Empowering Collectors to be Investors
How To Buy & Invest In Wine Like A Seasoned Wine Importer: A Juicy Conversation With Martine Saunier
By Sisi Liang and featured on Forbes MarketMoves on 1/4/2018
Two years ago I was enthralled with the film “A Year in Burgundy,” starring and produced by Martine Saunier, the woman who brought the finer Burgundies to America many decades ago, and elevated the American taste forever. I was so inspired by the film that I wrote this article. Martine’s passion for her life-long friends and their wines was contagious, and I found myself immersed in her joy. Recently, I had the great pleasure of speaking to her and asking her many questions about the trilogy films (“A Year in Burgundy,” “A Year in Champagne,” “A Year in Port”), her perspectives as a veteran importer on buying, drinking, collecting and investing in wine, her experience of working with the Burgundy winemakers (and later with winemakers in other European and North American regions), how she created a market for her wines here in America, and how she became the first woman who bought wines from those winemakers. She also gives advice on how to buy wine if you’re interested in drinking, collecting, or investing in fine wine. Below are the notes and highlights from our conversation, and I have provided the time stamps in the audio for each topic we covered. I highly recommend you to tune in for the recording above because it’s a *juicy* conversation where Martine discusses the many nuances of these topics. I hope you enjoy the notes and listening to her as much as I did!
[6'30"] As we chatted about Burgundy wines, Martine mentions that wine buyers usually don’t realize how small the production can be in Burgundy. Some wineries produces 10% of what a Bordeaux winery would produce. A combination of dramatically increased value of the land and a 50% tax (for transferring the land) makes it extremely difficult for owners to pass their vineyards onto their children. A vineyard that was bought for 100,000 dollars 30 years ago is now worth more than a million. The children would never have the money to pay the taxes if they were to receive ownership of the vineyard. As a result, large companies can buy the vineyards, but they still need local people to take care of it. Alternatively, the owners can create corporations so that they are not taxed the same way as single owners. In doing so, the owners become a part of this corporation. And yet all the children don’t necessarily want to be winemakers, which is the challenge right now.
[8'44"] “The price of the land will never match the price of the bottle,” Martine says. Half an acre of vineyard will cost millions now and the investor won’t get their investment back. Because of the reputation of the wine, the market has become so international that there is no way to control the price. For example, certain basic wines that used to be sold to Martine for $8–10 per bottle are now costing $40. The price of certain wines has gone up to a point that only certain great collectors can afford it. At the same time, the Chinese market has been heavily influencing the market, and still is. Martine mentioned a documentary film that I later learned to be “Red Obsession,” which is an eye-opening story that reaches into the psyche of the Chinese buyers and attempts to explain their behaviors when it comes to buying expensive wines. Martine says that the difference between Bordeaux and Burgundy is that Bordeaux produces much more wine and their prices are more vulnerable to the buyers’ attention, while Burgundy wines are in such low quantity that the Chinese will buy regardless of the price. In the face of huge market fluctuation and unpredictability — due to factors such as the Chinese buyers — the rarer the wine, the more money it’s going to sell for. From 2010 to 2014, Burgundy had very small quantities — but might be high quality. In some of the vintages, wineries made only half of the crop — and they had to survive on that crop. So they had to raise the prices. Only some of them could compensate for the lack of production, depending on the wines.
[13'26"] Back in 1969 when Martine first started buying wines in Burgundy, they didn’t have big tractors — only bicycles. Now everyone is mechanically up-to-date and they know better about how to make wines because all the children have to go to school and get a diploma if they want to take over the winery, even if they’re the children of a winemaker. When they graduate high school around the age of 17 or 18, if they want to take over the winery in the future, they have to go to viticulture school, which is 2 years in Beaune. Now they make better quality wines because they learned the chemistry of wine. If you have good grapes you can make very good wine, and if you don’t have good grapes, you can still make good wine if you know what you’re doing. The experience of the winemaker is what counts, Martine says.
[16'16"] Given all the technology advances, the weather is still an important factor in the quality of the wine: the frost, the rain, the heat. “Until the harvest is in your winery, you don’t know what’s going to happen,” Martine says. At the end of August of 1978, the grapes were as big as tiny peas. The winemakers were desperate because they didn’t have any sun. Then the sun was shining all of September and there was no rain. As a result, ’78 Burgundy was a magical vintage and still is to this day. It drinks fabulously and it was a miracle.
[18'53"] When it comes to natural influences, microclimate does matter to the taste of the grapes — therefore each vineyard is different. It’s important to find the right time for harvest for each vineyard. The winemakers would pick some samples and bring to their labs to determine if the alcohol, acidity and sugar content were at the right level. In the past, the winemakers used to put the grapes in their mouth to taste for the same characteristics. Technology helps the winemakers do much better now.
[20'07"] Continuing on this topic, Martine notes that the climate is now warmer all over France including Burgundy and Chablis. This is not great for the Southern regions because the alcohol content has already been up to 14.5% or 15%. It’s still fine in Burgundy but no one knows how long it’s going to last and the summers are getting warmer still. In contrast, the British climate is now becoming perfect for growing grapes — since sparkling wine can’t have more than 12.5% alcohol, England is perfect now that the climate is warmer. Since early 2000, there were people realizing that the climate was changing, and they knew they should plant vines and start producing wines, and that’s exactly what happened. There are two big players in England and they’re present in California and New York. It’s not only because they have the warmer weather in southern England, but also because they have the same soil as in Chablis and Champagne. So it might become a big industry in England in the next 10 years.
[23'09"] I asked Martine how this might impact the high end wines in France. Martine says it won’t. Today everyone is drinking sparkling wine in all kinds of occasions. It’s now a big industry and very different from before. The industry is big enough to contain the shift in regions due to the changes in climate. A lot of regions in France also started to produce sparkling wines again because of warmer weather and because they now have the technology to do it. However, the investment-grade wines are the rare wines. These are mostly the Burgundies and certain Bordeaux wines. Collectors for the last 50 years have been collecting huge amount of Bordeaux and Burgundies and are selling them in auctions in Hong Kong. “If you go to Hong Kong [for those auctions], you’ll have an experience,” Martine says. The Burgundies and the Bordeaux are still the rare wines and they’re not going to change, so people will continue to invest in them. BBC recently published a short article on the decrease in wine production globally due to warmer climates (1) — and Martine agrees that this may cause investment-grade wines to increase in price. Burgundy had very good crop and production in 2017 and the winemakers are very happy. But Bordeaux had a lot of frost, and therefore they had a very small quantity — it’s not a good year for Bordeaux. The Rhone valley was also affected due to lack of water because there was no rain at all. The climate determines the crop, but each region is affected differently. There’s overall less quantity but “trust me, there’s enough to drink,” Martine says with a laugh. All of the Eastern European countries now are back in producing wines. It used to be only Italy, Spain, France and Germany that produced wines and exported to America. But now lots of other countries from all over the world are producing wines.
[31'14"] When it comes to the high end wines, “there’s still a lot of money in China and the big guys in China want the best wines and they’re going to get it,” Martine says. At the same time, China is growing grapes and making wines themselves. They may find exceptional areas where they can make good wines. Martine points out that the Chinese will drink their local wines and will not need France for the cheap wines, but one day they might make good wines — there’s a lot of French investment in China in producing wines, exploring and hiring French winemakers. The world is getting into the wine business, but the great Chateaux in Bordeaux will always be on the market because they’ve been there for a long time and they always produce quality, reputable wines. Some of the major Burgundy wineries are re-building state-of-the-art facilities, so people can now invest safely in wineries.
[33'17"] I asked Martine about how she made the exquisite wines of Burgundy known to America. She told me that between ’69 and ’79, she went to France to buy wines and put them on the market here in the U.S. These were the wines that were never seen on the market before, for a new generation of wine drinkers who wanted high quality wines, and that’s how the Burgundies started to sell more. People started to prefer small producers over big wholesalers. They wanted the unique wines in small quantity and high quality with a great reputation. There has been a lot of progress that the smaller producers made in our market.
[35'23"] “When you start to involve a new winery in the market, don’t expect to be successful in the first year. It takes a long time to establish the reputation,” says Martine. Social media can make this process faster, but it still takes at least 5 years. Back when the dollar was extremely strong versus the francs, lots of people from America wanted to import French wines into the US market, but made the mistake of not having any marketing plan. New York was full of small importers who loved France and its wines, and would import 50 cases of wines here and there, but that’s no way to do business, Martine says. You have to work to get the wines out there — this includes the tastings, and explaining to the consumers the story of the wines such as where and why it’s made. People today learn about the aspects of wines and became more sophisticated and knowledgeable in their taste. We now have a bigger market where people are drinking more wines. But a wine importer has to work to establish the reputation for each winery they put on the market. It’s not easy; but the press is very helpful — Wine Spectator and other publications are constantly tasting and writing about wines, and they are very helpful in making the reputation for the wineries.
[38'30"] “When I first came to establish my market in California, I realized how important the press is — the press can make you or destroy you,” Martine recalls. Her first big article was in 1981, two years after she started her company, and it was entitled “Martine Saunier is her name; Burgundy is her game.” This wonderful article with its bold title changed the game for Martine and people from all over America wanted to buy her wines, especially when back then, the great Burgundy wines were not to be found anywhere. These high quality wines were completely unknown up to this point, and suddenly caught people’s attention when Martine brought them into the market. Additionally, the winemakers in France did not understand how the US market worked — that you’d need a license to sell the wines in different states and paying fees through different distributers, while sometimes it’s only the state that’s making the money. The French winemakers didn’t understand the three-tier system or the regulations and paperwork that’s involved here. “It’s insane,” Martine says. It’s difficult for a Frenchman to understand that unless they have a good distributer in every state, they’re not going to sell one bottle of wine. They need to find people with the same passion for wine and understand the production, and who will take care of it. This is the job of the importer, Martine says — to find the good people who will sell the wines on the market. At the beginning of Martine’s career, she used to distribute the wines herself in California and New York, working the markets, until she came to a point where she can have her own trusted distributers. “You can’t leave your wine with big distributors who sell thousands of wines, because no one will pay attention to your wines.” It was a sommelier in New York who told her: “Martine, if you want us to buy your wines, do it yourself.” The sommeliers couldn’t find those wines otherwise.
[44'33"] I asked Martine how she discovered and built such lasting relationships with the finest winemakers in Burgundy. She told me that she started from her aunt’s property in Mâcon, which is a small town in Burgundy, and slowly and patiently made her way to other regions of Burgundy as the only woman who was buying wines at the time. “They’ve never seen a woman buying wines anyway,” Martine says. What helped her was the opportunity to help out with harvest at Mâcon during her teenage years, when she learned about every aspect of winemaking. When she grew up, as a result, she could taste wines very well. As she started buying wines, she knew how each wine was made and how it should taste. The winemakers would let her blind-taste bottles of wines and tell the vintage — and she would get it right each time. The small but exceptional winemakers in Burgundy began to trust her because of her abilities, and she built the relationships from there. “And nobody ever put me down. It was a miracle. I was the only one as a woman at that time that was buying wine. But nobody said anything. They were happy with me, and I knew how to taste wine. They’d never even check my bank account.” Martine built strong relationships not only in Burgundy but in other regions as well, including Loire Valley — there was a man who didn’t even have telephone and they only wrote to each other, and he trusted her with his wines explicitly. “You have to be a professional,” Martine says.
[47'58"] I was curious to know what advice Martine would have for wine buyers and investors. For the investors who only want to invest, Martine says, the big Bordeaux wines are ones they should go for. But if you’re also a wine lover and consumer, then you should look into the other wines from Burgundy and the Rhône Valley. They are made in small quantity, and people who buy these wines are those who love the wines. They’re known in a small circle because of the small quantity they produce, but people invest in those wines because of that. Spain and Italy also have great wines for investment, and those people who seek these wines are right because the value of these wines will undoubtedly go up. For Martine herself, buying wines for herself is out of pure love for the wines.
[51'29"] As a lifelong wine-importer, Martine advises that if you want to keep your wineries happy, don’t only buy during a “good year.” You need to buy every year, because a good winemaker will make good wines every year — even if it’s not an exceptional year, it would still be very good. In Burgundy, even in the lesser years, the wines still taste very nicely. 2007 was not the best year and everyone was dismissing the vintage, but as Martine says, “Now, when you find it on a wine list in a restaurant, grab it — it’s delicious!” She continues, “if you want the exclusivity of a winery, you have to commit yourself to buying the wines every year. You don’t choose and pick.” This is because those winemakers rely on you to bring their wines to America every year. There are some stores that only want the best vintages, but it doesn’t work that way. If they don’t buy every year, then they won’t get the greatest wines. “When I expanded, I wanted exclusivity,” Martine says. A wine importer needs to go to the wineries every year after harvest, then after fermentation in the spring, and finally try it after it’s bottled. You then can get a pretty good idea of the quality of the wine. “If it’s a disaster, you don’t buy. It happened to me” — because everyone’s reputation is on the line. The qualities of the grapes is very important, but a great winemaker can carefully pick out the bad grapes and still make excellent wines no matter what. It’s very important to understand that the good winemakers make quality wines every year. But if the wines don’t taste well, “I’ll tell them that this is not gonna work,” Martine says. If the winemaker has the talent, it’s the wine importer’s job to lead them to making better wines and they will be a success. Just like the relationship between an art dealer and an artist, “to discover a new talent and put them on the market — how exciting is that? There’s nothing more exciting,” Martine says with a spark in her voice. It’s been her joy to discover new talents and put them out there and everyone says, “Wow!”
[58'25"] When it comes to buying and investing in wine, I was curious to know if Martine relies on the ratings or if she buys according to her own judgement. Martine imports the wines regardless of the ratings and reviews by the critics, but the wines she imports also receive good ratings, because she knows the critics are going to like those wines. She says that there was a period before when people would rely heavily on the ratings. Today, less and less people will put as much weight on the ratings.
[1h 00' 00"] I asked Martine if the ratings are a way of marketing. “No it isn’t,” Marine says, but a new winemaker will need those things to gain exposure and reputation. She tells me that the wine writers are absolutely necessary, because there’re a lot of new consumers in the market and they want to read about the wines that might interest them, so that they can make purchases and engage more with the market. When Martine first started, she decided to put wines that nobody knew about on the shelf in the store, and she worked only with restaurants to include those wines on their wine list — and people would love the wines and ask the restaurant where to buy the wines. The restaurant would tell them, this is Martine’s wine — and this is how she started making a name for herself. She would go all the way into the mountains to discover superb wines from Savoie, France, and the winemaker in turn wants her to be their distributer. After she put those wines on the market, they couldn’t keep it in stock because the wines are so good.
[1h 04'09"] I asked Martine if she had any final advice for wine buyers and investors in today’s market. Martine tells me that there’re a lot more wines on the market than we used to have. By reading the press and the critics who specialize in Bordeaux or Burgundy, and by going to the tastings and learning more about wine, today’s wine buyers can do very well. There’s good value in great chateaux and in some vintages — unless it’s a “bomb vintage,” which happens from time to time and more likely in Bordeaux and other places that produce large quantities of wine. The wine buyers have to trust the merchant and the press, and they have to be educated. People pay attention to the importer behind the wines, and therefore the reputation of the importer is crucial. “…for many years, [when people] saw my name on the bottle, [if] it’s Martine, it’s a sure value. That’s it. My reputation,” Martine says. She emphasizes: “A great winemaker does not make a bad wine, ever, due to poor weather. Great vintages are not [produced] yearly. But [the winemaker] makes wines that are good and you can drink in between great vintages aging in your cellar. My experience is that all vintages sell well… And if a collector is serious and wants to be allocated top vintages, [they] must buy every year to get an allocation. This is the same for me as an importer.”
 |
Sisi Liang loves to find connections between seemingly unrelated ideas. Her curious mind has taken her to places from business strategy to entrepreneurship, from angel investing to marketing strategy, from metals mining equity research to regulatory stress test modeling in the largest financial institutions. She's a trailblazer and a ruckus maker. Sisi holds a BA in English and Mathematics double major, with Honors, from Washington and Lee University, and an MS in Quantitative Finance. She is also an alumna from Seth Godin's altMBA program. Her passions for forecast modeling, the poetic and commodity elements in wine, yoga, along with her curiosity in the interconnectedness in diverse fields have drawn her to the collaboration of auctionforecast.com. Email: sisi.liang@auctionforecast.com
|