A hectare of Pauillac is worth more than 300 hectares of generic Bordeaux
Robert Joseph Wine brand creator, Consultant, Industry Analys
This is not an agricultural fact. It is a brand fact.
The vines could be of the same age and, in some cases, the soil might be very similar. The climatic conditions are rarely going to be that different.
What anyone buying that land is paying for — what that 300x premium represents — is not what is in the ground. It is what is in people's minds.
But here's the corollary that the Bordeaux establishment doesn't like discussing..
The most valuable Bordeaux land is not priced as an operating asset. It is priced as a luxury collectible, like an old master, or a cabinet full of vintage watches.
Which means the financial model only works if you accept that, if you play by current Bordeaux rules, the return from that land — as a wine business — is catastrophic. You are paying collectible prices to run what, however grand the label, is still effectively an agricultural operation.
Napa has understood something that Bordeaux never had to. Because it had no inherited prestige, beginning with names like Beaulieu Vineyards, Robert Mondavi and the winners of the Judgement of Paris tasting, it was forced to build brands from scratch — and to make the numbers work without the advantage of two centuries of accumulated reputation. Napa wineries have subscription wine clubs, pricy tasting rooms, catering operations and gift shops.
All of which explains why Napa, for all its apparently inflated land, grape and wine prices, is actually a more rational financial model than Pauillac.
Most of the French wine industry is moving the deckchairs on the vinous Titanic, by focusing on boosting or creating poorly-funded appellations (don't get me started on 'claret'), and stricter rules.
None of this will work.
The full analysis — including why Napa beats Pauillac on financial logic, and what it means for everyone selling below €15 — is in my Wine Thinking substack. which will be followed by a post proposing ways in which various kinds of wine producers might escape the worst challenges of the next five years.
COMMENT
Dr Michael Schuette, DipWSET • 2°