Today, we have the honour of introducing François Des Robert, senior banker at Edmond de Rothschild. A specialist in wine and asset management, he looks back on his career and on the work of the Edmond de Rothschild bank. A private bank at the heart of the wine world: you’ll learn everything about investing in wine!
Can you introduce yourself and look back a little on your career?
I’ve been a banker forever. I was at Paribas for 15 years and at Edmond de Rothschild since 1990. I was recruited by Edmond de Rothschild and Bernard Eisenberg, who was chairman of the bank. I was recruited to create Edmond de Rothschild Asset Management, of which I was a director on the supervisory board and the management board. In 1990 we had a portfolio of 100 million francs, and by 2003 we were at 11 billion euros. Michel Cicurel, then chairman of the bank, appointed me to the general management committee, in charge of family groups. I left asset management to handle these groups. It was following advice to the major family groups that some of them asked me to diversify their assets.
Where does your passion for wine come from?
It’s a very old one. My father had a fine cellar, and I’ve always been passionate. I had the chance at Edmond de Rothschild to dive into it even more. That’s also thanks to my shareholders, since Benjamin and Ariane have more than 500 hectares around the world, 3.5 million bottles sold per year, and properties all over the world. The great international fortunes are naturally interested in the Rothschilds’ journey in wine. The investment and diversification strategy interests them a great deal, and on many questions: why do you build an international portfolio? How do you put it together? How are the risks spread? The combination of all these factors means I spend 50% of my time in the vines and in contact with the great French owners. I have the chance to take part in the major events. I try to make progress every day in this field, but it’s daily contact with people of the land, with professionals who are great technicians.
What is your activity?
I negotiate mandates: that’s origination. I have 8 sale mandates underway for quite substantial amounts. I’m in the wine world. One of the great advantages of Edmond de Rothschild is having a proprietary deal flow: having mandates that nobody else has and that nobody knows about. People come to us because it’s Edmond de Rothschild, because of the discretion and confidentiality, and because we have support teams on every subject. For example, we have three people dedicated to executing deals. My job is to maintain relationships with both sellers and lists of investors. The important thing when you have a property to sell is knowing who’s going to buy it. In an ideal world, at least. You still have to make the effort to go see the owners and have reliable information. You realise that in some regions you have false good prospects. You have to know how to sort them, not to waste time with files that have been around for a long time. It’s a bit like a work of art. We look for Trophy Assets. Once you have a very high-quality portfolio and there’s a triggering factor, you’re the first. Then you have to talk to the investors, who define a profile of what they’re looking for.
What are the elements that go into this profile?
The price of course, the buildings, the architecture, the reputation, the distribution networks, the figures. Some look for a sleeping beauty, others for a property that’s already doing well. Is the cellar in good condition? Is there potential on various factors: expanding, buying the neighbours, building a hotel, etc.? There’s also the question of the teams. I’m working on a very important Burgundy file. The person tells us they want to find someone who resembles them to continue running the estate. There’s a real emotional dimension in there. It’s a sale, but money isn’t the deciding criterion. We spend a lot of time understanding what our clients want. When a property that’s been in the family for several generations is sold, it’s very painful. The seller feels they’re betraying their lineage, so you have to support them well while respecting a window of opportunity given the market. Our work doesn’t stop when the seller receives their cheque; we genuinely support them on every subject. I can find a tenant farming arrangement, help them with their investments, and so on. Upstream, we lay out the wealth strategy. We listen to them a lot, that’s what makes our trade so rich. Another thing I want to point out is that some people describe targets to us. They tell us “I want to buy such-and-such property,” and that’s very exciting, especially because it’s not for sale.
Can you tell us more about this part?
Above all you have to understand the motivations for buying a property. For example, for a CEO who does a billion euros in turnover, having a château lets them invite clients and build cohesion within the teams. It’s very convivial to have wine produced by your chairman. There are also pleasure investments that help balance a situation from a tax point of view. Finally, there are young people who have sold their company and want to buy a sleeping beauty. I’ll never sell an estate I don’t believe in. Among the sleeping beauties, some also want to do wine tourism, which is what Bernard Magrez and others did. Wine tourism is growing a lot: clients want to learn. We’re still in the early days of wine tourism. A concrete case: a client wanted a trophy asset in Burgundy. The client came by helicopter and spent a lot of time on the estate. He flew over the vines, he wanted to see the different Burgundy climats, the geology, etc.: he had a real thirst to learn.
Let’s come back to the different regions. What are the dynamics in France and abroad?
Our areas of activity are concentrated in France. Demand is very strong. There’s a very significant appeal due to various factors. To begin with, there was a flood of liquidity onto the markets because of the Quantitative Easing policies of central banks. The yield on a wine-growing property is basically fairly low (between 2 and 2.5%). When money is very cheap, there’s a lot of liquidity. There’s also price inflation. Investors look where deals can be done at reasonable prices: in the Côtes du Rhône and in Languedoc-Roussillon. Our mission is to find areas and talented winegrowers who remain under the radar but who deserve to be discovered given their talent. France, the great country of wine. Every year we have 4 million wine visitors, and Bordeaux is the top destination. I always say: “You can’t transport geology.” Wine is the genius of the winegrower and the blender; the rest is geological layers that you can’t transfer. There are foreign investors too. Wine, particularly in China, has become a social marker. Two bottles of Romanée-Conti were sold for 550,000 dollars. I don’t think they’ll ever be drunk. So much the better for the seller, because with 550,000 euros, he can build a fine cellar that will delight his children and grandchildren.
Can you tell us about the development of sleeping beauties?
There’s a bit of everything. You find properties that have been asleep for a very, very long time, and properties that are less asleep and can be boosted more quickly to reach a break-even point. It’s possible to take over a sleeping beauty with talent, money, a team, and a good assessment of the causes of the slumber. There are fine sleeping beauties. Some can’t be turned around, but the others need pushing. For example, some create a new brand, which lets them erase bad memories and start from scratch. When Edmond de Rothschild bought Château Clarke in 1976 from a Bordeaux family, there was nothing. He could have bought whatever he wanted, but he wanted to give a ruined property its noble status. All winegrowers have an attachment to the land. It’s magic to work on a ruin, with all the risks that surround it.
Speaking of risks, what’s the impact of climate change on viticulture in France?
Between 1950 and 2018, harvest dates have moved up by between 15 days and a month. Climate change has many impacts on every component of wine. In this sense, the winegrower’s technique and know-how are forced to evolve. I have a very important mandate, worth several hundred million, and the sellers are very concerned about climate change. I trust in human genius. Throughout the history of humanity, there have been great threats. There was phylloxera, for example, in the wine world. I think we’ll find a solution for wine. There’s also organics and biodynamics. Some accept losing part of their vines when switching to organic, and that’s part of the plans we take into account.
Is there a deal that impressed you most?
I didn’t handle this one, but Clos de Tart impressed me a lot. Originally, an investor with 21% of the capital came to see us. We had to convince a lot of people, and it took two years. This deal allowed us to make contact with very large international investors and to build ties with families. We sold 7.5 hectares for an amount not far off 300 million. What’s more, Clos de Tart is a worldwide rarity. What I also see is a change in the profile of investors. We’ve talked a lot about the Chinese, a bit too much perhaps. They bought quite a few properties in Bordeaux. Personally, there aren’t many I would have bought; they’re even in the process of reselling some, including one for which I have a mandate. Today we see Japanese, Americans, Swiss, English, French. The market has become international, given how abundant the liquidity is. Once the great families have real estate, portfolios, forests, a business-angel activity, having their name on a label is the cherry on the cake. Wine is a passion for many and an activity that everyone genuinely cares about. Buying an estate is also a way to share beautiful moments with children or grandchildren.
From a personal point of view, what’s your background?
I did Sciences Po and a master’s in law, but I never did any wine training. I learn every day, and have for many years. I read a lot of what’s available, I do tastings, I take part in master classes, I meet a lot of people, I exchange a lot. The other day a very nice gentleman gave me a bottle of Clos des Lambrays from 1950. When I see the owners, I try to make progress at every moment. I’m in the vines at least once a week. What’s more, I created an endowment fund for the collection of Michel Chasseuil, who has the largest wine collection in the world. He now has his foundation, and dinners are organised. I have to admit that wine is a technical field that takes years to understand properly.
Can you tell us more about this endowment fund?
Michel Chasseuil has an absolutely magnificent cellar with all the great wines in every format. This endowment fund gives a legal framework to this collection to keep it from being squandered. He wants to make the Louvre of wine. The question is “what’s going to become of it?” The endowment fund makes it possible to organise events to perpetuate this collection, but also to make donations to charities.
If you had a book to recommend on wine?
Le goût du vin by Émile Peynaud. When you tackle this kind of literature, you’re on the edge of being a chemist. I’m full of admiration when I meet sommeliers.
If you had to take one bottle of wine to a desert island, which would you take?
A bottle of Romanée Conti would suit me quite well, provided I had the corkscrew to go with it.
