Turning Cristal Into Gold

The Rouzaud family has expanded a Champagne house into an empire of  wine

From the Dec 15, 2015, issue

Cristal Champagne, the flagship bottling of Louis Roederer, has been a favorite of Russian czars and American rappers, a symbol of success attained and celebrated. But it rarely appears on the table of the family that makes it.

"I do not drink Cristal at home, really," says Jean-Claude Rouzaud. "We save it for the customer!"

Not that they have to: Given the extent of their achievements, Rouzaud and his son Frédéric could easily afford Cristal's $250 per bottle price. The Rouzauds' Champagne Louis Roederer is one of the few Champagne houses of significant size that remains 100 percent family owned and controlled. This is all the more impressive when one considers the challenges the family has confronted over the past 80 years, with each successive generation faced with crises that threatened to ruin the business.

Camille Olry-Roederer, Jean-Claude's grandmother, assumed control of the company when her husband died, in 1932, amid the Great Depression. Jean-Claude faced a massive TCA contamination in the winery in the 1970s. Frédéric became CEO of the Roederer Group in 2006 and was shortly confronted by the worldwide economic crash of 2008.

But by taking care of their customers first, the Rouzauds repeatedly steadied their business and even expanded it, eventually adding 10 more wineries around the world. In 2014, this "federation of artisans," as they call it, produced more than a million cases and generated 250 million euros in revenue. The Rouzauds' ambition, tenacity and foresight have steered the Roederer Group to a sparkling position in the world of wine.

JEAN-CLAUDE ROUZAUD

At 73, and now almost 10 years into his retirement, Jean-Claude Rouzaud, tall and fit, is an avid traveler and thrill-seeker, with a strong jawline and an imposing manner. It's hard to discern the self-described class clown who vexed his parents as a young man.

"The problem with my parents," says Rouzaud, "and I can excuse them in a way, is that they didn't trust me. I had been such a poor student [that] they couldn't change their minds and think I was someone serious."

By distinguishing himself in viticultural studies, however, he convinced them to place him at Roederer, which belonged to his mother's side of the family, and in 1967 Rouzaud arrived in Champagne with his young family in tow. Perhaps as a way of keeping an eye on him, he was placed alongside one of the house's veteran vineyard managers.

"It was a fabulous partnership," says Rouzaud. "Because he knew absolutely 100 percent of the practice, and I thought I knew 100 percent of the theory!"

Rouzaud spent his first five years at Roederer Champagne in the vineyards, learning about viticulture as well as the grapegrowers with whom he would work for the rest of his career. He also discovered his love of the vineyards; today Roederer Champagne's 580 acres of estate-owned vines provide almost 70 percent of the house's production needs, whereas most of Champagne's négociants buy the majority of their grapes from outside sources.

But in 1972, disaster struck. Louis Roederer began receiving claims of a musty, corky taste in its Champagnes. In just a few months, almost 20 percent of the wine sold in the previous year was returned for displaying cork taint. The chemical compound 2,4,6-trichloroanisole, or TCA, had spread throughout the Louis Roederer cellars after introduction via TCA-infected corks.

Rouzaud's responsibilities lay in the vineyards, not the winery. But he saw that his colleagues weren't taking any initiative to respond to or correct the situation and knew he needed to act.

"I reacted like a crazy guy-telling them all what to do or not do," says Rouzaud.

It took two years to clean up the TCA contamination and to remove all the TCA-tainted bottles from the marketplace. Additionally, about 800,000 bottles that had been undergoing their secondary fermentation and then aging in the cellar had to be destroyed. The world oil crisis of 1973 magnified Roederer's problems, and shipments of Champagne Louis Roederer plummeted from 1.2 million bottles to 750,000 bottles by the end of that year.

"I can seriously say it was the worst two working years of my life," says Rouzaud. Promoted first to production manager, then to general manager of the house, he struggled to pull Louis Roederer out of its slump. "But we came out of this story stronger than before, because we were not hiding anything from our colleagues [in the region] or from the consumer."

EARLY EXPANSION

"From the first day of my promotion, I did exactly what I wanted to," says Rouzaud of his early years as general manager. "I was learning everything all together-everything with an open mind."

Rouzaud watched as his competitors began establishing sparkling wine companies in California starting in the 1970s, including Moët, Piper and Mumm. He decided to follow them, but with two major differences.

Instead of the négociant model his competitors adopted, he would make entirely estate produced and bottled sparkling wine. And instead of basing himself in Napa Valley, where all of the newly established sparkling wine houses from French names were stationed, he would find a location with a climate more similar to Champagne's.

Rouzaud looked north, to Mendocino County, ultimately acquiring about 500 acres in a sleepy part of Anderson Valley, home mainly to apple orchards and sheep farms, for the new Roederer Estate.

"We were looked at like we were crazy guys," muses Rouzaud, recalling the opinion of many California natives when Rouzaud began to purchase land in 1982. "Totally crazy."

To finance the venture, the company borrowed $12 million in France, at then-exorbitant interest rates, and later almost the same sum in the United States. "In this business there is no room for people in a hurry," says Rouzaud of the company's financial commitments in launching Roederer Estate. "I was lucky enough to have, as shareholders, people who were not concerned with a quick return on investment. They were trusting me."

Roederer Estate, which released its first sparkling wines in 1988, has been a resounding success, earning some of the top ratings for California sparklers and growing to more than 100,000 cases annually.

With the California project well under way, Rouzaud took out the yardstick again to measure Roederer against its peers, noting this time that several Champagne houses also had a Port house in the portfolio. In 1990, Roederer Group acquired Ramos-Pinto, a family-owned company that included a path-breaking quinta called Ervamoira and almost 500 acres in the upper part of Portugal's Douro Valley.

"Once you go there, you are taken," says Rouzaud. "Ervamoira is something absolutely unique. I could not resist."

Almost immediately, Rouzaud saw the pitfalls of his decision. There was no significant growth on the horizon for the Port wine market. And despite the fact that Ervamoira's more gradual slopes would allow for mechanization in the vineyards, labor costs in Portugal were steadily rising following the country's acceptance into the European Economic Community in 1986.

But a windfall came at a dinner in December 1990 with Ramos-Pinto family member José António Rosas, who was also its president, and its winemaker, João Nicolau de Almeida. They poured Rouzaud a glass of the estate's "leftover," a dry table wine made from extra production not used for Port. Recognizing the potential, Rouzaud arranged for new winemaking and aging equipment in order to produce commercial bottlings of dry red wine from the very next harvest: Ramos-Pinto's Duas Quintas label was born.

"Anytime I discuss with my son and nephew [CFO Laurent Bourdier] the future of Ramos-Pinto, if you look at the Port wine activity you should forget it, you should sell it," says Rouzaud. "But anytime we discuss it, we say, ‘My God!' I don't know if it will take 25 years, 50 years, a century before the great wines of the Douro will be recognized worldwide, but they will. One day, they will."

That day is rapidly coming. Duas Quintas turned out to be a forerunner of what has become an explosion in high quality table reds from the Douro.

FRÉDÉRIC ROUZAUD

Frédéric Rouzaud grew up in a world dominated by his father. Thinking of his childhood, the younger Rouzaud says, "It was very vivid," referring to his impressions of his father's passion and drive.

Living in the historic family home, located beside Champagne Roederer's office and cellars, Frédéric and his siblings frequently interacted with their father and his business, joining lunches with customers or with members of the press. He remembers his father coming home smelling of the cellars or the tasting room after a day of blending. "[My siblings and I] were infused like a coffee or a tea by the soul of Louis Roederer," says Rouzaud.

But Frédéric, now 48, presents a contrasting persona to that of his extrovert father. Perhaps it was inevitable that he would look for a different life path. He completed a program of general business administration at Université Paris-Dauphine and, in 1992, accepted a position at Auguste-Thouard, a French real estate company.

"Always with Frédéric," says Jean-Claude of his son, "he loves to make deals."

It was in this capacity that Frédéric Rouzaud first worked with his father. A sliver of the real estate company's business dealt with vineyard investments and sales. Frédéric began presenting deals to Roederer, ultimately convincing Jean-Claude to purchase Bordeaux properties Château Haut-Beausejour, in 1992, and Château de Pez, in 1995, as well as, in 1993, the Champagne house Deutz and the Rhône estate Delas, then owned by the Lallier family.

After gaining experience at Auguste-Thouard, Rouzaud felt ready to be a part of the family business. "[My father and I] thought it was a good time to try to work together," says Rouzaud of the timing of his 1996 start date. "I was ready, and he was ready-probably-so it was a good moment."

Rouzaud first gained experience in the company as a commercial regional manager for France before being promoted to director of human resources in 1999, a far-reaching role in France given the stringent employment laws and strong unions. The job exposed him to people in every department of the company and helped him understand the finer points of working with these employees.

"[As director of human resources] you learn the people, which is very important," explains Rouzaud. "I learned a lot about human relationships in the company, and I think it helped me to start to be an integral element of the company." It was a position that would help to define Rouzaud's later management style as Roederer Group CEO.

PASSING THE TORCH

From 1996 to 2006, father and son worked side by side, two contrasting personalities who largely shared the same goals. "We clearly didn't have the same character-and thank God," says Frédéric Rouzaud, who feels that their differences let him grow as his own person. And though there were disagreements-such as Jean-Claude's resistance to Frédéric's desire to buy Domaines Ott, in Provence-there was never a major butting of heads. It was more about learning the measure of each man. "We got closer and closer the more we worked together and the more we understood each other," Frédéric explains.

Approaching his 65th birthday and having had notable changes in his personal life-including a divorce from Frédéric's mother in 2003 and, the following year, meeting his current partner, Anne-Louise Bléhaut-Jean-Claude began to think about retirement.

"I think it was really a time that [my father] wanted to change his life," says Frédéric. "He was tired."

But after 40 years of putting everything into his company, it was tough for Jean-Claude to consider such a change. "I saw too many Champagne companies die because they took all the little ducks to work in their [family] companies," says Jean-Claude. He would seriously consider two other candidates in addition to Frédéric.

"The question was, do I trust Frédéric, considering the huge differences of personality," says Jean-Claude. "And it's difficult to think at the same time that you've done well, and that somebody very different from you can also do well. It's not so easy."

Fabrice Rosset, 65, who has worked with Roederer Group properties for more than 40 years, including serving as president of Deutz and Delas Frères since 1996, has a detailed perspective on the Rouzauds. "I appreciate both [Jean-Claude and Frédéric]. Both are exceptional," Rosset says tentatively. "Fréd, I knew when he was a kid, and every day that passes gives me a clearer picture and understanding that Frédéric is constantly improving in terms of vision, his abilities for management, and overseeing the global vision.

"Jean-Claude had that too," Rosset continues, "but probably not as calm and serene as Frédéric." Elaborating, Rosset explains that he was constantly arguing his case to Jean-Claude, whereas Frédéric is more likely to give approval based on Rosset's recommendations. "Jean-Claude is more of a proprietor, and Frédéric is more of a manager. Different talents, different people."

Ultimately, Jean-Claude's respect for his son's business acumen led him to appoint Frédéric as CEO of the Roederer Group in January of 2006. Jean-Claude went immediately into retirement, although he retained a nonoperational role as Roederer Group's chairman of the board until Frédéric assumed that title earlier this year.

"The day I decided Frédéric was the boss, I quit the house in Reims, I quit the office, to show to him and to everybody that he was the boss [now], and not me," states Jean-Claude.

"To be honest, I didn't think my father would really do it," recalls Frédéric. "[His approach] was probably the most intelligent way: first choosing a successor and then really letting him take the reins. It's very rare in companies, and especially in the wine business, where people are very attached to the land, to the house, etcetera, to take that decision and to really do it."

FORGING THE FUTURE

With the power firmly in his hands, Frédéric Rouzaud rapidly made two key decisions. One represented continuity, the other a risky bet on the future.

First, he appointed Jean-Baptiste Lécaillon, chef de cave of Champagne Louis Roederer, to the position of executive vice president in charge of production for all of Roederer Group's properties. The new title effectively confirmed Lécaillon, who started at Roederer Group in 1989, as Rouzaud's right-hand man. In many ways, Lécaillon moved up the ranks with Rouzaud, succeeding for his exacting winemaking as well as his like-minded commitment and perspective. "Jean-Baptiste is very, very important for the house," says Rouzaud. "[He's] very intelligent, [and] we share a lot of ideas, values-a lot of things."

Rouzaud's overall approach strives to put into management positions people who share his philosophies and goals, and whose strategies and ideas for achieving success are essentially aligned with his own.

"When you have the right man to do it ... that's where you can be confident in the job they are doing for you and confident they will push their own house in the right direction," he says.

The ethos is appreciated at all Louis Roederer Group properties, many of which retain original family members in management or winemaking positions.

"Frédéric is very good about letting people make the decisions, but also about knowing and seeing when to come in to help with the overall direction," says Jean-François Ott, who manages the group's Domaines Ott property, in Provence, along with his cousin Christian Ott.

"Each company has to preserve its own identity, its own history," says Rouzaud. "And in a way, its independence."

With the exception of Champagne Deutz, the properties all share a worldwide distribution network. Most also benefit from Roederer Group's financial investments, when needed, as well as technical, business and marketing expertise.

Before 2006 was out, Rouzaud made another notable decision: the purchase of Château Pichon Longueville Lalande, a "super-second" estate in Pauillac. The asking price was a staggering 200 million euros, but Rouzaud didn't quibble. "I knew that this kind of jewel was rarely for sale, and when it is, you have 10 buyers."

But just as the Roederer Group was digesting the purchase of Pichon Lalande, the global economic crisis hit in 2008.

"The purpose I worked for was not ‘where do I want to put Roederer in the next three years'-even while in the middle of a crisis. [The crisis] is important, but it's short-term," says Rouzaud. "My point was ‘where do we want to put Roederer in the next 30 years.'?"

Rouzaud took a deep breath and turned inward. The Pichon Lalande acquisition was completed in a fiscally conservative way ("We like to pay what we can afford," notes Rouzaud) and the company focused on internal issues, fine-tuning its global distribution network and shoring up the group's wineries and vineyards.

Now Rouzaud feels confident enough to look outward again. Currently, he is in negotiations with a family-owned wine estate in Italy. "I don't know if it will go all the way to the end," he says. "But I hope we will do it. I think [Italy is] making great wine-as in France and as in Napa-they are in the middle of the game, where we like to be."

Rouzaud lives in Paris with his wife and three children, conducting meetings in Paris when needed, but generally commuting to Reims. He also spends considerable time traveling, visiting Roederer Group's properties, but more often than not for duties associated with Champagne Louis Roederer. His role is a balancing act between the needs of Louis Roederer and the general management of the group's other estates.

Rouzaud's voice fills with energy and excitement as he considers prospects for the future. "What is fantastic in this job is that it's never finished. I'm so lucky to be in the position I am," he continues, taking on a tone that's both grateful and sincere. "We are in this environment where we have this fantastic terroir, everywhere. And our mission ... is to research, to push the potential of this great terroir. And to fine-tune in the purest way the expression of this terroir.

"Our duty, every day, is to keep moving. And, with lots of creativity and research, to invent tomorrow's greatest wine. Because we are here for a short span in the life of this company-I'm the seventh generation [of my family]. If we can, in this short term, push the limits, push the frontier of this company-even more than our predecessors have done ..." He trails off, and laughs. "I will feel happy."

France Champagne Sparkling Wines