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Interview, Part I: Domaines Barons de Rothschild Targets Major Expansion In U.S.

February 21, 2014

Just over a year ago, Bordeaux-based Domaines Barons de Rothschild (Lafite) became sole owner of its U.S. sales and marketing company, Pasternak Imports. DBR already had a majority stake in Pasternak, but gaining full control has become a springboard for its goal of tripling the size of its U.S. business within the next five years. SND executive editor David Fleming met with DBR president and CEO Christophe Salin and Pasternak president and CEO Stephen Brauer to discuss plans to achieve that goal.

SND: What does the acquisition of full control of Pasternak mean for DBR?

Salin: It means we’re now both winemaker and marketer in the U.S., which is a hugely important market for us. We brought in Stephen (Brauer) to help develop a long-term strategy for Pasternak and wound up hiring him as its president and CEO. Much of the industry focus lately has been on Asia, but we want a more significant footprint in the U.S. market. Owning our marketing company gives us the potential to do that. We’re now implementing a long-term strategic plan for the U.S. that will become fully operational in May.

SND: What are the plan’s key elements?

Brauer: Our goal is to triple the size of the (Pasternak) business within five years. We have three distinct strategies for achieving that goal. The first is organic growth, as Pasternak’s existing portfolio has yet to achieve its full potential. The second involves filling portfolio gaps—we have no Italian table wines, for example, and Champagne also is a key target. The third element is gaining a presence in California: if you want to be a player in the U.S. market, California must be in the portfolio. We’re also boosting our sales force significantly and placing greater focus on national accounts. And we’ll be investing more on the owned-brand side, led by Los Vascos.

SND: Why is California so important to DBR, and what’s the ideal fit there for you?

Salin: In a country where about 70% of the wine sold is from California, we cannot envisage significant long-term growth without California in our portfolio. A winery with Cabernet Sauvignon as its focus would be our obvious target. We’re interested in marketing, production or both. DBR used to be the majority partner of Chalone Wine Group until it was sold to Diageo at the end of 2004, and there we dealt with 11 different vineyards. So we have experience in California and Washington state.

SND: What’s been most noteworthy within Pasternak’s portfolio over the past year?

Brauer: Bodegas Caro ($18-$63) from Argentina, the joint venture between DBR and Catena, is one of our top performers. Elsewhere, Valdo Prosecco DOC ($15) is up by double-digits. It’s the top-selling Prosecco in Italy, so it comes with strong domestic credentials. Also, our Loire Valley label Saget La Perriére is up by heavy double-digit rates, with its Sancerre ($25) as well La Petite Perriere, a Sauvignon Blanc positioned at $13-$14. Meanwhile, an old favorite, Cave de Lugny Les Charmes ($18), is back in double-digit growth mode. Other key performers have been Chateau La Nerthe ($60) and Los Vascos ($14-$65), which is stable today but positioned for growth, thanks to new investment and premiumization strategies that focus on the Reserve and single-vineyard wines.

In the second part of this interview, Salin and Brauer will discuss Los Vascos and Caro in greater depth, as well as the Bordeaux market. The full interview appears in the February 1&15 edition of Impact.

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