Comment - Spirits - Hine-Sight's Fine Sight
If Woodard had enough cash...
It must be madness, but Richard Woodard is in buying mood. Considering the state of the world's finances, his timing could be well off. But only Hine-sight will show whether he is a genius or a fool...
Hard to believe, but it’s nearly ten years since I first blundered into the world of drinks journalism, at a time when the big story was the Seagram sell-off of brands including Chivas, Martell and Captain Morgan.
Wise old heads at the time said this was the last great deal of the spirits industry, that we were in the final phase of consolidation and brands of this magnitude would never be available again.
They were, of course, talking rubbish. The carve-up cemented Diageo’s hegemony and changed Pernod Ricard forever, but the deals have continued: Allied Domecq, Absolut and a plethora of smaller companies.
And now? If I were a drinks CEO with x million in my wallet (there’s a terrifying thought), what would I spend my money on?
How about vodka? Do me a favour. The big brands are no longer available or prohibitively expensive, and those in the 'has potential' category will cost a fortune to establish in saturated, mature markets like the US and the UK. Exhibit one - witness CEDC backing gently away from buying Nemiroff earlier this month.
Gin? Rum? Tequila? All, at various points and in various ways, hailed as the “next big thing”. The problem with being the “next big thing”, however, is that everyone else gets the same idea and, before you know it, too many brands are chasing too few listings. How many designer gins have been launched in the past four years? And does anyone seriously think there’s room for them all?
Anyway, it’s not so much about categories – it’s more about the desirability, and availability, of individual brands.
I’ve been keeping an eye on Hine Cognac pretty much since those early, Seagram-tinted days. Then, it was part of the LVMH luxury empire, a good unit, languishing increasingly in the shadow of the mighty Hennessy.
Apart from the purely subjective reason that I love the Hine style – delicacy and finesse when too much Cognac is all about power and oak – it’s also been fascinating to watch the evolution of the company in recent years.
The kick-start was the relaunch in the dying days of LVMH's ownership, a perfect example of how to modernise a brand without sacrificing its history and heritage. In hindsight, however, LVMH looks like it was merely fattening Hine up for market, and in 2003 it was sold to CL Financial from Trinidad.
CL, best known in the drinks world for its ownership of Angostura (and, subsequently, Burn Stewart), gave Hine the kind of attention it had lacked under LVMH, but – and this is crucial – it also allowed the rebranded house do its own thing: no chasing volumes with VS and a focus on its trump card of vintage Cognacs.
Investment has continued, with the acquisition of Domaine Hine and 70ha of Grande Champagne vineyards at Bonneuil in 2004; the launch of mixology-friendly H by Hine VSOP; the relaunch of Antique XO Premier Cru and, in the months to come, a repack for Triomphe.
Self-evidently, this has not been a family business for decades (it was owned by Diageo precursors Distillers and Guinness before LVMH took over in 1987), but you wouldn’t guess that to visit the company’s tranquil HQ in Jarnac: A workforce of only 18; Bernard Hine as chairman, and a philosophy of valuing market position above volume.
But, there’s a snag – the travails of parent group CL Financial. A kind of Caribbean renaissance conglomerate with interests in everything from banking to energy to radio stations, CL’s financial core was savaged by the liquidity crisis last year, leaving the Trinidad & Tobago government with little alternative but to step in.
The circumstances of the bail-out are complex, but few observers doubt that some of CL’s many assets will be hived off as the politicians fight to secure the best possible deal for their taxpayers.
Officially, the “for sale” boards are not yet up in Jarnac, with Hine MD François le Grelle telling me recently he is sure that CL values Hine as a “jewel” in its portfolio. Yet it’s hard to believe that the powers that be wouldn’t listen to offers.
That said, I don’t think this a brand for the multi-nationals. It may be the fifth largest Cognac house behind the 'big four' of Hennessy, Rémy Martin, Courvoisier and Martell, but LVMH ownership proved that this medium-sized fish can get lost in too large a pool.
Hine’s change of UK distribution from the doomed, CL-owned Paragon to Pol Roger UK has been hugely successful, and surely a similar, family-owned business would be the best new home for the company.
Not only would they get the most out of the brand, but Hine itself would only benefit from the long-term approach of a new owner with no impatient shareholders to appease.
So what are you waiting for? I know life’s tough at the moment, but surely someone out there must still have a few million left in their back pocket…
A down-in-the-dumps Richard Woodard is a Richard Woodard best-avoided. But, the spirits giants of this world can bring him out of his stupor. And, all it would take is a little bit of spending....
One of the first signs of madness, I was always told, is talking to yourself. If that's the case, then Larry Nelson may have finally lost it. Before we cart him off, though, let's listen in on his and...
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