Vranken shows no sign of resting on laurels
By Richard Woodard | 17 May 2006
Thirty years after starting his Champagne business, an aggressive sales and acquisition strategy has made Paul-François Vranken one of the most powerful men in Champagne. Richard Woodard met him to discuss his plans for the future.
It takes a long time to become part of the establishment in Champagne. Paul-François Vranken may have started his eponymous Champagne company 30 years ago, but this is a region where history is measured in centuries, not decades.
But for Vranken, who is now the majority shareholder in Champagne's number two producer after Moët Hennessy, 30 years is a milestone. And it was no surprise to find him in cheerful mood at a 30th anniversary tasting in London.
Given the news of the past week, Vranken has something to smile about. Vranken-Pommery Monopole has just unveiled an impressive set of results for 2005, including a 10% rise in sales and a surge in net profits to EUR14.8m (US$18.3m). Crucially, for a company still strongest in the relatively stagnant French market, export revenues were up 14.3%.
"The company is growing very well and we have now a lot of people on the road everywhere in every country," says Vranken. "We have good strength in different markets."
Vranken is eyeing Asian markets with interest, but he has other goals first. "I fully believe that our expansion will come from England and the US," he says. "The countries where English is spoken are the countries where for historical reasons we are less present than in the rest of Europe."
Like many entrepreneurs, Vranken is a restless man, always looking out for the next challenge. But he admits that his broader strategy for the company's growth in Champagne is almost complete. "I cannot live without having a goal to pursue," he admits. "I have to organise my life for today, tomorrow and the day after tomorrow - otherwise I can't work.
"First of all, I wanted to do 20m bottles, which we should do by the end of 2006 or 2007. When I am at 20m bottles, I will have achieved size and then I will grow only by 2% if the Champagne market is growing by 2%. Then I will go more into vineyard acquisitions."
That last part of the strategy is already in play. Securing grape supply in Champagne is crucial, as sales go ever higher and grape prices follow suit. Many observers raised their eyebrows when Vranken bought Pommery from LVMH in 2002, but LVMH retained its vineyards - so crucial to maintaining the house style.
But Vranken has since secured 25% of Pommery's historic vineyards, especially in the top-quality Grand Cru areas - and he also points out: "There are 255ha of vineyards in the group, so Pommery has more hectares now than it did before."
You can add to that 21 more hectares after Vranken completed a vineyard acquisition in the Montagne de Reims which he describes as "one of the most important transactions for the past ten years". In Champagne terms, 21ha is a huge amount of vines, and as such the deal is likely to have set Vranken back close to EUR20m.
The deal shows the continued value of personal relationships in business. Vranken has known vineyard owner Jacques Gauthier for 35 years, and the company has been buying his grapes for the past two - giving Vranken first refusal to buy the land.
But it's easy to forget that there's more to the Vranken-Pommery Monopole group than Champagne, with the group also including Rozès Port and wines from the South of France under the Listel name. This is consistent with Vranken's overall vision, he says. "I think we have now built a good portfolio in Champagne. What I would like to do now is to have a wine brand portfolio."
Champagne, the Douro Valley, the vins de sable from the South of France… at first glance, these have little in common. But Vranken insists that the approach in each case is similar. "Champagne is a wonderful branded wine with a consistent taste. Port too," he says. "Listel is special for the rosés from the sand.
"My job is to do image, to market and to offer to people the pleasure where I put my name on the label, making wine that's the same from 1 January to 31 December. I don't want to change that strategy; you won't ever find me doing wine from a château."
As such, Vranken's mission with Port is clear-cut. Rozès may be number two in France, but few in the sector's premium markets like the UK have even heard of it - and France is a declining market where margins are tight and consumers are rapidly ageing.
"We have to convince a new generation," Vranken says. "It's going to be a long process and that's why it's going to be difficult." Already, the company has sold off lesser vineyards, concentrating on A-grade land in the Upper Douro, and embarked on a programme of product innovation to build for the future.
But you suspect that Vranken's heart remains in Champagne, and it is to the region and the proposed increase of the appellation that we return. Vranken is unsure that this is necessary, arguing that yields can be increased first without impacting on wine quality.
And he shows sympathy for the plight of Pierre-Emmanuel Taittinger, who is currently fighting to gain control of the family Champagne house, put up for sale by Starwood Capital. "It's always very sad when someone is losing his name and house," he says, adding that to his knowledge "12 or 14" offers have been received for Taittinger, including many from overseas.
"I understand that very well because if I was a rich man - which I'm not - I would be very interested in buying a house like Taittinger that owns 280ha of vineyards." For once, you sense that Vranken is happy to be a bystander in this particular takeover battle. But will 20m bottles really see the end of his wheeling and dealing in Champagne? I wouldn't take bets on it.
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