With the sale of Groupe Lanson International to Boizel Chanoine Champagne (BCC) expected to be completed within a week, BCC chief executive Bruno Paillard discussed his plans for the company with Giles Fallowfield.

The sale of Groupe Lanson International to Boizel Chanoine Champagne (BCC) should be finally completed by next weekend (March 18). That is the deadline for the French monopoly authority's report on the deal and BCC chief executive Bruno Paillard is confident that it will not be challenged.

That is not the only thing Paillard appears to be confident about. When the deal is finalised he will be in charge of the second largest Champagne company after the mighty Louis Vuitton Moet Hennessy (LVMH), with total sales of around 24m bottles and turnover of EUR280m, and Paillard seems the sort not to be cowed by such a proposition.

With the acquisition seemingly all but closed, attention is turning to Paillard's plans for Lanson International, particularly with regard to the balance of branded and buyer's own brand (BOB) business. Lanson International has total sales of around 17m bottles a year, split between branded (10m bottles) and BOB (7m bottles) business.

Although he is not a stranger to doing deals with supermarkets and BCC itself is major supplier to Tesco in the UK among others, Paillard sounds a good deal less enthusiastic about the BOB side of the business, represented by the 7m bottles produced at the Marne facility in Epernay. "It's not necessarily of much importance in the company because it's not profitable," Paillard told just-drinks. "BOBs have no future unless they are put in a win-win perspective. We are in a region where the availability of grapes is limited and it will be like that for the next ten to 15 years. Grape prices will become higher and higher, even if there may be short periods where they fall. Therefore, Champagne sold at a low value may not have a great future for producers, if they want to stay in business. They must extract added value from their wines and that's likely to be achieved with brands, not BOB. It's pure logic."

Paillard intends to rename the Marne & Champagne business Maison Burtin, and it will be interesting to see if this division of the company continues to supply Sainsbury's with its Etienne Dumont label, given Paillard's links with Tesco. Sainsbury's claimed that this exclusive outsold baked beans over Christmas and sold 2m bottles in December alone. While this may be an exaggeration, Dumont has become the fourth largest seller in the UK off-trade behind Moët, Veuve Clicquot and Lanson, (AC Nielsen MAT to 25/12/2005) thanks to its regular half-price promotions.

Paillard's reservations about the BOB side of the businesses could not be in starker contrast to his enthusiasm for the Lanson International brands. In addition to the Lanson brand, the company also boasts the Alfred Rothschild and Besserat de Bellefon labels.

While it is not as large as Lanson or Alfred Rothschild, Paillard clearly feels that the Besserat de Bellefon brand has potential. "It's a beautiful house which is very successful, the wine has a nice reputation in the restaurant sector and certainly this can be developed," Paillard said. "It sold 1.4m bottles in 2005." Massé is another of the company's brands that will be looked at but, as Paillard himself notes, it has almost disappeared since it was sold to Lanson in the mid-70s and its re-introduction may therefore be "a little more difficult".

The company's second largest brand after Lanson is Alfred Rothschild which sells around 3m bottles a year. The brand is one of the major players in the French grande distribution (hypermarkets) sector where it competes with the likes of Mercier, Nicolas Feuillatte, Charles Lafite and Canard Duchêne, which are priced at a little under EUR20 a bottle. However, Paillard appears equivocal about this brand and has reservations about the franchise arrangement whereby the Rothschilds are effectively paid a royalty for the use of the name. "It is not sold outside France and Switzerland and the (royalty) agreement really needs to be discussed," Paillard said.

Paillard is clear that outside the brands, the biggest asset in the purchase is the 55m bottles of stock in the cellars. And although he would not be drawn as to whether some of this will be sold off to help meet the remaining part of the EUR122.7m purchase price - EUR22.7m (about GBP15.6m) was raised by a new BCC share issue approved at the end of January - he did say it was "a logical guess". He further added: "It may not be necessary to keep such high stocks, but it's too early to say."

Asked about the value of the stocks, which include everything from just bottled wine to vintage Champagne from 1995, he says: "if you assume a value of around EUR9 a bottle you won't be far wrong". Paillard refutes the suggestion that Lanson has been losing large amounts of money recently. "Before tax, results have been positive in the past two years, around EUR2m in 2004 and EUR3m in 2005. This on a turnover of EUR193m (in 2005) is far from being satisfactory, but it is still a profit."

Paillard is the largest private shareholder in Boizel Chanoine Champagne with a 42.97% stake. The company, consisting of five Champagne houses, Boizel, Chanoine, De Venoge, Philipponnat and Alexandre Bonnet, which produced a total of around 7m bottles in 2005 - is publicly quoted with 15% of the shares listed on the French Bourse, while the other principal private shareholders are the Roques-Boizel family (18.12%) and Philippe Baijot (22.75%).