4 Apr 2013

Wine: Name of the Father becomes Empire of the Son

Philippe Magrez, son of millionaire “collector of chateaux”, Bernard Magrez talks to Douglas Blyde about opportunities in Bordeaux during the global recession (for The Wharf newspaper)
BEGINNING in 1962, self-taught businessman, Bernard Magrez amassed an empire of 40 wine estates across eight countries, as well as a burgeoning wine tourism agency. Holdings range from top growths in Bordeaux (including chateaux: Pape Clément, Tour Canet and Fombrauge) to international territories including Japan, from which fewer than 1,300 bottles per year are produced. His motivation appears to stem from a ruthless upbringing whereby his stonemason father would force him to endure daily walks to school bearing the sign, “I am lazy”.
Was Magrez senior (now 77) also strict with son, Philippe? “The same,” responds Magrez junior. “My father told me: ‘If you want to work with me, first make your mistakes with someone else. When you think you’re ready to come and work for me, you’re not ready. It takes a very long time to learn the wine business, perhaps longer than any other.’” Rather than shun such severe-seeming advice, Philippe proved his mettle, working at French mustard company, Amora, for five years. He appraises the experience: “A big company. A big school.”

Pile it high, Sell it cheap
Not unlike Tesco founder, Jack Cohen, whose business motto was: “pile it high and sell it cheap", Bernard Magrez built his business by making cheap bottles accessible, in considerable quantity. “85% of wines in France were sold in supermarkets,” says Philippe, “so it was a good strategy to work with them.” To truly understand how the “hypermarket” system functioned, aged 25, Bernard made a pilgrimage to the USA, navigating it by bus. “My father realised he needed to create a specific product,” says Philippe.
Back in Bordeaux, Bernard acquired a low-key Port importers, expanding it to shift what became a best-selling whisky brand, William Peel, and budget Bordeaux, Château Malesan. The latter would sell at a discount of up to 70%, according to Philippe. But peddling the lowest common denominator would not be the Magrez’s enduring model. “Our competitor, Castel, made an offer for Malesan which we couldn’t refuse,” Philippe recalls. From that moment (2005), the focus would tighten on the fine wine market. “Now, every bottle features my father’s signature,” says Philippe, straightening his dark, silk tie.
Although Bordeaux is the world’s largest source of “fine wine”, it is perhaps also the most “uncoordinated,” on account of abundant independent châteaux and “familial disagreements”, Philippe maintains. Bernard invests heavily in the image of the region once seen as “home to the finest wines in the world”, but now “damaged” in the minds of the younger generation. “People are able to bypass the disappointment and confusion of Bordeaux for the easier wines of Spain, California and Australia,” believes Philippe. To exemplify “history and roots” of his family’s holdings, Bernard devised the motif of crossed keys which now graces his every bottle. “It’s an easy symbol to understand,” says Philippe, “because everyone in the world has keys!” But the aesthetic addition was only the start of a much larger marketing strategy.

Nosing to Noises Off
To ensure prominence in wine collectors’ minds, the Magrez family strove to become the only proprietors of four grand cru classé, located over four appellations: St. Emilion, Medoc, Graves, and, recently, Sauternes. After his father “created roots”, Philippe created “the noise” in the form of wine tourism. “We sell dreams and the dream of Bernard Magrez,” says Philippe, excitedly. “We can do anything. We have a helicopter and new and vintage Rolls Royce limousines, ready to pick up our guests from the airport. Our Paris-trained chef offers cooking courses, alongside Pape-Clément wines. And we have our own boat, and the best nets.” In an otherwise closed wine region, the insight offered by glamorously-pitched wine holidays has proved victorious. “While California already has a very strong tourism industry, nobody else does it in Bordeaux,” says Philippe.
Other headline-grabbing initiatives included the launch of a cultural institute, named after Bernard Magrez, which has become one of Bordeaux’s most-visited museums. In addition to the “artists in residence scheme”, recent exhibitions have included work by Ai Weiwei. Philippe explains another canny strategy. “We bought a Stradivarius and re-named it after our St. Emilion Château, Fombrauge.” There is also the global partnership with holder of 28 Michelin stars, Jöel Robuchon, the so-called “world ambassador” of all-things Bernard Magrez. And, what of the future? Philippe talks of the new boutique “wine hotel”, potentially the first of many, sited across the street from the institute.
However, Bernard has been criticised for sometimes taking an overly-enthusiastic approach, particularly when it comes to press. After a lavish lunch co-hosted by Bernard and actor and oenophile, Gerard Depardieu, French journalists discovered gifts of Cartier watches within their press kit. Philippe cuffs the memory aside. “Yes, once my father bought entry-level Cartier watches inscribed with the date of the event on the back.” He pauses. “I’m sorry for the French journalists. Since then, my father decided ‘no more presents!’”
How does the company run day-to-day? “Everyone wants to be the chief, so my father ensures we know what we’re in charge of. You have to have rules. For example, I’ll never phone the team of my sister, Cécile, who look after the wine tourism, and neither will my father contact my salesmen. It really works.”

Downturn-Upturn
Philippe is bullish in the face of recession, echoing words often spoken by his father: “As long as we listen to what customers say, we won’t get it wrong.” But, perhaps sensing that I feel like I am being served-up a cliché, he continues. “Of course, the crisis is not very funny. But I’ve found that distributors and negociants are more open to hear about the owner of 40 châteaux with a 1713 Stradivarius. In no crisis we have more difficulty...” It is hard to fault this strategy considering customers appear to continue to be in the mood to invest in Magrez wines. “You know why?” asks Philippe. “If you change your car, everyone sees you’ve changed it and talks, while no one knows if you’ve bought 10 bottles of Pape-Clément. Life is short. Investing in wine is easier and cheaper than investing in a house, car or boat...”
With vines sown over eight countries, will Philippe consider a return to planting in China, given the fortuitous-seeming zeitgeist? “It’s not the right time,” he says. “Imagine Argentina 35 years-ago, when they produced poor quality, very cheap wines. It’s the same in China now, where they plant everywhere: around Beijing, the yellow Sea, near Shanghai where it’s humid. Even if you have the best winemaker, if the terroir is bad, then so is the wine.” However, Magrez junior considers Chinese consumers mature. “In the 15 years we’ve been in China, everything’s changed. Four years-ago, people bought wines like they would buy fashion labels. Since then, they’ve taken courses and know everything about the wines. I increasingly see the same faces at tastings.” But does a maturing market still accept inflated prices? “No, they’ve finished paying €7,000 for one bottle of Pétrus. But our target is not to sell wine, but to promote our product. We could sell more in China, but we need to be everywhere.”
Although the Magrez family abandoned the sort of promotions favoured by Jack Cohen, they have never forsaken another attribute favoured by him – that of “YCDBSOYA" – or “You Can't Do Business Sitting On Your Arse”. With that in mind, and rushed in our interview by the PR, I ask Philippe if he ever has the luxury of free time. “Building a reputation takes a lot of time and travelling, but I try to go skiing and spend time with family in our home near Bordeaux, which we spent six years restoring.” However, escape from the vocation is fleeting. “It’s my birthday tomorrow and I’ve organised dinner in a restaurant. But I know I’ll be thinking whether my wines should be there. Last time, I ended up getting five wines listed!”
Finally, thinking to the next generation, I wonder how Philippe might manage his own children’s expectations. “My daughter, Clemence (after Pape-Clément) and son, Leo, want to work in the wine business. But, like my father taught me, I tell them, try to work in another company, and when you think you are ready...”
For The Wharf newspaper