14 Oct

An American in the Bordeaux Wine Trade

Richard J. Palermino 

One of our oenologists called up to my office, "Tomorrow I am going to sit on a tasting panel at the University. You may find it interesting to tag along as a nonvoting participant." The tasting took place at the University of Bordeaux with a cross section of judges from the interested parties: representatives from chateaux, negociants and courtiers. This was the periodic invitation to a blind tasting of randomly chosen wines that have applied for an export permit. The wines are rated as to suitability for the palate of the country to which they are being exported and as a spot quality check on whether or not they merit the appellation to which they pretend. Too many thumbs down on a wine could lead to an investigation by authorities on the activities taking place at the property.

We sat at our glass enclosed cubicles, fully equipped with wines, sinks, and tasting glasses while the official at the front intoned, "This first wine is applying for export to Belgium. Present your marks on its suitability to the Belgian market (my memory is that meant good forward fruit and a goodly amount of mouthfeel or body with none of the mature flavors the British market, for instance, favors)." "Now present your marks on how well it represents St. Emilion which is the appellation it claims". The wine nearly got enough negative marks as possibly not being from St. Emilion as to have had its papers referred on to the proper authorities. "Wow",  I thought with the stupor of someone watching for the first time a game of Russian roulette, "There are real bullets in those guns!" As a wine professional I was once again hit by the contrasts in how the wine business is conducted in France and the United States, the two countries with whose wines I have always been most familiar.

So what is a courtier?

Who is the "courtier" mentioned in the first paragraph? In France all newborns must be declared by the parents in person before the city authorities. A decade ago, at the birth of my first daughter in Talence, Bordeaux, I caused a line to form at the appropriate counter at the Mairie or City Hall while I struggled to reply to the clerk with the French equivalent for my then American based profession in the wine trade. An impatient man to the back of the line shouted “courtier en vin”.  I sort of guessed at the meaning, thought it sounded much more interesting than being a “market manager” and let it stand at the city registry. 

I did not know then that the "courtier" is a reasonably old and time honored professional: a person who is a middle man for most sales from chateaux or producers to negociant; as such, he represents the interests of both parties in a transaction. Very few sales are made without a courtier's involvement and his small commission. It is he who carries around samples of anything available on the market from bulk wine to chateaux bottlings to yet unblended chateau cuvees that still may be finished to customer specifications in final blending. It is he who takes the middle ground in price negotiations and so on.

No real equivalent personality exists on such a scale in the American wine business. The name evoked a romanticism equivalent American terminology does not. That early visit to city hall ended up being the first example for me of the contrasts between the commercial aspects of the American and French approaches to the wine trade. In fact, being a "courtier" is a difficult job and little did I know at that time how important to me the weekly visits by these "cuvee" locators carrying their "milk bottle" baskets of samples would later be when I had either to buy or sell wine unlike the position of the American market manager who just sells.

So began a humorous series of cultural misunderstandings for me as an American, an American with a Bostonians puritanical work habits tied to an affinity for Latin culture; so began a wine professional's dream: a career in Bordeaux. It was a career in Bordeaux as International Director for one of the largest negociants with all the excitement of buying and selling anything from bulk tanker cars of wine to the most exotic of chateaux, from locating little known "petits chateaux" to doing special labels and bottlings blended to customer specification. 

Beyond obstacles of language, for most Americans a professional post in Bordeaux is an impossible dream due to tough French regulations on work permits. Therefore, for Americans, working in Bordeaux means being an unpaid trainee of some sort, a file clerk, a helper but certainly not being privy to the inner workings of the system: for the majority of us, time in Bordeaux is the wine professionals equivalent to junior year abroad. If you are not independently wealthy, French law requires extraordinary circumstances to have the right to work and reside in France; for example, the "carte de resident" the equivalent of the "green card" in the film of the same name, is not yours merely for marrying a French national but the marriage must also have survived at least two years before undertaking the move to France!

My American training therefore in no way prepared me for the spectacle of the "appellation based" control tasting mentioned at the outset of this article. That sort of exercise is just one example of the activities funded by the tax on every sale imposed by the C.I.V.B. It is a tax that ranges in severity according to the value of the appellation, not the value of the sale. Therefore, a sale of a tonneau of Margaux represents quadruple the tax raised by the sale of generic Bordeaux red. The money is used to maintain and promote the integrity of the appellation.  It is a tax based on quality not quantity.  

In any event it is one of the many demonstrations of points of difference that we see when comparing the pragmatic American to the methodical French. Although our political cultures once seemed to have so much in common (not only was France our young republics early ally and revolutionary soul mate but Bordeaux was home to Montesquieu, the originator of our theory of the separation of power within government), we still ultimately have so much to learn from one another. Somehow, in the end, as in the afore-mentioned film, we have always found each other and each other’s culture so opposite yet so attractive.

Classic French and American cultural misunderstandings are summed up by differences of approach to the wine business particularly as exemplified by California versus Bordeaux. Our social informality clashes with their formality and measured respect; yet our formality of business culture clashes with their less corporate approach. At that time in America, we always appeared at the office in business attire, minimally a jacket and tie.  Not so in France, I went often went to the office in a polo shirt. 

Our brief and generalized wine laws shrink before their infinitely laborious and strictly codified definitions which fall on the marketplace with an inexorable logic and machine-like progression. At times I imagined all French people have a "Cartesian" chip embedded in their brain at birth; once started down a path, the logic of a situation occupies them fully; it is probably the reason they have such a talent for mathematics.   You might arrive at the solution early, but forget it and don't interrupt; you get a common phrase very much in vogue, "laisse moi finir".  

Not a Sales Market Manager?

Our drive to increased volume is the alternative path to their striving for increased price. Our loose and flexible definition of the market by grape varieties and brands opposes their confining and restrictive definitions by terroir and individual properties. Our vocabulary of measurement is centered nearly exclusively on either the gallon, ton or twelve bottle case as opposed to their more minimal description of possible retail production in terms of individual bottles of 750ml awaiting a later final conversion for a client driven to either the continental case of six or whatever the client demands as a case or bottle size. Their internationalized trading vehicles of the hectolitre (100 litres) and the tonneau (900 litres or 9 hectolitres) versus our nationalist and unique gallon..

Our ever greater consolidation of companies and holdings counters their protection of the little guy... think of it, all of California represents a few thousand brand names originating from several hundred wineries while the geographically much smaller Bordeaux alone has in excess of 5,000 independent wine making entities and 26,000 growers. I used to jog in Cotes du Bourg and passed so many small properties that never be handed down in America from generation to generation.

Similarly, the contra positions of our stiff governmental regulation of price policies by state agencies contrasts with their open market pricing; in Bordeaux a price is what you negotiate with the individual client; therefore, if you are out tasting and are complimentary about the quality of the product at the same time, your price just went up! Hence the French tendency to comment on a good wine as at best “pas mal” unless it is one they are trying to sell!

Long-term certain rules of economics rule both markets but the immediate tendencies of pricing in Bordeaux and how it is arrived at is a great difference from California. California has brands which sell directly to their single agents in the market while Bordeaux , on the whole, has tradeable  commodities that are handled by a multitude of agents or negociants.  We have a legally enshrined, fairly obligatory three tier distribution system of producer, distributor and retailer while the French have essentially an open system.  We are becoming more and more like the French with the arrival of the internet but it is hardly a drop just yet.

Explained by Structural Differences in the Markets

Bordeaux proportionately sells infinitely more of its wine out of the region while for California it is very much the reverse although that is less and less true today. As mentioned above, a curious circumstance of opposites is that they have essentially an open market system when it comes to price while we do not. Every day in Bordeaux you can get the going “stock market” quote for available wines in Bordeaux beyond any individual real market condition such as chateau or negociant overstocking causing that particular vendor to have a lower price. There is no government regulated national price selling structures beyond quality control laws nor is there the subsequent local government regulation of prices as the Prohibition inspired laws of the United States requires. 

We were very agile as a company doing private label work.  I remember getting the private label for the Oxbridge for Bordeaux  Claret one year. I couldn't sell to these two universities a simple blend of Bordeaux generic: it would be too raw and unstructured  for the British palate. Different levels of appellation sell for different prices on the open market and to bring in a better wine would make our bid on the contract too expensive.  I therefore made a blend of 80% Bordeaux generic and 20% a wine we already had in stock, a Bordeaux Superior which the company had to use anyway because it was approaching 5 years from the vintage date and would have to be sold as generic or vin de table anyway. This kind of strict control of the appellation took some getting used to.

In fact in Bordeaux, within certain practical limits, nearly anyone who has the wherewithal can set up shop and buy on the open market and nearly any client can order from any negociant they please. Hence the tendency to transactions off "offers" to sell. When the freeze of 1991 hit over a weekend, we opened business the following Monday calling back all our offers or bids which were always made subject to final confirmation. The difficulty of applying such an open market to the American distribution system is also why the American consumer is very much both insulated from and deprived of unfavorable and favorable short-term tendencies of price. Much more so than Bordeaux, California sells brands through exclusive distribution networks with set pricing modulated by government regulation. One irony is that our bureaucratic alcoholic beverage distribution system is in fact the American idea of how business in general is conducted in France!

In the beginning of my time in Bordeaux, my first day on the job, I arrived at work in a standard business suit and was greeted by management in polo shirts and slacks.. My boss and I coincidentally but symbolically started the day with a description of company "guidelines" on ordering lunch, an important part of the day in a French company!

 Alas, my career there was interrupted by difficulties arising from the crisis on the real estate market in New England in the late 1980’s.  More towards the end of my stay, I recall being about to exit an office of some female colleagues when one of them enquired: "But Monsieur Palermino, you have been coming here for three months now without once complimenting us on our clothes!" Were they just having a good time at the expense of the only American in the company or low level flirting in the not very serious way for which French women are famous? It is true, I thought, they had been attractively attired of late but my American cultural training had been to avoid such observations in a business setting. I continued my retreat from their innocent remark, threw them a not so knowing smile, thought of the upcoming well planned lunch break where I would go running for one hour, dine properly the second hour at a rustic restaurant and then muttered aloud in English in my best, and thereby possibly least intelligible, Boston accent, Yes, despite any efforts of Jefferson, Franklin, Lafayette, De Tocqueville, Dillon and the rest, there is still a lot we two countries could learn from one another!"

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