Baron Philippe De Rothschild S.A. Business Information, Profile, and History

Company Perspectives:

Since 1933, Baron Philippe de Rothschild SA, located at Pauillac in the Médoc, has been motivated by a constant ambition: to make the world's finest wines, each in its own category, whether the châteaux wines for which it is responsible--the renowned Château Mouton Rothschild, a First Growth, and its distinguished lieutenants, Château Clerc Milon and Château d'Armailhac--or branded wines, like the famous Mouton Cadet.

History of Baron Philippe De Rothschild S.A.

The Rothschild name is not only associated with high finance, it is also synonymous with the world's finest wines, made by Baron Philippe de Rothschild S.A. The family has controlled its Bordeaux region vineyards for nearly 150 years; since 1922, when Philippe Rothschild took over the vineyard's operations, the Mouton Rothschild name has established itself as one of the world's most sought after labels. Baron Philippe de Rothschild (BPR) First Growth wines typically command more than $100 per bottle, and can reach into the thousands of dollars at auction. This is not only because of the wine in the bottle, but also because of the company's famed labels, which, since 1945, have featured artwork from some of the greatest artists of the 20th century. BPR also produces and bottles premium wines under the labels Château Clerc Milon and Château d'Armailhac. Yet the company's innovative branded wine, Mouton Cadet, is perhaps its most famous, and at any rate most accessible. Featuring Bordeaux grapes blended under BPR's supervision, the company produces some 14 million bottles of Mouton Cadet. BPR also bottles a variety of wines under labels targeted at specific markets, such as the restaurant and mail-order circuits. The company opened an e-commerce capable web site in October 2000. Total wine sales for the entire company topped 22 million bottles in that year. BPR has also extended its production beyond its Bordeaux, France, home. In 1979 the company set up the California joint-venture with Mondavi to produce the premium-class Opus One wine, which produces more than 250,000 bottles of what many consider as one of the world's top wines. The success of the Opus One joint venture has led the company to launch a second joint venture with Chilean producer Concho y Toro to create the French-Chilean label Almaviva, launched in 1998. Both the Opus One and Almaviva joint ventures feature French expertise adapted to local grape varieties. Philippine Rothschild heads BPR; she is the daughter of the late Baron, who died in 1988. She is seconded by Pierre Guinchard, who serves as company CEO. Since 1995, the privately held company has more than doubled its revenues, which are estimated to have topped FFr 1 billion in 2000.

Making Wine History in the 1920s

The Rothschild brothers--Nathan, James, Aemschel, Carl, and Salomon--were sons of Aemschel Rothschild, who had built up a successful merchant and banking business from the family's home in the Frankfurt ghetto. At the end of the 18th century, the elder Rothschild sent his sons to each of the major European capitals of the day to build the family's fortune. Nathan went to England, while James was sent to Paris, Carl to Naples, and Salomon to Vienna. Aemschel remained in Frankfurt. The Rothschilds cooperated closely, establishing their own private courier service, and soon established the Rothschild name as one of the foremost financial families in the world.

Nathaniel Rothschild, son of Nathan, moved to Paris at the beginning of the 1850s. The idea of serving his guests wine bearing his own name appealed to him, and in 1853, Rothschild purchased the Chateau Brane Mouton ('mouton' came from the old French word 'mothon,' meaning hill), in Pauillac, in the heart of the Medoc region, on the French coast near Bordeaux, between the ocean and the Gironde estuary, which by then had already achieved world renown as the site of the world's greatest vineyards. Rothschild quickly gave his own name to his new property, which became known as Chateau Mouton Rothschild.

The vineyard purchase came just before the first official classification of the Gironde region wines. Unfortunately for Rothschild, the classification, presented on the occasion of the Universal Exhibition of 1855, was made according to price, not quality. Because wines from the Mouton Rothschild estate sold for slightly less than its famous neighbors--Lafitte, Latour, Margaux, and Haut Brion, which all received First Growth qualification--Mouton Rothschild was subsequently classified as a premium Second Growth wine. Yet neither Nathaniel, nor his son James, who inherited the estate after his father's death in 1870, took an active interest in running the vineyard. Nor did Nathaniel's grandson, Henri, who was to turn over the winery to his youngest son, Philippe, in 1922.

Philippe Rothschild was to revolutionize the Bordeaux wine industry. Coming from Paris, where he had become a well-known patron and friend of the lively art scene in that city, the 20-year-old Rothschild arrived in a region with a business structure unchanged since the 19th century. Rothschild, however, not only proved a more active landlord than his predecessors, he took the running of the Chateau Mouton Rothschild estate in his own hands--and in doing so, sent a wake-up call to the entire region. From the start, Philippe Rothschild began to challenge the wine classification system, adopting the motto 'Premier ne puis, Second ne daigne, Mouton suis' (First I may not be, Second I will not be, Mouton I am).

One of Rothschild's first and boldest moves was to begin bottling his wine at the chateau itself, breaking with long-standing industry tradition. Until then, wineries sent their wine in casks to wine merchants in the city of Bordeaux, who then undertook the responsibility of stocking the casks for the two-year aging process, before bottling the wines. Although labels had been in use since the middle of the 19th century, they served merely to provide basic information about the wine contained in the bottle--or what, at any rate, was supposed to be in the bottle. Because the chateaux did not bottle their own wines, no one could guarantee the contents of the bottles bearing their names. The system also placed control of the wine industry with the merchants, rather than the chateaux themselves.

Philippe Rothschild changed all this when he decided to add the now-famous mention 'Mis en bouteille au chateau' to his wines. To stock the casks for the two-year aging period, Rothschild commissioned the construction of a storage facility, the so-called 'Grand Chai,' a 100-meter-long structure that could stock some 1,000 oak casks, and became the inspiration for similar structures in the Bordeaux area as competing vintners adopted Rothschild's idea.

By 1924, Chateau Mouton Rothschild was ready to release its first self-bottled vintage. For the occasion, Rothschild commissioned popular poster designer Jean Carlu to design a label for the chateau. Carlu's cubist-inspired label shocked the wine community--Philippe Rothschild was to scrap the label design only two years later--but nonetheless succeeded in calling worldwide attention to the new era of Rothschild wines. In the years leading up to the World War II, the Rothschild chateau continued to experiment with its wine labels, incorporating the famed 'five arrow' motif of the Rothschild family but also a 'rams rampant' motif, of two rams, another Rothschild family symbol--butting horns. In the 1930s, Rothschild labels also began to include the number of bottles that had produced in that year's harvest, which proved to be a new marketing success.

Postwar Renaissance

The company's preoccupations with its labels--which was to inspire a new marketing coup in the post-war years--did not interfere with its production of premium quality wine, which continued to achieve accolades as being among the finest wines in the world. Yet Philippe Rothschild's high quality standards were to lead him to striking a new chord with the world's wine community. Dissatisfied with the quality of the 1930 vintage, Rothschild refused to bottle the wine under the chateau's label. Yet because the wine was nonetheless of good quality, Rothschild created a new name for the wine: Mouton Cadet. The Cadet name, first released in 1932, was later to become a brand name for the wine blended by the company from grapes bought from Bordeaux region producers. The original Cadet vintages, however, were bottled from the family's own vineyards.

Mouton Cadet proved a success and inspired Rothschild to expand the family's vineyard holdings to supply its growing production needs. In 1933, Rothschild acquired neighboring Chateau Mouton d'Armailhacq, then classified as a Fifth Growth vineyard. With that purchase the company also acquired the wholesaler company Société Vinicole de Pauillac, bringing Rothschild into the distribution arena and providing the basis for what was later to become Baron Philippe de Rothschild SA.

France's capitulation to the Nazi invaders and the installation of the collaborative Vichy government nearly spelled disaster to the Rothschild wine business. The chateau itself was occupied by the Nazis and made a German headquarters, while the Vichy government placed operations of the vineyard under its agricultural department's control. Philippe Rothschild and his family were captured--Rothschild's wife was killed in a Nazi death camp--but Philippe Rothschild managed to escape, finally joining up to fight with the Free French army under General Charles de Gaulle.

Returning to his chateau after the war, Rothschild decided to allow his first post-war vintage to celebrate the Allied victory. Rothschild asked friend Philippe Julian to design a new label for the 1945 vintage. Based on Churchill's famed V-sign, the label sparked a new era for Mouton Rothschild. As Philippine Rothschild told Wine Spectator, 'he wanted to let the world know that Mouton had survived the war.'

Rothschild, who had already been among the pioneers in recognizing the marketing potential of a wine's label, now decided that the label for each year's vintage was to feature an original piece of artwork--commissioned from Rothschild's circle of friends, only some of whom were artists. Yet all received the same payment: five cases from that year's vintage, plus five cases chosen from the Rothschild cellars. The new era of labels proved a publicity coup for the company, which saw its wines gaining steadily in demand, and its prices rising--even when vintages proved disappointing. In 1955, the Rothschild label took on a still more serious role. That year's label featured a design from famed painted Georges Braque. From then on, the Rothschild labels were to become a showcase for the world's top contemporary artists, featuring, among others, drawing and paintings from Joan Miro, Salvador Dali, Henry Moore, Marc Chagall, Pablo Picasso, Andy Warhol, and later artists such as Keith Haring, Balthus, and others.

Diversified Wine Empire for the New Century

The company incorporated as Baron Philippe de Rothschild SA in 1956, yet continued to operate under other names--such as La Baronnie--until the 1990s. The company expanded its production again in 1970, when it acquired another Pauillac Fifth Growth property, Chateau Clerc Milon. This and the company's other fifth growth chateaux became a central part of the company's increasingly diversified product, as it began to target specific markets, such as the restaurant, specialized retail, supermarket, and other segments, with specific labels.

The company got a major boost in 1973, when, after nearly 50 years of pressure from Philippe Rothschild, the Bordeaux region was reclassified according to the quality of its wines. At long last, Mouton Rothschild was classified among the First Growth growers. Rothschild according changed the company's motto to: 'Premier je suis, Second je fus, Mouton ne change' (First I am, Second I was, Mouton does not change).

The growing importance of California wines, which, under such names as Robert Mondavi, had been steadily increasing in quality, led Rothschild for the first time to branch out beyond France. In 1979, Mondavi and Rothschild formed the joint venture Opus One. Bringing French oak casks and wine varieties and Rothschild techniques to California's Napa Valley region, Opus One was designed as a premium quality producer. Indeed, the new winery--led by Mondavi's son Tim Mondavi--quickly became classified among the world's top-quality wines.

Through the 1980s, the Rothschild name gained further renown, especially with the worldwide tour of an exhibition of the Mouton Rothschild label's artwork. That exhibit, which featured the original artwork alongside their label reproductions, was mounted by Rothschild's daughter Philippine, heralding her entry into the company's operations.

Philippe Rothschild died in 1988 at the age of 86. Philippine de Rothschild took over the chateau's operations, a marked departure from the Rothschild family's male-dominated traditions. Philippine de Rothschild also took over the commissioning of the Mouton Rothschild label artwork, expanding its scope to feature more international artists.

During the 1990s, Mouton Cadet became the company's spearhead into the mass market. Boosted by the Rothschild name, Mouton Cadet quickly became one of the world's top-selling branded wines, with more than 14 million bottles sold each year. By the mid-1990s, the company's sales were topping FFr 500 million. Rothschild continued to look for new international opportunities. The growing maturity of the Chilean wine industry led the company to conclude a new joint-venture agreement, this time with that country's largest vintner, Concho y Toro, to create the premium class Almaviva wine. The first Almaviva vintage was released in 1998, to worldwide acclaim.

In that year, Rothschild acquired a new property, Domaine de Lambert, near Saint-Polycarpe, in the Languedoc region. That purchase marked a departure for the company; it was its first vineyard holdings outside of the Bordeaux region. The company began renovations of its new vineyards in 1999, including replanting much of the vineyard to improve the quality of the traditionally poorly rated Languedoc grapes. The company hoped to be able to release its first Domaine de Lambert vintages with the harvest of 2002. Meanwhile, the company had begun to look even farther afield for future expansion possibilities, considering not only purchases in Italy and Spain, which had their own strong wine traditions, but in India as well. As it entered the 21st century, Rothschild, with sales topping FFr 1 billion, aided by a growing interest in wines in the Asian markets, carried on Philippe de Rothschild's commitment to creating history with wine.

Principal Competitors: Antinori; Banfi Vintners; Beringer Wine Estates Holdings, Inc.; Bodegas Riojanas, S.A.; Bodegas y Bebidas, S.A.; Cantine Giorgio Lungarotti S.r.l.; The Chalone Wine Group, Ltd.; Constellation Brands, Inc.; E. & J. Gallo Winery; Federico Paternina, S.A.; Golden State Vintners, Inc.; Gruppo Italiano Vini Soc. Coop. a r.l.; Kendall-Jackson Wine Estates, Ltd.; Laurent-Perrier; Marne et Champagne SA; Martini & Rossi S.p.A.; Mercian Corporation; Ravenswood Winery, Inc.; Rémy Cointreau; R.H. Phillips, Inc.; The Robert Mondavi Corporation; Sebastiani Vineyards, Inc.; Taittinger S.A.; Trinchero Family Estates; Vina Concho y Toro S.A.; Willamette Valley Vineyards, Inc.; The Wine Group, Inc.

Chronology

• Key Dates:

• 1853: Nathaniel de Rothschild buys Chateau Brane Mouton.
• 1855: Chateau Mouton Rothschild is classified as second growth.
• 1922: Philippe de Rothschild takes over operation of chateau; begins bottling at the chateau.
• 1924: The first chateau-bottled vintage is released.
• 1933: The company acquires of Chateau Mouton d'Armailhacq.
• 1945: The first Mouton Rothschild label featuring artwork appears.
• 1956: The company is incorporated as Baron Philippe de Rothschild SA.
• 1959: The Georges Braque label is introduced.
• 1970: The company acquires Chateau Clerc Millon.
• 1973: Mouton Rothschild receives first growth classification.
• 1979: The company begins Opus One joint-venture with Mondavi.
• 1988: Philippe de Rothschild dies.
• 1990: Baron Philippe de Rothschild SA becomes the official company name.
• 1997: The company launches Almaviva joint-venture with Concho y Toro.
• 1998: The company purchases Domaine de Lambert.
• 2000: Sales top FFr 1 billion.