This is a follow-up to a previous article on brand portfolio strategy in Bordeaux. There, I looked at concepts such as the Grand Vin, the second wine, endorsed brands, and other brand extension strategies. Here, I will look at how those individual building blocks come together to make up the overall brand architecture of a Bordeaux winery. I’ll consider three broad portfolio models for wineries: a house of one, a branded house and a house of brands.
Strategy 1: House of one
The simplest brand portfolio strategy in fine Bordeaux wine is where a château produces just one wine, its Grand Vin. There are not many of these. They are usually at the very highest price points or belong to larger producers or merchants with deep pockets. Often, it’s both.
Pétrus is the most obvious example here. Château d’Armailhac in Pauillac, part of the wider Baron Philippe de Rothschild SA portfolio, is another. Le Pin is very nearly this.
House of one: Pétrus
In fine wine, this approach makes sense for small estates whose production is extremely limited. Genuinely limited production of exceptional quality wine can command sustained high prices over the long term, making the strategy sound.
If considering a more commercial wine, the producer may opt to market only the Grand Vin. The logic here is financially driven. The producer can expect to command a lower price for a second (or third) wine than for a Grand Vin, so may decide to forego all but the Grand Vin.
Whether that Grand Vin sells for €3 or €3,000 per bottle, there are some considerations. There should be real demand for the wine, and it should be perceived as credible at its price point by its target market. If it looks as though the producer is simply passing off second wine quality at a first wine price, it’s not likely to work long term.
Strategy 2: Branded house
Much more common is for a château to offer a second wine, generally a sub-brand to the Grand Vin. There are several well-known third wines out there, and even fourth wines are not unheard of. Most of the Grands Crus Classés market at least a second wine, and their portfolios tend to follow the branded house model.
“A branded house and a house of brands…vividly describe the two extremes of alternative brand portfolio strategies. While a house of brands contains independent, unconnected brands, a branded house uses a single master brand to span a set of offerings”.
David A. Aaker, “Brand Portfolio Strategy”, pg. 48
Branded house: Château Angélus
Saint Emilion heavyweight Château Angélus is a great example of a pure branded house portfolio in practice. Its brand portfolio consists of a first, second and third wine.
Château Angélus, Carillon d’Angélus and No. 3 d’Angélus are all driven by the master brand, which is the Angélus brand name itself. Visual cues such as colour and the bell emblem tie the sub-brands to one another and ultimately to the master brand. The château building is a literal branded house, featuring both the brand name and an elaborate bell structure.
The branded house model is most simply illustrated at the individual château level, though there are other ways to look at it.
An extended branded house: Barton Family Wines
Château Léoville Barton is a standalone branded house. It can also be considered within the context of the Barton family’s Bordeaux portfolio. In addition to their share of the original Léoville property, the Bartons own Château Langoa-Barton and Château Mauvesin-Barton. Taken collectively, the Barton Family Wines portfolio constitutes a large branded house.
Though the Barton property brands do not conform to a uniform visual style to the extent of the Angélus portfolio, the family name is the clear master brand. The Barton strategy has, for nearly 200 years, been to acquire properties and then rebrand them, affixing the family name. Each château bears the Barton name, as do the estates’ second wines. The Barton coat of arms appears in the master brand logo and on the label of each wine.
The benefits of a branded house
The branded house strategy has a number of associated risks and benefits in the context of the winery’s portfolio.
A key benefit is that the branded house builds upon an established master brand. Successfully launching a new wine brand is inordinately difficult and expensive. With a branded house, the winery builds upon solid foundations, saving itself some of the heartache and expense.
Leveraging the brand equity of a known and admired entity like Château Angelus minimises the need for additional investment when launching a second or third wine. Likewise, the Barton family added its name to what was previously just “Château Mauvesin”. The new brand name is unmistakably linked to the master brand, instantly boosting its brand recognition.
A branded house should provide clarity, making it easier for the consumer to understand the offering. One clear master brand, managed carefully over time and consistently across the product range, is a simpler proposition than a range of unrelated brands and products. Angelus’ sub-brands are clear in their link to the master brand. The Barton name, likewise, is shorthand among wine buyers and fine wine consumers.
Link to the master brand
The primary risk is that all sub-brands are inextricably linked to the master brand. All eggs are in the master brand’s basket, so to speak. The success of the second wine depends on the ongoing success of the Grand Vin and master brand. If the Angélus brand were to, hypothetically, fall out of favour with a segment of its customers, this would likely impact the performance of its sub-brands.
Conversely, if the Angélus brand equity improved for some reason, such as its promotion to Premier Grand Cru Classé “A” level in 2012, its sub-brands stand to benefit enormously. The master brand can modify the market’s perception of the sub-brand, boosting both brand equity and price.
Developing a branded house model would appear to make sense for many, if not most, top Bordeaux châteaux.
Strategy 3: House of brands
The house of brands portfolio strategy sits at the extreme opposite end of the spectrum to the branded house. Here, the portfolio consists of distinct brands, independent of one another and of any overarching master brand.
This model is rare at the individual winery level, and I struggle to think of any examples in high-end Bordeaux. In global fine wine, California’s Sine Qua Non more or less fits the bill.
In Bordeaux, this model best fits larger companies that operate more than one château. Such companies could, like Barton Family Wines, opt for the branded house model. Others choose to structure their portfolio as a house of brands. This could be to avoid unwanted brand associations, avoid or minimise channel conflict, or to target multiple market segments that may otherwise be incompatible.
Some producers operate in more than one segment of the market, where associations across those segments would not necessarily be beneficial. A typical example would be a group that owns Grand Cru Classé estates but also markets cheaper or even entry-level branded wines from the Bordeaux appellation. Both the Mouton and Lafite branches of the Rothschild family broadly fit this model, as do several prominent négociant families.
Mouton and Lafite
Baron Philippe de Rothschild SA, parent of Mouton, and Domaines Barons de Rothschild (Lafite), of Lafite, have highly complex brand architectures. They run the gamut from their flagship First Growths to other classified growths, to relatively inexpensive branded wines from Bordeaux, and to wineries from outside of Bordeaux, be that elsewhere in France to new world outposts such as Chile and Argentina. There are also joint ventures to consider, including the co-branded Champagne Barons de Rothschild common to both, and the Mouton branch’s interest in Opus One.
To best illustrate a pure house of brands model in Bordeaux, I’ve opted to look at a comparatively simpler portfolio.
House of brands: Vignobles K
Peter Kwok is a relatively recent arrival in Bordeaux, buying his first property in 1997. Today, his portfolio is an enviable one, counting some serious holdings on the right bank, particularly in Saint Emilion and Pomerol. Kwok’s star has been rising for some time, due in large part to a series of smart investments in property and people. His portfolio, known collectively as Vignobles K, is structured as a house of brands.
The house of brands structure allows the producer to position each brand within its specific niche, whether that’s on wine style, classification, sub-region, price or other factors.
Tiny Pomerol property Enclos Tourmaline, with its 1,000-bottle production, blue clay soil and critics’ scores in the high 90s, targets the ultra high-end segment. The relatively more affordable Château La Patache, also in Pomerol, and Enclos de Viaud, in satellite appellation Lalande-de-Pomerol, can peacefully coexist without detracting from Enclos Tourmaline’s prestige.
Recently-acquired Château Bellefont-Belcier is Kwok’s first and only Grand Cru Classé-level estate in Saint Emilion. Bellefont-Belcier was already an established brand, so the house of brands structure allows Kwok to keep the property’s independent brand name and identity intact. This is a marked difference from the approach of the Barton family, who you would reasonably expect to rebrand such an acquisition to include their master brand, that is the family, name.
Château Le Rey is in the Castillon-Côtes de Bordeaux appellation. Though similar in terroir to Saint Emilion, Castillon produces wines that tend to fall into a lower price segment. Château Le Rey is not an entry-level brand, but it can happily compete at a price point that may bring volume sales that the more expensive brands cannot, without doing any damage to their positioning.
Towards a branded village
I have chosen the above examples as I feel they reasonably represent the extreme ends of the branded house/house of brands spectrum. There are many different ways to structure a brand portfolio, and many different contexts through which to consider that portfolio. An individual chateau may be a branded house that sits within a house of brands. Not all branded houses are branded in the same way, as touched on in comparing Angélus and Barton Family Wines.
The interrelationship between brands in a portfolio is nuanced and has many possible permutations. “The challenge”, according to Aaker, “is to create not a single house, but a village where all the subbrands and brands fit in and are productive.”