Educational

The History of Wine Negociants

A French term for wine merchants, negociants initially originated in Burgundy, buying grapes or wine from the small producers or winemakers and then mixing, packaging and offering the wine under the their own name. In fact, some of the best known Burgundy makers including Jadot, Drouhin, and Bouchard Père and Fils are principally negociants.

The wines supplied by some of the negociants have become immensely popular owing to their unique taste. As a result, many negociants have evolved into vineyard owners themselves over the years.

How it all began

Initially, Bordeaux wines were sold with nothing but the name Bordeaux on the bottle. By the late 1600s, there were certain regions and brands that started the practice of allowing discerning consumers to choose their preferred Bordeaux vineyard or appellation. Among the foremost brands that developed recognition were Margaux, Haut Brion, Latour and Lafite. Buyers slowly started looking for wines from specific communes.

Once the differences were recognized, or appreciated, what is known today as the Second Growths were the next brands to garner a following. For all this to take place, the need for negociants and courtiers was born.

The prime reason why negociants came to assume a lot of significance in the wine business was because:

  • They bridge the gap between grape producers/vineyard owners and buyers
  • They were able to aggregate sufficient quantity of grapes or wine for the wine manufactures to vinify, which was not possible otherwise, considering that the high quality vineyards were highly fragmented

The earliest negociants date all the way back to 1620, with Beyerman the Dutch firm. In the early 1700s, this quickly expanded when several new companies were founded. These companies continue to operate to this day. Some of these firms have over 350 years of experience in the business. Schroder and Schyler, Nathaniel Johnston, Thomas Barton and the Lawtons are some of them.

 

The Negociant System

Originally, the role of chateau owners was to tend the vineyards, make wine and place it in a barrel. This is how the systems worked as far back as the early 18th century. The rest of the job was handled by negociants – from bottling to sales and distribution. As a matter of fact, the owners of the chateau were all wealthy people, with many of them being members of the royal family. The idea of having to sell their product personally would have been considered unseemly at the time from their point of view. Hiring someone to handle the mundane commercial aspect of wine production was just what they needed.

Perhaps, there was an even more crucial need for the negociant system. Maintaining the chateauand vineyards, making wine and ensuring that everything was in good shape and running smoothly was an undertaking that came with high costs. The wine was bought by the negociants before bottling and sales was a way for chateau owners to get instant funding to maintain their vineyards and keep their wine-making operations running. Soon, the most powerful negociants became a sort of unofficial bank for the owners of chateaus.

The Bordeaux system has continued to be unique. As negociants are sold wine only by the top chateaux, Bordeaux became the only wine-producing area where direct customer interaction was not required with the chateau and the owners. Since there was no wine to buy, it was not necessary to meet the ordinary wine drinkers. Therefore, the royal wine makers discovered another method that allowed them to operate a commercial enterprise without the need to have contact with the masses. This is one more reason the negociant system grew and flourished.

1855 Classification

Although the 1855 Classification was started at the request of the French government, it quickly became the most successful marketing tool the world has ever seen. The classification’s purpose was to promote Bordeaux wine and provide information to offer consumers guidance about which wines were the best and how to pay for them. There was a need to create something simple to do this. And voila, the 1855 Classification was born!

So how did the 1855 Classification come about? Similar to today’s World Fair, the Exposition Universelle de Paris provided France the perfect opportunity to display to the entire world the best of everything it had to offer, including wine of course. This was one of the goals of Napoleon III in 1855. An official classification was ordered by the Gironde Chamber of Commerce to promote the now famousBordeaux-appellation wines. Even in those days, Bordeaux was recognized as the most important wine region in the world.

The Wine Brokers Union of Bordeaux was requested by the Chamber of Commerce to develop and expand the classification system that is recognized and well accepted all over today. A group of known brokers and negociants came together and worked to develop what is now referred to as the official 1855 Classification of the Medoc.

Categories of Wines/Growths

Wines were given rankings in five unique classes for red wines by Bordeaux, calling them Growths – First Growth, Second Growth, Third Growth, Fourth Growth and Fifth Growth. The wines that were included in these rankings all came from Medoc, with the exception of the renowned Chateau Haut-Brionwhich came from Graves. It had to be included as a Growth due to its popularity all over the world. In Barsac and Sauternes, sweet white Bordeaux wines were also included, although it was only in two classes. A special class was given to Chateau d’Yquem – “First Great Growth, Premier Cru Superieur,” which is equal to the best of all the produced First Growth wines.

The Role of Negociants Today

With every chateau today bottling their own wine, it is the responsibility of negociants to sell and distribute the wine to a large number of importers, wholesalers and merchants all over the world. They play an important role because they are responsible for helping create new markets. Currently, there are over 400 active negociants in Bordeaux. The number of negociants that each chateau works with differs – some work with five while others work with more than 100.

It is not necessary for a chateau to sell through negociants, but only a handful of estates have the ability to sell their entire production in every vintage without negociants. Of course, there are a few important Bordeaux producers that sell directly to merchants and private customers and do not sell their wines to negociants on the Place de Bordeaux – one of the most notable is TertreRoteboeuf in St. Emilion. Starting with the popular 2012 vintage, the renowned First Growth estate, Chateau Latour stopped offering their classical wines as a form of futures. Latour rendered an official announcement stating that their wines would be held at the Chateau and offered for sale when they were ready to drink. However, the estate would still sell their wines to the trade through the negociant system.

The negociant system works because it helps in getting wines quickly to the marketplace. However, it has a flipside too. While it helps the best chateaux that take part in the system, it leaves out smaller properties, and this results in their wines not being available to many consumers.To add to it, there is a dependence on selling wines that are on the 1855 classification. Classified wines, the First Growths in particular, are the heart and soul of the system. That has traditionally been their core business, along with the wines of the Medoc. The first, and currently the largest, negociant focusing on the Right Bank’s wines is EtsMoueix.

Although most people feel that the negociant system makes wines more expensive, it is not true for the majority of Bordeaux wines. Interestingly, when Pomerol, Le Bon Pasteur was taken from the Place de Bordeaux and owner Michel Rolland used his own company to market the wine in 2005, it cost even more than it would have, had it been sold through negociants. Within the next few years, Bon Pasteur returned to the negociant system and sold their wine on the Place de Bordeaux.

Negociants have been Bordeaux’s fabric for as long as wine has been produced here. As far back as the 11th century, there were groups of French merchants selling their wines abroad, but the market saw real growth with the advent of the English and Dutch in the 17th century and the Irish and German in the 18th century. They set up businesses along the docks of the Garonne in the district of Chartrons. At this time, they were buying wines in bulk and adding their own names. They certainly added most of the wine’s value as well.

Bordeaux negociants sell wine throughout the world, but their primary location is Bordeaux. Many changes have occurred in the negociant system, with a number of these changes happening in ways that do not satisfy long-established negociants. It will be interesting to see the future of the system, as it makes its way around the world with negociants like Joanne, Diva and CompagnieMedocaine opening up offices in the United States.

Negociant system spreading its wings globally

Though the negociant system originated in Bordeaux, it is now prevalent in many parts of the world, including US, Italy, Spain, Portugal, Australia, New Zealand, England and even China. In fact, in 2012, Diva, a large negociant firm, sold a 70% stake in their company to investors from China. Shanghai Sugar Cigarette and Wine (SSCW) bought the stake. Since 2008, the relationship between negociants and the Chinese market has continued to expand when wine taxes were taken down to zero by the Chinese government.

Negociants USA (NUSA), a leading importer of New Zealand and Australian wines for the U.S. market also enjoys an exclusive tieup with Wirra Wirra, a historic winery that has gained acclaim for producing premium-quality wines from the coveted region of McLaren Vale. The system is only gaining more prominence with the passage of time.

Moreover, with the passage of time, wine negociants have come to assume a far more significant role in the wine making business. They are no longer relegated to the role of mere intermediaries in the trade. Rather, they have now come to the fore, and based on their strong insights into the business, are making some of the most sought after wines in the world today that are raking in big moolah.

Sources:

http://www.foodandwine.com/articles/wine-masterminds-negociants

http://www.bbr.com/wine-knowledge/bordeaux-trade

http://www.thewinecellarinsider.com/wine-topics/bordeaux-wine-history-description-wines/

http://www.newbordeaux.com/#!the-negociant-system/cc0y

http://www.thewinecellarinsider.com/wine-topics/negociants-courtiers-en-primeur-bordeaux-wine-system/

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IBWSS_FB_Pic_1200x630_0516_1-04The International Bulk Wine and Spirits Show aims to give the bulk trade a truly dynamic trading platform where buyers can confidently conduct business with the world’s most reputable suppliers. As the go-to shipping gateway on the Pacific seaboard and home to the majority of wineries in the USA, San Francisco is positioned perfectly for the fair. The city has long acted as the USA’s trading post between the northern and southern hemispheres.  With the launch of IBWSS, international bulk suppliers from some of the world’s most important markets will have unprecedented access to the US market.

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IBWSS buyers are wineries and distilleries looking to meet their demand, importers, retailers and distributors looking for private label programs, and negociants who are looking to meet new growers and producers.

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