For prospective vineyard owners, Vineyards-Bordeaux provides the careful and expert guidance needed to help realise a dream
A historic château with a vineyard in the Bordeaux region of France might look like a dream piece of real estate, but there is much more to it than that, says Michael Baynes, co-founder and Executive Partner of Vineyards-Bordeaux. “Our clients are not buying real estate, they are buying a business,” he says. “It can be a rude awakening to realise you have to sell wine to make a profit or just break even.”
Bordeaux vineyards are often associated with the grand classified estates that can sell for hundreds of millions. But these form the minority of the Bordeaux inventory and the transactions managed by Vineyards-Bordeaux. Around 80 per cent of the vineyards are valued at under €5 million, and there are plenty that trade for between €1 million and €2 million.
Expertise in the sale of vineyards is essential to guide buyers through what can be a lengthy, complex process. In Bordeaux, there are around 110,000 hectares of vineyards and some 7,500 vineyard châteaux. While the word “château” elsewhere in France means castle, in Bordeaux the name applies to anywhere used to produce wine. Between 150 and 200 of such châteaux are up for sale annually, but “only 25 to 35 of these will sell in a typical year, of which Vineyards-Bordeaux sells around ten to 20,” says Michael.
The market is dominated by a small group of players, and Vineyards-Bordeaux is a market leader, despite Michael only launching Maxwell-Baynes Real Estate, of which Vineyards-Bordeaux is a part, in 2008, with co-founder and Executive Partner Karin Maxwell. Michael had spent the previous 13 years in investment and development in Southern California, while Karin ran a wine importing company in Hampshire. He puts the success of the company down to a few basic but crucial factors, such as customer service. “We established a rule that no client would get a call later than 24 hours after their first call to us,” he says. “We are in a privileged position, because the French teams typically come to us with properties for sale and ask us for access to the international market.”
Many potential owners are attracted by the lifestyle in Bordeaux: close to nature and the appealing climate. But Michael points out that there are many practical factors to consider. Clients are asked if they can run the business that comes with a vineyard. If not, they must consider if there are sufficient economies of scale to employ others to operate it for them, which Vineyards-Bordeaux can arrange. Selling the wine is the next challenge.
“A small vineyard of around six hectares is going to produce 30,000 to 35,000 bottles every October,” says Michael. “If you get to August and you’ve only sold 5,000 bottles, with another 30,000 set to arrive in two months, you can quickly be in trouble.” A robust business plan is essential. There is also the technical side of running a wine business. Vineyards-Bordeaux offers information on drainage systems, root stock and other agricultural and meteorological issues. Checking technical details forms is part of the team’s due diligence, so clients can have confidence in their investment.
Vineyards-Bordeaux has also started a scheme for buyers to invest in half a hectare or the production equivalent of 800 bottles, which they buy through a limited company. The land is farmed and operated by specialist farm contractors, reducing risk and responsibility. The bottles can even be sold back to the farmer. “It is a new way of looking at the market,” says Michael, “and a significant part of the future.”