Anson: St-Emilion’s year of deals

You could be forgiven for thinking that St-Emilion in 2017 has collectively broken into its own wine cellars and got seriously high on the contents.

It’s been hard to keep track of the number of classified estates changing hands, with six or seven Grand Cru Classés or Premier Grand Cru Classés going under the hammer in the last six months, and at least double that in terms of overall transactions.

It’s not just the sales that have been eyebrow-raising, but the prices. The average price per hectare in 2016 in St-Emilion, according to land agency SAFER in its report last year, was in a range from €180,000 to €2.3 million.

In 2017 we have seen Chateau Troplong Mondot exchange hands for between (unconfirmed but near certain) €5.5 and €6 million per hectare.

This was followed more recently by Clos Labarde for a reported €3.2 million per hectare to the same Scor insurance group that bought Troplong (after, so I was told by Gerard Perse of Pavie, a serious bidding war between the two parties) so cementing the idea that a new ceiling has been breached.

Clos Labarde is a 4.5ha AOC St-Emilion Grand Cru estate whose main attraction is its location close to Pavie Maquin (and, a stone’s throw further, Pavie itself, hence Perse’s interest).

Other high profile chateaux to have been sold include Chateau Bellefont Belcier to Peter Kwok (from Chinese owners Juxin Wine & Spirits who bought back in 2012, although I believe there may have been an interim sale somewhere between the two reportedly to a John Remos), Chateau Fonroque to the Guillard family, owners of another French insurance company in the shape of CHG Participations.

And then there’s Chateau Berliquet going to the Wertheimer brothers, owners of Chanel and neighbouring Chateau Canon, and Clos de la Madeleine going to the Moueix family (again neighbors, this time of Chateau Belair-Monange). Perse himself after losing out of Clos Labarde managed to secure Domaine de la Vielle Eglise for a little less painful €1.2 million per hectare.

Two other classified sales came with Chateau Petit Faurie de Souchard to Mondiale insurance of Chateau Soutard while Chateau de Candale was bought by Thibault Decoster of Chateau la Commanderie.

A sale has closed on Chateau Franc Mayne also, but the new buyers have not so far been announced, although I believe also French, and I know of two others that are imminent, also big name classifieds.

So is there a pattern here?

These are mainly French buyers, and a large percentage of them are existing St-Emilion owners increasing their holdings. We have seen this increasingly over the past few years, with the Dillons enlarging Chateau Quintus with the purchase of Chateaux l’Arrosée and l’Amont, and the Dassault family buying Chateau Trimoulet to increase the holdings of Chateau Dassault, among others.

The St-Emilion classification system – which classifies land not chateaux brands, unlike the Left Bank – means that they may not now, or indeed ever, be able to join the new additions to their existing classified land, but they always have the possibility to apply to do so, and if not can leverage their existing brands with the addition or expansion of second wines, or simply use the power of one name to improve price potential of another.

One question for me seems to be why now? Most of these sales have come in the last half of this year. We know 2017 was difficult with frost, but after 2015 and 2016 vintages surely cashflow was not a problem at this level of property?

It is because it is becoming harder for small families to keep hold of their estates, and this is a continuation of a phenomenon we have seen in Pauillac, Saint Julien and Margaux for years, where the big names relentlessly swallow the small?

Alex Hall of Vineyard Intelligence, says, ‘It’s certainly interesting that the sales are concentrated in the hands of locals. Even Peter Kwok qualifies in that category, as he has been an owner of an estate in St-Emilion since 1997. These are people who understand the region, the wines and how to sell them, and are willing to compete, often with each other, to secure prime assets, even if that means pushing the price up in the process.

‘When you look at the purchases individually, it’s hard to give one clear reason for the rate of turnover, but the prices themselves will now be spurring extra interest from sellers. I don’t think we’re done yet.’

What Hall may mean is that at Troplong, for example, Xavier Parrente had raised the profile and prestige through En Primeur prices and critics’ scores, and that he may have felt he was at the end of a cycle and at exactly the right time to cash out. While at Clos de la Madeleine, the owner Jean Charles Morisseau was taking retirement from his main job with Société Generale’s wine division.

He didn’t have an obvious successor among his 80 or so shareholders, so took the decision to sell. Moueix was already distributing the wine, and it no doubt made sense to pay a high price per hectare (exact amount unconfirmed but the rumor is around €3 million) because its location effectively takes it into Chateau Belair-Monange’s garden.

Whether these estates will keep their original names or be subsumed into the stronger brands is not yet known (even if widely expected). Chateau Canon has form on this, after all, having bought Chateau Matras in 2011 to transform into the second wine Clos Canon, as does Belair-Monange after having swallowed up Chateau Magdeleine in 2012. Canon’s director Nicolas Audebert confirms that was their initial plan, but that now they are hesitating.

‘Berliquet has 10ha in one square plot on the plateau and slopes, and Canon vines surround it on three sides, so of course it made sense for us, but I can’t give a straight answer yet as to what we will do. Two years ago when first thinking about it we wanted to incorporate it into Canon; but the more we look at the special quality of its terroir the less sure we are. No decisions will be taken until we have got to better understand the soils.’

It’s hard to argue, of course, that Chanel’s money is going to be a negative for Berliquet – an estate with huge potential but to date sometimes uneven results. But there’s no doubt that the landscape of St-Emilion is changing, and the people ultimately paying for all these acquisitions is almost certainly going to be us, through the price of the bottles.