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It's Not Easy in Burgundy, Either
by Jim Gordon | 04.21.2015
 

You may have heard the news recently that an American vintner in Burgundy had more than doubled the size of his company's vineyard holdings. This was quite a feat in a place where the price of land makes prime California vineyards seem like bargains in comparison.

Alex Gambal's holdings now include 12 hectares (or 30 acres) in famous appellations including Nuits St. Georges and Puligny Montrachet after a merger with Domaine Christophe Buisson. Of course, it didn't happen overnight. Gambal's first vintage in 1996 filled just 60 barrels. If you read on, you'll see that many of Gambal's challenges are not that different from those you might be facing here in North America as a small-scale winemaker trying to expand to a sustainable size.

Gambal says, "When I arrived it was possible to have a good life as a vigneron if you had 5-6 hectares of vines. With the increasing costs of production, this is no longer the case." Gambal sent Wines & Vines his thoughts and insights about the evolution of his business, and we are sharing them here.

Alex Gambal tells his story

"The initial years of the business were based on the classic Burgundy negociant model of buying wine in barrel, conducting its élevage and then bottling," Gambal writes. "However, within a year I was purchasing and vinifying small amounts of grapes and grape must (mout)."
 

Early Vintage Production
1996: 60 barrels
1997: 90 barrels
1998: 150 barrels: first grapes and must
1999: 250 barrels: more grapes and must
2000: 200 barrels: first year of buying in more grapes and must than finished wine

"It is interesting to note that in 1997 it was possible to find quality wine in barrel from the 1996 vintage even until the winter/spring of 1998; wine practically ready to put in bottle. Another example is in 1999 I was able to make four Vosne-Romanée 1er Crus, two Chambolle 1er Crus, three Gevrey-Chambertin 1er Crus and five Grand Crus: Echezeaux, Charmes Chambertin, Mazi-Chambertin, Chapel-Chambertin and Clos Vougeot. Today it is practically impossible to find a drop of the above appellations. It was another era, one of the principal reasons business in Burgundy has changed fundamentally, which I will explain more below.

"In 2003 we purchased our current winery located on Beaune’s ring road. The building was originally owned by Bouchard Aine, had remained empty for 11 years, and consisted of a cuverie, cave and office space of approximately 17,000 square feet and two houses. Friends bought the homes, and I totally renovated the building starting in December 2004 and moved the operations in June 2005."

Vineyard purchases

"In 2005 I bought my first vineyards of Bourgogne Pinot Noir and Bourgogne Chardonnay consisting of 6 acres. In 2008 I bought 1.5 acres of Puligny-Montrachet (Les Grands Champs and Les Petits Grands Champs), whose vines are nearly 60 years old, and a 0.5-acre parcel of Chassagne-Montrachet 1er Cru La Maltroie.

"In March 2011 I became the first non-Frenchman to own vines in the Grand Cru of Montrachet; ~1/2 an acre of Batard-Montrachet. The seller was my professor at the wine school in Beaune, and the parcels of Batard-Montrachet had been in his family for many generations; one parcel was given to the grandfather as a payment for medical services early in the 20th century. The Batard consists of two parcels which lie in the upper part of Batard that is considered the best or "Premiere Classe," according to the 1860 classifications, called "Les Batards Montrachet."

"Also purchased was a 0.75-acre parcel of Puligny-Montrachet Les Enseigineres, classified a village wine, but because of its excellence it is often referred to as 'Baby Batard.' Finally, a 0.33 acres of Chassagne-Montrachet 'L'Ormeau' completed the purchase.

"Acquired under leases in 2011 and 2013 were parcels of Savigny-les-Beaune and Chorey-les-Beaune. It is not well understood that most domaines lease their vineyards in some form or another. It could be interfamily leases where one cousin runs the vines for the family or the lease could be a third party transaction."

Burgundy today

"One of the interesting and dynamic changes in Burgundy has been one of scale; it has crept up on the Burgundians and has especially affected us because of the last four or five small crops. When I arrived it was possible to have a good life as a vigneron if you had 5-6 hectares of vines. With the increasing costs of production, this is no longer the case. Here are a few bullet points:
 

• 35-hour work week

• Social charges

• Accounting/regulatory controls

• Work rules

• EU regulations

• Push to bio/organic farming equals lower yields.

• Older vines, smaller yields and the need to constantly replace dead vines

• Tiny harvests during the past four to five years.

"Together, the above mean that what was at one time a profession of being a farmer is now one of a manager. The small Burgundian winemaker—and it is important to remember that the average production makes 3,000-6,000 cases per year of multiple wines—now has to work a lot longer and harder to stay even.

"Our transaction with Christophe Buisson is a perfect example of this trend. He is 47 years old, smart, personable, energetic, a great friend (we have shared our bottling machine for years) but he cannot do it all. He has 7 hectares (17.3 acres), a good size domaine, with good appellations, and a negociant activity, but has to do everything himself. He is literally up at 5 a.m., in his vines plowing, treating, pruning , etc., and doing paperwork at night (monthly VAT filings are a nightmare).

"Our domaine with good to excellent appellations is too small to have our own tractors and vineyard team, so we have had to sub out the work. This has led to very high costs, especially when one factors in the low yields. Thus, both he and I are stuck at opposite ends of the same problem: not enough critical mass to spread one's fixed costs.

"Finally, as a negociant, with the doubling of the cost of grapes in the past three years for many of the prestigious appellations, the business has become a financial/factoring service. Will the pendulum swing back to a more balanced and rational market? Perhaps, but the question is when. As I hinted at above, the classic business of being a negociant has changed. When I started there was little competition; there were the 'Elephants' of Drouhin, Jadot, Latour, etc. The 'Rhinos' Olivier Leflaive and Vincent Girardin, and the 'Ants': me, Potel and Laurent. Potel and Laurent became big quite quickly, but there were still plenty of delicious crumbs that fell at our feet.

"Taking in the dynamics of the above, the biggest change in the business has been the creation of multiple new negociant business in the past seven to 10 years. There are the known names of Laroux, Pierre-Yves Colin (2/3 negoc), Lucien Le Moine, etc., but the biggest factor is that many small domaines that used to be net sellers of quality grapes (the crumbs) are now buyers. There are at least 300 new negociants in this period; the majority fall into the aforementioned category of domain. Thus, the math is simple; the big guys continue to run their businesses above the fray all the while there are a great many more ants fighting for fewer crumbs.

Goals

"With the above dynamic environment, I decided to adapt my model so it could be sustainable. I can never eliminate the effects of climate, but I can at least secure a steady stream of supply without the threat of rupture from human competitive causes. (Now I get the double whammy of climate and human effect. If a grower loses 50% of his crop, I lose a greater percent than if I was the grower.)

"With the assemblage of 12 hectares (30 acres) the business has enough scale to do our own farming and reduce some of the climatic risk by spreading our holdings over five zones: Nuits St. Georges, Savigny-Beaune, Volnay-Pommard, St. Romain, Puligny-Chassagne. With these zones we then plan to add selectively to our holdings.

"We need to produce 5,000 cases per year, 60,000 bottles, but in 2012 produced only 39,000. In 2013 we produced nearly 47,000, but we are far from capacity. With the new vines and keeping selected contracts, our goal is to produce 6,000-6,500 cases with about 55% of the production white. With the St. Romain as an example, and its three hectares, we should be able to make 1,500-1,700 cases; a great production by Burgundy standards."

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