ILPB - Ep One: So You Think You Know La Place?

In the global world of fine wine, so many threads are connected by one single place, La Plas de Bordeaux. For 800 years La Plas de Bordeaux's unique training system has brought the fine wines of Bordeaux to merchants and collectors around the world. But what was for so long an exclusive local club is now the hub of the international world of fine wine. But despite its huge inference on the world of fine wine today, we don't really know much about La Plas de Bordeaux. I mean we don't really know what the Plas de Bordeaux is and what happens behind what appears to be closed doors. The most important and influential wine marketplace in the world remains shrouded in mystery. How does La Plas work? And maybe more importantly, why? And when does it work? Who's behind it? And who gets to be in the club? And what are the questions that we hear most often from wine makers around the world is, will my wines be successful if they go through the Plas de Bordeaux? I am Boulin Vicchia, who founded and director of a rene global. And after hearing these questions over and over, we decided to explore exactly what La Plas de Bordeaux is. Who are the people behind it are and explore the role that the Plas is likely to play in the future fine wine distribution. And I'm Felicity Carter, the editorial director of a rene global. For me this is a fascinating journey into a place that's growing in importance but yet remains poorly understood. So come with us as we enter La Plas. Welcome to the first episode of Inside La Plas de Bordeaux. In this episode we're going to give you an overview into La Plas, what it is, where it came from and how it functions. And then in upcoming episodes we'll do a deep dive into each element. I can't wait, but first we're going to define what La Plas actually is and debunks some of the myth around it. Most wine lovers will have heard of it but for most people it remain mysterious. I don't think I really understood the mechanism that Fordeaux wine went out to the rest of the world. And perhaps in the early years I probably thought like most people did that you imagine there is a physical place that the Plas is actually some way where you have all of the history. These different businesses instead of what it actually is which is really a virtual network. That was Jane Anson, one of the world's top wine critics who's actually based in Bordeaux. Pauline, I must admit that I used to think the same as Jane. So I guess the first myth that we have to vast is that La Plas is not an actual place. So no, it's not. It's not a place in Bordeaux where you can go and take a selfie. But actually no one can explain better what the Plas is than Matieu Chadronier. So the matter is the president of one of Bordeaux's major negotiations with CvBG and listen to what is definition of La Plas is. I think the simplest way to put it is to describe the Plas as a marketplace. If I was allowed to use more than one word I would say a distribution platform. We could extend the definition to even an ecosystem but essentially fundamentally and functionally it is a distribution platform. The best wines meet the clients from all over the world who are focused on these products. I mean who meets it's essentially supply and demand. Supply coming historically from Bordeaux today not only from Bordeaux but it's a place where the offer is consolidated and then the wines are distributed dispatched all over the world. So in other words it's a distribution system. Yes it is and a very well organized one on top of that. The Plas de Bordeaux is actually a network of three actors. So you have the Château or the wine producers, the Courtié or Brokers and the Nigos de la Ortraders. All of them have a very specific role to play in the system. Listen to what Tom Portaic of Founder of International First Grows from Australia has to say about the Plas workings. The system really asks you to stick to your lanes in terms of one-makers. Your job is to make great wine and then your second job is to enjoy that with like-minded people who are their customers. And the negotiations are very clear that their job then is to sell the wine, distribute the wine and get it to the places that we have that shared objectives. So in other words as you can see it's like a giant matchmaking hub where buyers, sellers and agents converge. So wine flows into the warehouse of Bordeaux and from there they're sent out again to buyers from all around the world. So the role of the Plas as a system if you will is to make sure that most wines find a suitable home. And I believe it's a very old system. It is very very old. One of the world's oldest wine markets actually. And dating back from the 13th century so you know either 9th rented license to sell wine in 1243 if you can imagine. My goodness, okay so that's the end of my first misunderstanding. Here's my second one I used to believe that only the great wines or the Grand Crucchlessa wines were sold through Laplace. But that turns out not to be true either. No, no, because those wines are certainly distributed through Laplace. But wines of all levels also flow through the system. So of course you've got those investment grade wines but you also have bulk commodity wines and everything in the middle. So to give you some idea of the quantities here are some numbers. I'll try to keep them you know short and concise. But in Bordeaux according to the CIVB there are 6,100 wine estates. And of these the Grand Crucchlessa represent around 4% of all the estates. There are 190 Crucchlessa I counted them all you know from the different classifications. So of course as you know there's 1855 classifications in the Medoc, the Centimillion classifications, the Grave classifications, the Souternan Barça classifications. And on top of that they are around 50 to 60 what they called as Similig Grand Cru. So those are not classified rows because either they are from a village like Pomeroll where classification doesn't exist. Don't have any classification system. Or they came out to be recognized as you know high quality wine after the classification system was issued. There are 33 wine cooperatives in the Bordeaux region to consider. And they bring together about 2,500 producers and account for 25% of Bordeaux production. So you can see very quickly that all together the Grand Crucchlessa are just to drop in the ocean. So Pauline have you got any idea of how many bottles that is? The election yeah found a found in this dimension of the you know all together all those actors produced around 559 million bottles. And just to give you an idea if you were in charge of selling the whole production in one year you would need to sell 18 bottles of Bordeaux per second to make it. But fortunately I don't have to do that on my own and it's not one person in charge because 70% of all that volume is distributed via Laplace. Felicity earlier you asked me about Laplace you know distributing only Grand Crucchlessa and if that was the case. And as we've seen this this is not true is that Laplace distribute a full range of Bordeaux wines. And what is interesting though and I guess often results in that understandable confusion is that there is a clear separation between the trading of the different tiers. The system is more often than not internally very specialized with actors involved only with fine wine. Or with Bordeaux wine and this is an interesting phenomenon because this is a trend that we observe in other distribution channels than Laplace. And that has an impact of course on the future of fine wine distribution. And so that's because it's it's quite important we'll talk about it more in upcoming episodes. And just to complicate things further we now have to add the so-called beyond Bordeaux wines into the mix. So more and more wines from top producers in Italy, California, Australia, Chile and Argentina among others are choosing to distribute their wines through Laplace. Okay so who is in charge of the actual distribution? Well the negotials are the negotials buy wines and match them with buyers in 70 different countries. And those buyers can be anyone from you know importers, local distributors, wine stores, restaurants and supermarkets. Do you have any idea of how many negotiants there actually are? Around 300 negotials house in Bordeaux but only 3240 that are involved in the trading of croclessie. And it's the same it's very similar for the courtier they are currently about 100 wine brokers in Bordeaux but only a third involved in the trading of fine wine. Okay so now we come to the other big question I've got. I understand the producers, I understand the negotials but you are going to have to explain the role of the courtier. Well the courtiers are a fascinating profession but you write the rule is not that easy to grasp. So I guess what can help is think of it like this, whether the negotials match the wines with the buyers. The courtier's matchmaking job comes before that because they're match the wines distributed through the blast with the right negotials. And the courtier I mean talking about old, the courtiers are as old as the place really because the profession was organized in 1321 by Filipp Rebell. Okay but surely once a producer has been matched with the negotials the first time they won't need the courtier anymore. I mean it sounds like it marries you only to use the matchmaking service once. Yeah hopefully well you would think that for the Bordeaux wines but the matching has to be repeated every year. Because the shadow strategy will vary depending on production volume and quality and the negotials strategy will depend on the level of stock and preview. years result quite logically. But it's also important to remember and that stage that border is a very vast geographic area. It's a very, very big region. So and the negotiations they are usually based in Bordeaux, so historically along the Quiddish Attron, with the direct access to the river, and the shadows are all over the region. So if Santa Stef in the Medoc, for example, is 70 kilometers away from Bordeaux, so just imagine that distance when you had to travel by, you know, by horse, it could take you, you know, days to get there. And of course, the negotiations can't deal directly with this thousands of players, and they can't know what happens in the countryside or the time. They have a business to run in Bordeaux, and you know, the other side is the same. The shadow are busy pruning, botting, wine making. So they can't deal directly with 300 negotiations. So they need someone who does the link for them, and that's that's to call to you. Okay, so I understand why this role would have been extremely important in the day of horse and cart, but why they're still important in the internet age. Well, of course, the quality is, play a slightly different role today, not to have, you know, not to have to ride horses all the time, but their central role is as information broker relief. So if you are a producer and you want to know what negotiator is, the right fit, and at what price to sell your wines, the quality as the people who can help, because they help, they hold, you know, almost all the piece of the puzzles. And likewise, if you're a negotiator and you need a particular style of wine at a certain price, the quartiers will find it for you. And now it's my turn to bring up a myth about Laplace, and that myth is that Laplace is all about Amprimer. Is that so? Again, this is what I also used to think, but it turns out that while on-premure is a key date in the calendar, it's only one part of what happens during the year. And this is the part that is pretty much solely about the Grand Croucee wines. That's right. And it's about showing wines before they are finished. So Amprimer could also be called wine futures in English, because it's a way of selling wines before they are bottled. And in the past, it was a critical mechanism for cashflow, as you can imagine, because it meant that the shadow could smooth out the sales curve, while the buyers could get the wines at what was theoretically the lowest price ever. It was a bet on the wines' capacity to aid and improve, both in taste and financially, of course. But today, it's evolved in a complex dance between shadows, buyers, and critics. Okay, so even though we're talking about a small sliver of what Bordeaux produces, it's still a lot of wine, and that makes Amprimer something of a marathon. So Amprimer comes in a couple of parts. The first part is when the critics descend on Bordeaux, which is usually before everybody else. And they can taste up to 800 wines to give them a full picture of the vintage quality and how each shadow did that year. So, and this is the point that they often begin awarding their scores. Next, come the negotiations and the buyers, usually in the last week of April. And they too set up a marathon tasting. They get a 30-minute slot per shadow, I think. So is this when the sale happens, Pauline? No, not yet exactly, because actually this period that you are describing, the Amprimer week at the end of April, is when the shadow answer questions and explain the wise and present all the innovation what was new this year. But it's also when they listen to feedback and get a feel for what the what the traits think of the new vintage, but also what the, you know, how is the market at the moment, what kind of elasticity and et cetera. And once the big week is over, they usually get this scores from the critics and they gather and digest the feedback. And so the the Amprimer campaign is actually that last week of April, but it's also the two months that follow because based on what they've had during the Amprimer campaign partly, not exclusively, but that helps, they release their wines at some point between May and June. So, they will tell the negotiator the price they have decided on and the quantity they are allocating to each negotiator. So, you know, phone rings all the time emails keeps on being sent and the negotiator are then free to accept or pass on these allocations based on what the estimate the demand will be for this wine through that network or distributors around the world. Two years later, only then, when the wines are bottled and ready, they are sent from the shadows to the negotiator's warehouse in Bordeaux. They consolidate everything like orders and palettes with other wines and stuff and they send that to the customers that actually bought the wines. So, do the crew wines sell everything through this on-premise system? Well, some do and some don't. Some choose to put everything through the Amprimer cells, some have other systems next to the Amprimer cells. Some chateau sell their wines extremely quickly, as quickly as 30 minutes. Can you imagine selling your whole, you know, crop for a year, well, all your bottles in 30 minutes, that's quite astonishing. But some don't manage to sell it everything through the Amprimer system. Now that we've covered off those basics, let's move to a more contentious topic, transparency. The people we've spoken to from inside Bordeaux have told us that Laplace is very transparent compared to the past. Well, that's a fascinating question indeed. But before we get into it, I just want to take a second to ask a favour to everyone listening to the podcast right now. If you like what you've heard so far, these do subscribe to the Oruini podcast channel on any of the platforms that you are listening this podcast on and give us a cool rating. It really helps. But thanks to your question on transparency. I also had that idea actually of a very close system where chateau spy on chateau, you know, I lived in the French countryside enough to remember how you are constantly observed beyond moving curtains and how you took your decision based on what you understand your neighbours strategy to be. But I'll do my best to give you a balanced view on this. First of all, I guess the Blasissin as a pack or pay, first because it's a complex system and it's also very unique. I mean, all those way of trading wine is unique. There is simply nothing like it in the rest of the wine world. And if you think about it, there are very few transparent industries when companies hardly reveal crucial data to the world, like they production cost, they margins, they stock levels. So we can't really expect the borderlay to be truly transparent, either. But the second thing is what I think the system is still seen as a pack is because until quite recently, even the members of Laplace themselves, who the chateau in particular, why they didn't really have any idea of what happened to their wines once they go, so I had bought them where in which market they would go and actually who would open the bottle and drink them. And I mean, some of them still don't have a very good idea of that, but in general, they have access and they demand a lot more data. Yes, I mean, at least one producer from South America told me that he now knows less about where his wine to distributed than he did before he entered Laplace because the negotiations, partly want to get on with the job, but also they don't necessarily want to answer questions about exactly who the final client is. Well, there is probably some truth to that, but Laplace is definitely more transparent today, and honestly, quite simply, that's because they had no choice and they had to be, because there's, you know, since the internet, as you said, there is a lot more data in the market now, you can find prices of wines everywhere on the internet, you've got wine searches, you've got websites like that. So the main actor certainly have a clearer idea of where the wines go and the final price. But I think also something that we don't really think about and I find very important to understand is that there is a huge oral tradition on the plas. So in our very first interview, Matrusha Dronier, again, the head of the Sevier-Bigie, he told me that there wasn't any contract on that plas de Bordeaux because their handshake goes a long way in Bordeaux. And to be fair, I didn't really believe him. I couldn't bother the fact that such a big platform was working without any contract or anything written. So I asked everyone I interviewed after that, doing sure that it was true. So let's listen to Valentin Lille now, one of the leading fine wine corthian the plas, on the importance of the oral tradition in Bordeaux. So it is in French, but I will translate right after. Everything is done orally. There's a saying I like, the word is worse than man, or the man is worse, nothing. Everything is done orally by phone. There's hardly any consideration by you now. That's so beautiful when you think about it, this old relationship and the value given to someone's knowledge, the relationship of the trust, the relationship of the oral, the relationship of the source of the word. So Valentin Lille also explained why people from outside the wine world, this work place can appear little close on the outside. That's because in fact it takes an enormous amount of time to put this trust and the trust that it's necessary for relationships. And it really is a lifetime work, building a human relationship with an owner or a manager, building that trust. There's also a lot that's taken in terms of announcing the value of the wines. And Valentin, what is the most critical information for you? In fact, for example, if you're computer with stolen tomorrow, what would be the most critical information. And we are more critical than the state of the United States. The most important information stays in my head, but to answer your questions, the key information are knowledge about stocks. The broken view has been working every day for 25 years, doesn't necessarily mean a database. He knows all the prices by heart, he knows the stock, more or less by heart. To answer your question, the key information again are the stocks on the market, at the property and at most wide merchants. You know, listening to Valentin, what I realized is when a system relies so much on trust and knowing intimately the main stakeholders and when there is so much at stake financially, I guess it's not hard to understand why a system can be perceived as close to opaque, because people don't give their trust easily and they don't really talk to you if they don't trust you. Sure enough, alright let's move on to one last cliche about the plus. Does the plus build brands or not? The negotiator will tell you that they are not brand builders at least now. This remains the domain of the estate. Most people will agree that to be successful in the plus, the first thing that you have to have is that you already need to have this durability. You already need to have high demand for your wine and then and only then the plus can do something for you. So let's hear from Axel Heinz, who is now the estate director of Shetoul Eskoun, the second gross in Malgo, but I guess that you will remember from these days also of heading on in Ion, Messe, Italy. From the outside, success stories always seem something incredibly easy, because once they worked everything, everybody thinks well, look gorgeous, Messe, the wicked, just the same. They'll do it, one of us. And if you keep it too much on the surface, the risk to overlook a certain elements is very high and usually what happens, we've seen this in Tuscany with the supertuscany movement. It's quite a similar phenomenon. There were a few very successful wines in it. Everybody thought they'd found the recipe to reproduce that success and it created a whole load of creation of new wines and after 10 or 15 years, everything sort of bounced out into a more reasonable amount of wines surviving this way. And if you have the right credentials, then it can really help you to sort of have an almost exponential growth of your reputation near the mind, because that's something that Bordeaux can do very efficiently and will take you probably much more time to do that with a more traditional distribution model. On the other side of the ocean, Christopher Lynch, the head of Opus 1, concaus. The PLAS really has catapulted that to a new and unparalleled level of international distribution. So it very much, the PLAS took something that was already in existence, which was market awareness demand. And over the 20 years that we've been with the negotiations, our distribution is unparalleled for a natural wine in international markets. Yeah, I think what is also true is that when a new country is listed on the PLAS, it generates incredible attention for both that wine and that country. So this is what Christian Wiley managing director of Dozzon in Uruguay had to say. So you can be older, Brian, but basically what they, I think the answer is they don't do it for you. You have to make a very, very important commitment and allocation of investment of budget for long-term brand building. So they're very happy to see you at the New York Wine Experience and Wine Spectator ratings and they love to see you at the James Sackling Tasteings and they, you know, kudos for you to getting the wine into head and his mind. They don't do it for you. So I'll tell you what was interesting. At the very end of that interview with Christian, he said that their wine had become in such demand after it was listed on the PLAS that he had to buy back stock in order to have it available at their estate in Uruguay. And not only that, but he had to pay the full mark up. He didn't get it back at his own price. The goal of the PLAS is to increase profitability for everybody's to, I guess, they've also had the missions here. That's right. And, you know, because of that goal, to increase profitability for everybody, the best negotiating quality is well work hand in hand with the wineries to fine tune their distribution. So that's one of the biggest change that happens in the PLAS recently, that kind of collaboration, partnership, going everyone working in the same direction to work who gets to get the wines, what volume, for what price, actually the create and manage scarcity. And in that, to me, they contribute highly to the desire to the desirability of a brand. All right. So since we're talking about the really contentious topics, here's a provocative question. How self-serving is Laplace? Does it only exist to serve its own interests? Well, that's that's a very, very big one. And I guess we could write a essay about it. But let's see. So first, actually the system Laplace system has evolved to serve a complex network of intermediaries. We quoted all of them and everyone involved in the system is committed to making money for the rest of the system so that they can guarantee their own survival. There's a lot of inward looking happening in the PLAS. So in that sense, Laplace serves Laplace. But now let's see what Philip Newlin, who's the former fine wine buyer for wine.com in the US, has to say about that. And Bordeaux having such a history of distributing the masses of wine internationally across however many hundred and plus countries. The Bordeaux distribution system is built in such a way that it's rather efficient. There's very generally speaking, very good information. In terms of availability of wine, pricing of wine, you obviously have new resources since most wines, speaking of Bordeaux wines, are not held as exclusives. So if you need ex bottles of or ex cases of a certain centimony oil, the PLAS provides the information and generally speaking again competitive pricing. So in a certain way, it's an efficient market. And that makes it a very useful tool for a buyer's perspective because you're likely to find which you want it that's available and find the best pricing as well. As Philip is saying, Laplace is an open market place, right? So everyone can buy from everyone. So that means that more people can buy more wines in more markets. More consumers can access more wines in more markets. And every market is supposed to end up with the right quantity of wines for them, the right quantity of wine that they can absorb. And something that we don't really talk about as well, but Nigosios have invested huge amount of money in top notch logistics and warehouse. Logistics, it's never the sexiest part of fine wine trading, but it's so important to ensure that the wines are delivering top notch quality. So in that sense, I guess it's fair to say that the PLAS serves the market. And what about consumers? Where are consumers in this? Do you think Laplace serves consumers? Yes, I think it does. And I know that it can be a controversial statement. So let me explain. Well, first of all, what Laplace does is that it allows more consumers to have access to in demand wines. So I think there are very few industries where producer can call three people in the morning and see the product distributed across the globe. And that within a matter of hours, they can reach Vietnam and South Korea and Canada and Argentina and Brazil and Japan and etc. So I guess if you are a consumer in France and you could have an easy direct access to the wineries like in any other regions in France, it might be better for you if, you know, shadows were selling directs. But otherwise, it's just a very effective way to give access to end demand wines to more consumers. I'm sure it does in a sense in just that matchmaking service. So many of the people that we spoke to talked about the incredible expertise of the negotiations that they truly understand markets all around the world in a way that would be very difficult for individual producers or even regions to do. So the fact that they have this incredible understanding of markets probably means in practice they serve and consumers in those markets extremely well. Exactly. So of course now there is access and we've seen that the plowsative is out. There is also the price at which you can get access to those wines. And so we often hear that because of the many intermediaries involved between the wineries and the final consumers, the wines end up being, you know, really expensive for that end consumer. Now, prize mechanism within the plaza is a full topic in itself and we will be talking more about it in the upcoming episodes because it's really interesting. But in a nutshell, and as a short answer, it is often not true or not automatically true. So many importers we've interviewed told us then their business models importing wines from Bordeaux worked with a very different margin system than when they were importing wines from, you know, let's say the Rhone or the Loire Valley and that the Bordeaux wines would probably end up at a very similar price for the end consumer should there be imported directly into one country. There is some exception to that. So again, we will talk more about this in upcoming episodes. All right. So so far we've covered the producers, the courtiers and the negotiations, on-premise, we've even talked about the consumer and we've even thrown in a bit of history. So what's next, Pauline? What do we do now? Well we barely scratch the surface and I'm quite excited for all the episodes to come because there is so much more to uncover. But I think it's time we stop talking about it and when's an experience it for ourselves through the Antrimard and just around the corner and there is so much more to learn about this crucial moment. So I say, let's go to Bordeaux. Oh great. So guess what, Pauline? I have a confession. I've been ricing about wine for two decades and I have never been to on-premise. Well guess what, Pauline? It's the I was born in a vineyard and I've never been either. So pack your bag. And of course you, our listeners are going to come with us. We're going inside the chateau to find out more about the system, past, present and future. So don't forget to subscribe to our newsletter at oeene.blueble or the relevant links are in the show notes to be the very first to know everything about our upcoming discoveries. Thank you for listening to this first episode of In Saint La Plas de Bordeaux, a podcast series produced by Oeene Global, a thing tank dedicated to the future of fine wine. Oeene Global helps wineries, distributors and retailers to understand how the world is changing and how that creates risks to be managed and opportunities to be seized. What risks, what opportunities? Well be sure to visit our website oeene.blueble, subscribe to our newsletter and follow us on social media so you don't miss any of our reports, events and analysis. This podcast episode was presented by me, put in Vicare and by Oeeneer, the tutorial director Felicity Carter and was edited by Paulie Hammond and the five forest team. We want to thank all the fascinating personalities who took time to openly answer all the hard questions we had for them. Only a few of them were featured in today's episode, but you will be hearing from many many more in the episodes to come. And finally, In Saint La Plas de Bordeaux was made possible thanks to the support of the civil busy, one of Bordeaux leading the Goucians house. We are very grateful to Matrice Hadronienn esteemed for the for sharing invaluable insights, data and contacts while allowing us to totally control or free them. Until next time, cheers! [Music]