Castel is one of the least known French wine giants outside of the trade and has spent years building a formidable position in the Chinese wine market, but how did it achieve it? Jane Anson visits the firm's Bordeaux base.
Optimism ahead of the 2015 wine harvest could yet be tapered by an August that is going to be remembered for the looming return of financial uncertainty in global stock markets.
China has just this week arrested nearly 200 people for actions that supposedly led to its own stock market crashes that have seen three months of straight declines, 12.5% in August alone. Global companies invested in the Chinese market have seen their shares devalued by US$4 trillion since June, with 24 August nicknamed Black Monday.
Many luxury wine producers, including those in Bordeaux, will have been watching with a familiar sense of alarm. But it has made me think about my visit to Castel Frères in mid-July a company that has taken a rather different approach to China than many of its Bordeaux peers, and is reaping the benefits. Castel has 30m bottles of French wine shipped to China each year, most of them at prices not affected by stock market ripples.
As with Africa – where Castel made its name during the 1950s and remains a strong player – the company’s approach to China has been to get in early, and to control volume sales. Castel is today the biggest foreign importer of wines into China; both directly and indirectly, bringing in a staggering 3,000 different brands. It was also one of the first French companies to invest in winemaking in China, opening the 135-hectare Chateau Changyu-Castel in 2002 as part of a joint venture with Changyu Pioneer Wine Company.
I had been meaning to visit the offices of this French winemaking giant for several years, mainly to explore the vast warehouse that provides ageing space for Castel’s Baron de Lestac brand and is described as Europe’s largest barrel cellar.
It lies on the outskirts of Bordeaux, in an area of non-descript commercial outlets in the lower foothills of nowhere, and yet is the main headquarters and bottling facility of a producer with 2,500 staff worldwide and a turnover of 1.1 billion euros.
Castel is still headed up by founder Pierre Castel, the youngest boy of six brothers and three sisters. Thirty members of three generations of the family are active in its day-to-day work. All three surviving original siblings are there, and at 88 Pierre himself heads into the office every Monday morning, ready to get down to business. Not surprising for a man who has said ‘as long as I have breath in my body, I will continue’.
It says a lot about my own failings that it has taken this long to get there. I head out to chateaux several times a week, but Branded Bordeaux gets less of my attention that it should. Castel for many years didn’t have a classified estate as brands such as Mouton Cadet do to back up its branded wines, and the 20 Bordeaux chateaux (covering 1120 hectares) it does own I tend to know through tastings organised by the Côtes or AOC Bordeaux syndicates.
Since 2011, the company has a 50% stake in Château Beychevelle, and in 2008 it purchased a ‘mainstream’ négociant house in the form of Oenoalliance, the first real entry for Castel into the grand cru business. But its absence from the rarefied world of classified Bordeaux is completely unapologetic. Why should it need to compete in this field when Castel as a company sells almost as much wine per year (from regions around France, some in bottle, some in bag-in-box, some in bulk) than the rest of Bordeaux put together?
‘For a long time the Castel family didn’t have the money to invest in the prestigious châteaux of Bordeaux,’ development director Jean-Baptiste Prot tells me, ‘and even though now they do, the strategy has not changed. They feel more comfortable staying focused and discreet’.
Walking around Castel’s barrel cellar and bottling room is a very efficient way to see exactly what focus looks like for Castel. There are 50,000 barrels – or a potential 15 million bottles – in this cavernous space, just for the ageing of Baron de Lestac alone. Each barrel is used for three years, ageing wine for six months at a time; so each one sees six wines over three years. Just two workers look after the whole process, using forklift trucks and a series of pumps to empty and refill as required. And this is just one of the many production or bottling centres located across France, from Provence to the Loire to the Languedoc, making 630 million bottles in total. There is an ongoing programme of renovations and restorations in all Castel’s own châteaux, but an equal focus to grow the brands that have made its name.
Staying out of the classified estate game in China might well mean that it avoids some of the problems caused by the government anti-corruption drive, or by the stock market crash.
But Castel has faced its own challenges, most notably in the trademark battle with Chinese wine distributor that saw it fined over 30 million RMB for infringement of the Ka-Si-Te trademark (the most famous Chinese translation of the name Castel). The fine is currently under suspension until a further ruling by China’s Supreme Court but until it is resolved, the company’s focus and discretion will once again come in handy.
‘We spend hundreds of thousands of euros each year on brand protection in China,’ Prot says. ‘It’s an ongoing battle and it’s not one that we always win, but we persevere’.
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