottinghamshire and Derbyshire-based Le Mistral restaurants. Lauroux is Le Mistral’s house wine and there’s a whole page in their extensive wine list telling diners all about us, the vineyard and how the wine is made. Jim believes in “telling the story of the wine”, rather than simply “pouring and drinking”; he is very clear on the importance of training and retaining his staff, so visits our vineyard regularly with his staff and his family. Members of Le Mistral’s staff who’ve been here can talk honestly and knowledgeably about the wines. In addition to the Cotes de Gascogne wines, we also produce Floc de Gascogne – the local aperitif; a blend of grape juice and Armagnac, and of course Armagnac itself. We are, after all, in Bas-Armagnac - what is reputedly the best of the 3 Armagnac-producing areas. Making and selling Floc and Armagnac are additional challenges. We invested heavily in stocks of Armagnac when we bought the domaine – over £100k of spirits happily evaporating at approximately 1/2 º per year – know as “la part des anges”. Producing and selling Armagnac is a real joy and we are honoured to be part of a tradition dating back to the 14th century. We have Bas-Armagnac distilled 78 years ago in 1929, (incidentally the year in which Popeye and Tintin made their debuts). Distillation takes place each Winter with an officially defined start and finish date between November and March; we use traditional methods and an alambic still owned by one of our neighbours. Recent changes at the BNIA (Armagnac’s governing body), have resulted in massively improved marketing and therefore greater awareness of the product, we’ve seen sales in the UK (especially Scotland), steadily rising. We have many, many plans for the future. We have an option to buy a further 6 hectares of land from a neighbour and would like to plant this, ideally with Sauvignon which grows exceptionally well in this region. Planting vines represents a significant ongoing investment – between 9,000 and 12,000 euros per hectare and the grapes can’t be harvested for 3 years after planting. To farm the extra land, we’d need a new tractor, preferably with a cabin and whilst we really need more resource, the social charges paid by an employer are often as high as the salary itself. 2007 was an extremely tough year – the heavy rains, winds and dramatic temperature changes of Spring damaged vines and created perfect conditions for the spread of mildew. We harvested late this year and our yields were reduced by 50% against previous years. This means we’ll have a lot less wine to sell but we’ve still had to pay 100% of the salary bill, the diesel bill and the fertilizer bill this year!
The future plans will have to wait for the moment though it’s 6.25pm on Wednesday evening - we have several hundred bottles of Armagnac to be filled, labelled and hand-waxed ready for collection and shipping to UK clients, we have guests in the B&B and I have my weekly 10 hours of WSET study to catch up on!
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