This publication spoke to two of the most illustrious names in global fine wine production and investment to get a closer insight into the dynamics - and biodynamics - of this elite business.

In the world of fine wines and collectibles, there aren’t many names that scale the same Everest-high peaks as Louis Roederer, the French maker of champagne and that prince of drinks – Cristal. It is one of those glories of craftsmanship that carries the allure of history and is now associated with a passionate commitment by its makers to organic best practice.

And the phenomenon of such a champagne is part of a broader story of how buyers of fine wine - many of them now from the rising affluent emerging market middle class - are becoming more knowledgeable and demanding about what they buy, and are less carried away by fads. For it is not enough these days to have a “label” to show off to friends. What also draws people in is the chance to learn about the painstaking skills and processes involved in making these marvels.

There are few people on the planet with a stronger handle on what it takes to produce fine wines than Jean-Baptiste Lécaillon, who holds the post of chef de cave – the winemaker of the house – at Louis Roederer, a position he has had since 1999. Working at Louis Roederer since 1989 (it is a business where longevity is part of the culture), Lécaillon spoke to WealthBriefing recently about the business and how his organisation fits into the broader fine wine story.

                                                                                                               

One of the first things that he mentioned is how small in relative terms is the size of the French house’s estate – this is specialist wine-making and definitely not a bulk business. The estate is 240 hectares in size and it supplies more than 70 per cent of Louis Roederer’s needs. “All our vintage wines at Louis Roederer are all 100 per cent estate-grown and bottled,” he said. The house makes more than 3 million bottles a year. The wine is sold in around 100 nations around the world.

One notable feature of Louis Roederer’s produce is that a high percentage – there isn’t an exact figure – is exported from France rather than being consumed in the home market. That makes this house an important source of overseas earnings for the country. And that shapes how the firm works in the marketplace. “It is not a question of market share but putting it out at the right time and at the right price and to the right people,” he said.

                                                                                                          
The ultimate Cuvée de Prestige, Cristal, was first created for Tsar Alexander II of Russia in 1876 with a bottle design with a flat base and made from clear crystal (hence the name), with a distinctive orange wrapper to protect the wine from ultraviolet light. The blend is usually 55 per cent Pinot Noir and 45 per cent Chardonnay from only the best rated sites of Louis Roederer’s vineyards. Cristal is released after at least six years ageing in the Reims cellars. Among the particularly special cuvées that the firm highlights is the “Medallion” 2002 Jeroboam which was designed by Philippe di Méo. Each of the limited edition release bottle sports a hand-made gold lattice “cage”, making the 300cl jeroboam bottles even more appealing to look at. Not only is the bottle stunning, but also 2002 was a very highly rated vintage, renowned throughout the Champagne region of France.

Biodynamic revolution
Lécaillon became particularly animated when he talked the phenomenon of “biodynamics”, which is an approach to agriculture that embraces organic techniques – and eschews man-made chemicals. One definition describes biodynamic agriculture as “a method of organic farming originally developed by Rudolf Steiner that employs what proponents describe as "a holistic understanding of agricultural processes". Soil quality, plant growth, and livestock care are treated as being ecologically interrelated. (It is, needless to say, not without its critics and remains controversial in some quarters.)

“In 1999-2000 I decided to start a different form of viticulture and came back to more ‘craftsmanship and more `haute couture'-style of viticulture. Biodynamics is a very precise way of looking at your vineyard. Biodynamics is about coming back to look at the soil and using less [artificial] chemistry and relying much more on working with the soil and the balance of the vines,” he said. “We began with some trials…it is difficult because in the champagne-growing region the climate can be difficult,” Lécaillon continued.

The first trial was in 2000. Today, some 72 hectares of the vineyard is managed via biodynamics – a substantial proportion of the total. The commitment to the philosophy looks powerful.

Lécaillon goes into full flow: “It is about digging into your history and know-how. Everything you do is not about how you do it but why you do it.” And the results, he says, are glorious: the result of using biodynamics is that the wine is richer in taste. “Biodynamics helps you to get a more definite taste, more precision, and done with a sense of place,” he said. As such, it enables his business to be more distinctive and valuable in the global marketplace.

Learning, investing with Berry Brothers & Rudd
The approach that Louis Roederer takes is also part of a broader trend of super high-end marques seeking to draw in clients through education, a focus on craftsmanship and learning about how articles are made (although of course such businesses need to protect some secret recipes and techniques from their actual or would-be rivals). WealthBriefing discussed this point recently with Berry Brothers & Rudd, the specialist wine seller, advisory and storage management firm that has been in existence since 1698.

“We have a wine school here and have classes [to learn about wines] almost every night,” Matthew Tipping, fine wines sales manager at Berry Bros, told this publication from his firm’s offices in St James’s Street. (As befitted the subject matter, the interview happened in one of the cellar areas of the premises; your correspondent was surrounded by dusty bottles from Bordeaux. This counts as one of the more exotic locations for an interview.)

As wine prices – with some fluctuations - have fetched increasingly eye-catching prices at auction, it has also helped galvanise an investment market in fine wines. In the early 1990s, about 90 per cent of investment focused on the famous regions on the right and left side of the Gironde (such as Pomerol, Médoc, Graves and St Emilion). Since then there has been a bit more variety in the fine wine investment market: Champagne (Cristal and Dom Perignon, for example); the Burgundy region (output from this area is relatively limited); the Rhone region of France, some Australians (Penfolds) and select wines from Northern California (such as Screaming Eagle), Tipping said.

For the moment, about 25 per cent of wine investors hold wines purely to make money; the remainder hold it to drink it later and if they manage to make a profit, that is a bonus, he said.

A client’s store of wines will be held in a bonded (ie, tax-exempt) cellar and if the person wishes to sell to drink it, he or she will pay tax on the original price paid for the wine, not its latest value. There is now a considerable secondary market in fine wines and clients typically use a firm such as Berry Bros for its expertise in finding buyers, as well as for its 300-year-plus expertise in keeping wine.

Wine investing has become less opaque in terms of price discovery in recent years, Tipping continued. The Internet has been a boon; there are platforms such as the Liv-ex online exchange giving out data on what fines fetch at sale. Wine enthusiasts can still gain pointers from such influential critics as Robert Parker; there are also websites such as Wine-Searcher.com that provide valuable data. Tipping also mentioned the Berrys Broking Exchange (BBX), a technology that allows clients to use the valuation data to list their wines at a price they choose and sell them to other clients. “This would have been unthinkable 10 years ago,” he said.

Berry Bros is also part of an industry network, The Bunch, pushing for continued best practice in the sector. Tipping says that the firm’s focus on physical ownership of wine as the best way to invest in it stands the test of time. “We don’t think, for example, that wine should be held in a `sub-account’ and that the best way [to invest] is to have clear knowledge of where your wine is and what it is worth,” he said.

Internet benefits of craftsmanship
Talk of how the Internet has taken some of the opacity from the marketplace leads back to Louis Roederer’s Lécaillon’s comments about how the firm’s focus on craft and biodynamics makes sense in a more transparent world. In the internet age, when data is easier to obtain, it is a paradox that people want more human interaction and like to visit places where wine is produced and see how it is made, he said.

“We have always been owned and managed by a member of the Roederer family; today Frédéric Rouzaud – seventh generation Roederer – is at the helm. This puts us in the fortunate position of having records and information on the land we own stretching back right to the foundation of the company in 1776. This gives us a lot of information about the terroirs; how they have performed historically, and what their characteristics are and how that evolves,” he continued. 

“You need to see that there is something behind the brand and not just the marketing,” he said.

And this maestro of wine-making wants to leave readers with one final, emphatic message: “Wine is good – wine is good for health.”