Sunday, December 4, 2016

The very predictable (fill in the blank) Barolo Estate sale

Late yesterday I saw a post from Anna Savino on the Barbaresco and Barolo Facebook page saying/asking "Heart is breaking ... did you hear about Voerzio?' A few queries were directed at her but she did not respond futher at that time. I had heard a rumor at the recent Cavallotto Dinner at La Pizza Fresca that Voerzio was up for sale but did not assign any credence to it at the time. So I asked if that was the issue that was causing her distress.

When I woke up this morning, I was greated by a loud verbal wail from Anna adding furher fuel to the fire and using the letters LVMH -- the company that is synonymous with luxury brands. I was intrigued and went looking around for further info. One of the boards had a petered-out thread that referenced a potential acquisition but Pernod-Ricard was the name bandied about there. I got some more substantive information later on in the morning which indicated that LVMH was believed to have purchased the Voerzio company.

And if that is the case, it would not come as a surprise to me. In August of this year, in my assessment of the Vietti sale, I wrote:
Now what are the implications of all this for the broader Barolo. There is potential for this being the tip of the spear. In a tight market, Vietti now has a competitive advantage over its neighbors. It's sources of supply are guaranteed and it is sitting on capital with which to make future acquisitions. In the podcast Luca described a property that was coming on the market but he would not bid on it because the vintner who sourced grapes from that property was a friend. With the Krauses as partners, that property could have come into his portfolio through a Krause acquisition, allowing him to hide behind the "they did it" mantle. No self-respecting market player can allow a participant to acquire and retain this type of competitive advantage without a response at some time down the road. Within that environment, the Vietti purchase is just the tip of the iceberg for Barolo: (i) All of the other vintners are facing the same pressures that Vietti was facing and drove them to this decision. (ii) Luca says there are a number of potential investors sniffing around the valley; therefore, it is only a matter of time before some of the folks seek to monetize their investments while preserving the fundamentals of the business.
Further, a little over a year ago, I lucked into predicting this event when I titled one of my posts "The Louis Vuittonification of Burgundy: A roadmap for Barolo?"

It will be interseting to see the details of this deal (if there is a deal) as they emerge.

©Wine -- Mise en abyme

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