Subscription, or the forward purchase of goods, has been around in the wine industry for a long time, but only recently has it become a regular offer from retailers to consumers. In the meantime, it has become a key sales tool, especially for high-end Bordeaux wines, which keeps the entire industry on its toes every year. To understand the mechanics of the trade and the arguments of its proponents and opponents, it is useful to take a look at its history. This article introduces the most important protagonists and explains the development of the most important markets.
La Place de Bordeaux
In addition to its proximity to some of the world’s most famous vineyards, Bordeaux benefits from its unique geographic location. Founded by the Celts, the city sits on a bend in the Gironde estuary, the largest natural harbor in Western Europe. It is no wonder that Bordeaux was already mentioned as a trading center in ancient times, when viticulture was unheard of. The road to Narbonne, the first Roman colony outside Italy, was already of great economic importance in ancient times. It was the shortest route from the Mediterranean to the Atlantic coast. From Bordeaux, trade continued by ship to the Iberian Peninsula, northern France, and the countries of the north to the Baltic Sea. The existence of a “negotiator britannicus”, a British merchant, in the port of Bordeaux is documented as early as the 1st century BC.
By the late Middle Ages, wine had become the region’s main source of income. However, the true importance of the Bordelais came after the Médoc peninsula was drained by Dutch engineers in 1599. The exposed gravelly soil proved to be the ideal substrate for red wine vines, which gradually ended the dominance of white wine around Bordeaux. Gradually, more and more wineries sprang up, and as demand increased from the early 17th century, the specific form of Bordeaux wine trade that still exists today, “La Place de Bordeaux”, was established.
The central adversaries were the (initially all aristocratic) wine estate owners and the merchants, the so-called négociants. Since the nobility did not deal directly with the merchants before the French Revolution, the courtiers were created to mediate between the two parties. These wine brokers were not allowed to trade in wine themselves, but they advised the vineyard owners on matters such as prices and potential customers. And they passed on important information about potential deals to the merchants. In return, they traditionally received a 2 percent commission, while the négociants earned an additional 10 to 15 percent when the wine was resold.
The German and the Ango-Irish
As exporting was part of Bordeaux’s DNA as a commercial center, leading négociants came from abroad. They were soon called “Chartrons” because they had to settle outside the city, near a Carthusian monastery, today’s Quai des Chartrons. It is no coincidence that the oldest trading house still in existence today, Beyerman from 1620, is of Dutch origin. After all, the Netherlands, founded only 40 years earlier, had the world’s largest merchant fleet and talented traders. However, Dutch dominance suffered during the War of the Spanish Succession, when the Netherlands fell out with France. After the Peace of Utrecht in 1713, merchants from Hanseatic cities such as Lübeck and Hamburg were particularly attracted to the Gironde. The latter had concluded its own commercial treaty with France in 1716. In his “Histoire du commerce de Bordeaux” (1892), Théophile de Malvezin counted 20 new establishments from Hamburg alone by 1744, including Schröder & Schÿler, founded in 1739.
Jean Henry Schÿler came from Hamburg, Jacques Schröder from Lübeck: the oldest German-born négociants in Bordeaux still in existence today. The Tesdorpf family had married into these families and gave their name to the Lübeck wine merchant founded in 1678, the oldest still existing in Germany. These private connections also led to fruitful business relationships. From then on, first-class red wine from Bordeaux reached northern Germany. In 1753, according to the chronicles of the trading house, Frederick the Great served his guest Voltaire “Lübschen Rotwein” with roast venison.
After the Peace of Utrecht in 1713, which also ended the war between England and France, British merchants once again settled in Bordeaux. After all, Great Britain had been the main importer of Bordeaux wines until 1453, the end of the Hundred Years’ War and the English rule over Aquitaine. Ironically, there were only a few English at first, but mainly Irish. They were politically on the side of the French and had often emigrated from their homelands, such as Thomas Barton in 1724, William Johnson in 1729 and Abraham Lawton ten years later, who founded important trading companies that still exist today. This Anglo-Irish axis supplied the British aristocracy with the finest new, exciting red wines from the Médoc, while the German merchants tended to supply the middle class and the Dutch with simple red and, above all, white wines. Structures that would endure for a good 200 years.
The power of the négociants
In these early days of the Bordeaux trade, the power was clearly in the hands of the négociants. At a time when the mostly absentee lords of the châteaux were unwilling to invest much and administrators ran the estates fairly or poorly, the wine was sold in barrels to the merchants in the spring after the harvest. They then took over the actual aging of the young wines, the élevage, i.e. the maturing, blending and later the bottling.
The wine was therefore sold “unfinished”, sometimes even earlier: as ripe grapes or even on the vine, i.e. “sur souche”. This practice was common in Bordeaux until the 1950s. A common practice was the long-term, sometimes exclusive sale of a series of grape harvests to a merchant, a form of subscription. This form of contract over five, sometimes ten years was also common from the 18th century to the 1920s, even for First Growths such as Château Lafite or Margaux.
It was only when the châteaux owners realized how important it was to have complete control over their own wine (wine counterfeiting, image building, higher margins) and when bottling gradually became the norm for classified growths in the first half of the 20th century that subscriptions also came to an end, at the very latest with the great 1961 vintage. Today, the classic négociants are rarely responsible for the elevage, apart from the business with branded wines, but mainly for distribution. The magic word for merchants today is allocation, an acquired right to purchase a fixed proportion of a château’s bottlings.
The river, the delta and the sea
But distribution is a challenge in itself, since it involves 70 million bottles from some 3,000 wineries. In his standard work, “Bordeaux: People, Power and Politics,” Stephan Brook quotes a nice analogy from wine consultant Dominique Renard. Bordeaux wine should be thought of as a river flowing through the delta of intermediaries before flowing into the sea of retailers, restaurateurs and end consumers.
Some 400 négociants still work at the Place de Bordeaux, supported by 70 courtiers, specialists in different markets, market segments and distribution channels. It is an ancient, strictly hierarchical system. Nowhere else in the wine world are the spheres of production and distribution so clearly separated. According to wine historian Nicholas Faith, Bordeaux wine probably has the “most chaotic means of distribution of any major product”. But it is also “the only effective means of distributing the products of thousands of estates to a hundred countries”. No wonder that in recent years more and more top wines from all over the world have tried to sell through “La Place de Bordeaux”.
Changes in the market
The structure of the Bordeaux wine trade has changed relatively little. Apart from the entry of the Libournais merchants (with wines from Pomerol and Saint-Émilion) and the increasing role of outsiders such as the corporate groups on the one hand and the so-called “faxistes” (speculative merchants who have no stocks of their own and deal only by telephone and fax) on the other. More fundamentally, the sale of Bordeaux wines to consumers has changed since the Second World War. In particular, sales by subscription, a phenomenon closely linked to the more recent public presentation of Bordeaux wines “en primeur” and the growing importance of wine journalism. This also marked the beginning of the dominance of the United States over the British Bordeaux market.
In the early 1950s, British wine auctioneer Michael Broadbent could say: “We had Bordeaux all to ourselves.” That quickly changed as the U.S., still reeling from postwar Prohibition, developed a taste for French red wine and the Gallic way of life. With the strong dollar and the dramatic devaluation of the franc, their purchasing power was also immense. As a result, by the 1959 vintage, the Americans had overtaken the British as the top importer of Bordeaux in terms of value (i.e., measured by the average price per bottle), a position the British had held for 750 years.
The birth of the consumer subscription
This coincided with the innovation of subscription sales to consumers in the spring of 1960, specifically of the 1959 vintage by Sherry Wines & Spirits (from 1965: Sherry-Lehmann) in New York. It is not clear how the legendary Sam Aaron came up with this idea. Perhaps he was inspired by Frank Schoonmaker, the legendary wine writer and importer who had a consulting contract with Sherry Wines & Spirits since 1937 and worked closely with Alexis Lichine, probably the most important wine ambassador for Bordeaux in the USA at the time.
Indeed, the great 1959 caused a sensation there – and the press was already in the front row. Reports in “Newsweek” and “Time” magazine, as well as the satirical and grotesque report by humorist Art Buchwald, which was even reprinted by the German weekly “Die Zeit”. Sherry Wines & Spirits repeated the subscription with the enormous 1961 and the good 1966 vintages, and gradually people in New York began to realize what a good deal could be made by buying young top wines from the Bordelais early. In the mid-1960s, wine merchant Bill Sokolin began to promote his concept of investing in wine through Bordeaux futures, which made a big splash during the Wall Street bull market of the 1980s.
Economic crisis and a counterfeiting scandal
First, however, the Bordeaux subscription idea suffered a major setback from which many believed it would never recover. In 1971, Ab(dallah) Simon, who worked for the venerable merchant Austin, Nichols & Co. and came from a Jewish-Iraqi family, had the idea of combining the New York Bordeaux subscription of the 1970 vintage with the presentation of cask samples from the major châteaux. The idea was an enormous success. In fact, the 1970 subscription campaign was the most successful to date, helped by a number of circumstances. The following vintage, 1971, even surpassed this result. The mediocre 1972 vintage was sold at far too high a price. The disastrous vintages of 1973 and 1974 followed – and they came at a time when the world economy was on the verge of collapse due to the oil price crisis.
The consequences for the wine trade were dramatic. Consumers stopped buying, even after prices collapsed due to bad publicity. A wine counterfeiting scandal involving the renowned Bordeaux trading house Cruse was the final straw. Merchants’ and négociants’ stocks overflowed and demand for young wines collapsed. In their distress, top producers such as Château Lafite and Château Mouton-Rothschild resorted to drastic measures, bypassing the Place de Bordeaux and having their wines auctioned directly by Christie’s in London. A whopping 6000 cases for the equivalent of about 25 marks per bottle.
The creation of the Union des Grands Crus de Bordeaux
During these years, the owners of Bordeaux’s leading châteaux realized that they needed to present a more united front to the trade. The initial spark was a group trip to Japan in 1973 to develop the market there. The discussions on that trip led to the creation of the Union des Grands Crus de Bordeaux (UGCB), with the goal of presenting its members’ wines together – which, two decades later, would lead to the En-Primeurs tasting week in April. In any case, as Thierry Goddet of Cavissima recalls, Baron Philippe de Rothschild decided in the mid-1970s, shortly after his Château Mouton-Rothschild had been elevated to the rank of Premier Crus, to organize tastings of his own current vintage, an idea that was soon taken up by other owners of Grands Crus in the region.
In addition, cask samples of the 1975 vintage were sent to London, which, as Jancis Robinson recalls, marked the beginning of the subscription trade with the traditional number one export partner. Until then, the British trade had only listed Bordeaux wines for consumers when they had reached the right age. However, most of the “finest and rarest wines” had long since been distributed, because on the island “gentlemen” sold wine “to gentlemen” (Michael Broadbent), and it helped if the customer wore a tie from the right Oxford college and was a member of a prestigious club in London. No wonder Great Britain was slow to embrace the subscription trade.
A young lawyer
The 1982 vintage would change everything. Bordeaux was still far from a well-organized presentation of young wines, separated into press and trade. But at least most of the classified châteaux had created reception facilities for guests, and the first joint barrel tastings were being presented. The number of international dealers and journalists was still manageable. Among the handful of Americans were the most widely read wine critic in the United States, Robert Finigan, as well as the young Robert Parker, who had a column in the “Washington Post” in addition to his newsletter “Wine Advocate” with some 7,000 subscribers.
Bordeaux had been one of his main interests since he started his newsletter in 1978 with an unflattering review of the 1973 vintage. From then on, he flew to the Bordelais twice a year to taste barrel samples. However, his strong recommendation to buy the 1975s by subscription had virtually no impact on the market. Nevertheless, Zachys Wine & Liquor, whose owner Don Zacharia had shaken up the U.S. wine trade with extreme price promotions and who had risen to become the leading subscription supplier in the U.S. since his apprenticeship with Sam Aaron of Sherry-Lehmann, quoted Parker’s opinion of the 1981 Bordeaux in full-page ads in the New York Times, which Zachys placed annually on the occasion of the Futures campaign.
The time of great upheaval
Robert Parker’s enthusiasm for the 1982 vintage changed the wine world. While competitors such as Robert Finigan were lukewarm or disappointed, Parker’s verdict marked the beginning of his rise to become the world’s most important wine critic. In addition, all châteaux had to wait until the scores of the most important critics were published before setting their prices “ex sortie”. Above all, just as “Reaganomics” began to take off, Parker’s enthusiasm rekindled Americans’ passion for wine futures – thanks to favorable exchange rates, even among the middle class. It was a situation that benefited everyone: the buyers, the merchants and middlemen, and the winery owners. At the same time, major upheavals were on the horizon. In the meantime, Bordeaux had become interesting for large corporations in the beer and spirits industry. In 1974, for example, the giant Seagram’s hired the pioneer of the subscription business, Ab Simon, to create the wine import company “Château & Estates” – just as the market was imploding.
Like Parker, Simon believed in the 1982 vintage, which made Château & Estates the most important Bordeaux player in the United States. In 1987, the company sold some 900,000 cases for a turnover of 80 million US dollars*. Contrary to popular belief, British tasters such as Davis Peppercorn and Michael Broadbent also praised the vintage. But the traditional trade on the island lost out to the overheated subscription market in the US. “In recent months,” complained wine merchant Simon Loftus in August 1983, “the Bordelais have done everything possible to alienate themselves from genuine, long-term customers, merchants and wine drinkers, and instead to encourage the dangerous, destabilizing wine fever of international commodity speculation.”
The start of Bordeaux subscription in Germany
In Germany, too, the spark was delayed. At the beginning of the 1970s, when subscription fever began to take hold in the United States, the Bordeaux trade, traditionally based in the Hanseatic cities of Hamburg, Bremen and Lübeck, was still struggling to make the transition to Château-bottling. After all, the Premiers Grands Crus had been required to bottle since 1967, while it became mandatory for the other classified growths in 1972. With “melancholy”, the Segnitz trading house noted in the “Kollegbuch des Weines” the gradual decline of the “Bremen bottlings” compared to the “Schlossabzug” in 1971. No wonder that an outsider introduced the Bordeaux subscription in Germany: the Bulgarian-born merchant Peter Margaritoff, who founded the “Hanseatische Wein- und Spirituosen-Kontor” in a garage on the Alster in 1964 (1966: Hawesko, with “spirits” replaced by “sparkling wine”). With the first subscription campaign in 1982 for the 1981 vintage, he secured a strategic advantage in the coveted allocations of classified growths on the German market.
The 1982 vintage was also of decisive importance there: not only because the German winemaker and wine critic Armin Diel traveled to Bordeaux in March 1983 for the second issue of the newly founded wine magazine “Alles über Wein” and established German en primeur coverage. But also because other trading houses entered the futures business, such as Schlumberger or Jacques’ Wein-Depot, which was taken over by the Horten Group that year. Burkard Bovensiepen, who had a background in car refinement, was particularly involved with his company Alpina. He flanked his entry into the Bordeaux subscription business in 1983 with full-page advertisements informing potential buyers about “wine as an investment” and promising higher returns “than with any fixed-income investment”. 15 years later, Hawesko came full circle when it acquired a majority stake in the Lübeck wine merchant Carl Tesdorpf, the pioneer in importing fine Bordeaux wines to Germany. Today, Tesdorpf stands for the group’s premium program. The highlight of the program is the annual Bordeaux subscription.
Annotations
* For comparison: For an analysis of the en primeur campaign in the magazine “Weinwirtschaft”, I estimated the total annual German sales of wine from the wineries united in the Union des Grands Crus de Bordeaux (i.e. including the entire subscription business) at a good 70 million euros. The article appeared under the title “Am Scheideweg” in issue 11/2024 of “Weinwirtschaft”.
This article first appeared in a slightly different form in FINE – Das Weinmagazin 1/2021.
Image rights
All modern photos: Stefan Pegatzky / Time Tunnel Images; others: archive Stefan Pegatzky
