To Make a Small Fortune in the Wine Industry

You start with a big one.

I know, it's cliche to say this at this point in the quarter, but last week's case on Bordeaux kept reminding me of this line and I think it's so worth keeping in mind when analyzing the Burgundy and Bordeaux red wine industries.  While many of the big brand names of these two regions have been producing high quality wines for a long time, their struggle to producing profits and cash flows has (in my opinion) resulted in several owners needing to sell the businesses.  And while many French wineries will swear that they won't sell to a buyer that isn't French, recent history has provided some interesting examples of quality vineyards and wineries with historic names being bought by non-French buyers with enormous pockets.  In many cases, these buyers are billionaires purchasing the vineyards not for strategic reasons and to make profits but instead as pet projects and ways to enrich their lives.

Here are a few examples of the various types of winery sales in France over the last few decades that I found interesting:

- Michael Baum, the cofounder of software giant Splunk, purchased Burgundy's Chateau de Pommard in 2014
- Bordeaux staple Chateau Margaux is owned by Greek Corinne Mentzelopoulos, who inherited the vineyard from her Father, who purchased it with money funded by supermarket empire
- Burgundy's Romanee-Conti was once the victim of an extortion attempt (not quite a sale, but still interesting) when they were told they needed to fork over 1 million euros or have all their vines poisoned
- Several Bordeaux wineries are receiving interest from Chinese and Australian buyers


https://www.winespectator.com/webfeature/show/id/50573
https://www.bloomberg.com/news/articles/2018-05-14/a-wine-billionaire-emerges-in-bordeaux-at-chateau-margaux
https://news.nationalgeographic.com/news/2014/07/140731-france-wine-burgundy-vosne-romanee-terroir-domaine-booktalk-ngfood/
https://www.bloomberg.com/news/articles/2018-04-22/bordeaux-vineyards-are-finding-buyers-from-china-australia


Given the French's cultural insistence that France's premier vineyards be owned by French families, I find it very interesting to look at the above transactions and where the industry is moving.  Hope you do too!