In France, wine is not just a passion or an industry—it’s a cultural heritage. So when foreign investors show up to buy their own slice of French vineyards, local murmurs and press reports tend to suggest that heritage is becoming as globalized as Le Big Mac. But a recent study finds that such headlines have exaggerated the scope of the trend.
The study by Vinea Transaction, a network of real-estate agencies that specializes in vineyard properties, found that foreign investors own only 1.98 percent of French vineyards. According to the findings, the top three regions attracting foreign money are Bordeaux, Languedoc-Roussillon and Provence.
Who owns the vines? The British—longtime French wine fans—come in first, with 22 percent of foreign-owned vines, although the study shows British investment slowed dramatically after the 2008 financial crisis. They are followed closely by Chinese owners at 21 percent and Belgians at 17 percent. The Americans are a few nationalities behind, at 6 percent.
“For three years now, we have noticed a retreat in foreign investments,” said Michel Veyrier, founder and director general of Vinea Transaction. “In order to quantify and analyze this phenomenon, we decided to conduct an exhaustive study on the subject.”
Vinea’s team based its analysis on its own data dating back to the creation of the company in 2000, and cross-referenced those findings with statistics from government agencies, such as the Ministry of Agriculture, France AgriMer and SAFER, plus industry organizations like Vignerons Indépendants de France. They also surveyed 8,000 vignerons and conducted interviews with members of the wine industry.
There are limits to the study, however. “They only consider direct investments,” said Maxime Kusak Depailler, partner at Wine Bankers, a wine and spirits mergers and acquisitions firm based in Paris. “We have a lot of foreign investors who have French trust companies, holding companies or French subsidiaries that invest in vineyards.”
Veyrier acknowledges that limitation. “We think that in reality, our numbers should be increased by about 10 percent [to between 2 to 2.2 percent] because some domaines are held by companies for which it is not possible to identify the investors,” said Veyrier.
For this reason, Champagne was excluded altogether. So were the vineyards of Cognac and Armagnac, considered non-wine markets, and the smaller regions of Corsica, Savoie, Jura and Alsace. The study covers 1.48 million acres, or 80 percent of French vines.
In Bordeaux, the scope of investment by the Chinese, who now own 47 percent of foreign-held vineyards in the region, is no surprise. Howard Kwok, whose father Peter Kwok started buying land in Bordeaux in the late 1990s, has seen the trend accelerate dramatically in the past decade.
The popularity of Languedoc-Roussillon was more unexpected, with more than 5,200 acres under foreign control. The study found it to be the most cosmopolitan region, with more than 20 different nationalities detected. Not only are the vineyards more affordable than those of other regions, it is also an area where there is still room for quality improvement and innovation. “You can produce wines with atypical blends and create new products,” said Jérôme Villaret, general director of the Conseil Interprofessionel des Vins du Languedoc (CIVL).
The Vinea Transaction study also explores trends that may attract foreign investors to specific regions. The rosé boom is in a large part responsible for interest in Provence, where 60 percent of transactions are made for land in the Côtes de Provence AOC.
On the flip side, the Loire Valley, the Northern Rhône and the Burgundy-Beaujolais areas record little foreign investment. Small quantities of available land, already established big players and elevated costs of vineyard properties seem to be the main reasons for this, Vinea reports.
Michael Baum, a longtime business player in Silicon Valley, acquired Château de Pommard in Burgundy last September after searching for a property in the region for seven years. “There isn’t a lot of foreign investment here,” said Baum. “First, Burgundy is a small wine-producing region. Second, Burgundians are very protective of the heritage here.” Nevertheless, Baum feels he has been “completely welcomed by the community.”
It may be difficult to pinpoint the exact extent of foreign investment in France, but others in the industry believe the overall findings of the Vinea Transaction study are accurate. “The fact is, [the overwhelming majority of] French vineyards are owned by French companies and French individuals,” said Kusak Depailler. “Foreign investors have always been here, will always be here and will always be welcomed by all the different vineyards.”