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Champagne Shaken Up by Potential Sales

Prominent houses Taittinger and Lanson are seeking bids, while Mumm and Perrier-Jouët change hands

Posted: July 15, 2005

Some of the top houses in Champagne could have new owners soon, but it's unclear who all of the buyers will be and what it will mean for the wines.

The Taittinger family has received preliminary offers from seven different investment groups to buy their holding company, which owns the Champagne house and several other luxury businesses. French bank Caisse d'Epargne announced on July 5 that it was seeking offers for its 44 percent stake in Lanson Champagne, a large producer that has suffered from financial troubles for several years. Meanwhile, French spirits giant Pernod Ricard will soon take control of both Mumm and Perrier-Jouët as part of its purchase of Allied Domecq, which is expected to close by the end of this month.

The Taittinger Group, which is controlled by 38 family heirs, revealed last month that it had asked two banks to examine bids from prospective buyers for its holdings, which include hotels in Paris and Cannes, Baccarat crystal and Annick Goutal perfumes. The banks will accept offers until July 20. Seven private equity groups, including Carlyle, Cinven and Crédit Agricole have either made or are putting together bids for the luxury giant, which could sell for more than 2 billion euros.

Members of the industry say the family was split on whether to sell. A majority favored the idea, but several opposed it--including those most directly involved in running the Reims-based house, which also owns Domaine Carneros in California. Sources said some family members, including Claude Taittinger, chairman of the Champagne operation, hope to keep the Champagne house even if the other businesses are sold off.

"Clearly there are members of the family who want to keep the Champagne business in the family," said Jean-Louis Carbonnier of Carbonnier Communications and former director of the American office of the Comité Interprofessionel du Vin de Champagne (CIVC). "And from the perspective of some of the investors, the hotels or even the perfume may be seen as more stable investments; the Champagne business always has its ups and downs."

The third-oldest Champagne house and one of the last family-owned major producers, Taittinger began life as Forest-Fourneaux in 1734. Pierre Taittinger bought it in 1931 and added several top vineyards to its holdings.

"[The pending sale] is sad news for independent producers like me, because Taittinger was a living example of a great family working together to make great wine," said Bruno Paillard, owner and founder of one of the region's younger houses.

Taittinger produces more than 400,000 cases annually, but its biggest asset may be its vineyards: It owns more than 650 acres of vines in a region where producers buy the vast majority of their grapes from the more than 20,000 growers.

Lanson used to enjoy large vineyard holdings, but luxury goods group Moët-Hennessy Louis Vuitton (LVMH) bought the house in 1990 and sold it just four months later, keeping the vineyards for itself. Lanson has struggled since, and Caisse d'Epargne paid 38 million euros for its stake last year to help majority owner Marne et Champagne strengthen the brand. But now the bank wants out.

"Lanson has been poorly managed for 15 years," Paillard said. "It's the exact opposite of Taittinger."

Mumm and Perrier-Jouët have enjoyed a revitalization under Allied Domecq, after a period of neglect. Pernod Ricard has not released details about its plans for the two brands.

But all the potential turnovers worry some Champenois, who fear large public corporations may not realize what they're getting into. Champagne is an attractive investment; it's one of the few French regions to increase exports in recent years. "There's always an interest from the outside in gaining access to the quality of Champagne, but it's a very expensive business," said Sam Heitner, current director of the CIVC's U.S. office. "The houses must pay the growers for their grapes well before they sell the wine. It sits on the lees for a minimum of 18 months for non-vintage, three years for vintage, and many of them hold the wine for much longer. You've already paid for the product, and you're sitting on it."

Some Champenois fear that Taittinger's eventual owners may not understand that. "Once you enter this corporate dance, you never know how it's going to end," Carbonnier said.

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