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Friday, June 16th, 2017

Bordeaux châteaux in the spotlight from foreign investors

Tom Sullivan and Britta Luber during a visit to Château du ParcFor many years the wine region of Bordeaux has been attracting interest from international investors. According to experts in the industry like Michael Baynes, founder of Maxwell-Baynes Vineyards, there has been a noticeable upwards trend since 2016.

However, foreign investors are not only focused on the large châteaux, but also on the small less-renowned estates that are listed around the five million euros price range. Investors have begun to realize the market potential of producing great quality Bordeaux wines at reasonable prices in order to access new markets.

An American business man, Tom Sullivan, founder and president of the companies Lumber Liquidators and Cabinets to Go, has recently acquired a variety of small wine estates in Bordeaux. After his visit to Saint-Émilion at the end of 2015, Sullivan began his negotiations and finally acquired Château du Parc in September 2016, followed by Château Gaby, Château Moya and Château Auguste, the latter in December.

Château du Parc is a property located close to Saint-Émilion with AOC Saint-Émilion Grand Cru wines. Sullivan bought this 5.25 hectares wine estate from the French wine expert Alain Raynaud.

Château Gaby (17.5 hectares) and Château Moya (8.2 hectares) are two estates with AOC Canon-Fronsac and Bordeaux Castillon Côtes vineyards, respectively, which were acquired by the Canadian David Curlinorder to convert them into organic vineyards.

Château Auguste, previously owned by DutchSteve Meijer, is a large wine estate, located in Entre-deux-Mers, with 30 hectares of AOC Bordeaux Supérieur. Sullivan was equally drawn to its fantastic terroir as much as its excellent rosé wines.

From the beginning, he made it clear in what he wanted to invest and Maxwell-Baynes always offered him the most appropriate terroir for the specific products he wanted to produce. His objective is for all his vineyards to be organically grown, in total he has acquired more than 60 hectares of vineyards, out of these some already have this characteristic, including Château Moya and Château Auguste and others are in the transition phase, such as Château Gaby.

With regards to the châteaux management, Sullivan will rely on the help of experts. Amongst these are Damien Landouar, the old manager of Château Gaby (he will act as the managing director of the Bordeaux properties) and Raynaud, who will act as the consulter at Château du Parc and his signature will remain on the wine label.

Sullivan, who already controls the distribution channels of Lumber Liquidators, wants to employ a similar strategy in Bordeaux. Consequently, in order to avoid trading with commercial and intermediary agents, he wants his sales directors to deal with the distribution of wine to Europe and Asia directly from French importers. Meanwhile, using his own distribution channel, the Miami-based company, Wine Traders International (with Steven Howard, the old director of sales at Zonin Prosecco, as director of sales in USA), will satisfy demand in America. His objective is to offer a quality Bordeaux wine at the most competitive price possible and therefore bring this excellent product to the new market.

Other châteaux sold

According to Michael Baynes, the profiles of foreign buyers that invest in the Bordeaux châteaux are very variable and although many pay in dollars, they are not confined to American investors, such as Tom Sullivan.

Jack Ma, a Chinese magnate and founder of Alibaba, was also interested in investing in Bordeaux. In February 2016, he bought Château de Sours (85 hectares of vineyards) in Entre-deux-Mers, but that will not be the only investment he makes. A group of managers of the same nationality and affined interests have already planned to acquire more châteaux and, as a result, they want to create their own distribution network in order to meet the demand of Bordeaux wines in China.

The sale of châteaux to international buyers also occurred during 2016.

In September, the group Les Vignes Olivier Decelle sold the Château Haut-Ballet to the Labrune family. This wine estate is located in Saint-Michel-de-Fronsac and boasts 12 hectares of vineyards, in addition to more than 40 hectares of vineyards at the Château de la Dauphine, also owned by the Labrune family.

Furthermore, Coralie Bouard and her husband Loïc Maillet also bought Chateau Tour Musset, with AOC Montagne Saint-Émilion, from the Castel group. The property is made up of 30 hectares of vineyards and was reborn with the name Château Clos du Boüard.

The transactions mentioned above are only examples of outbreaks that the wine sector in Bordeaux experienced during 2016, but overall, the figures were surprisingly positive.
According to Michael Baynes, his real estate company that specializes in the sale of wineries and vineyards in Bordeaux, might have sold around six wine estates in previous years, but in 2016 they completed a total of thirteen sales.

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