Laurent-Perrier SA

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Laurent-Perrier SA

Laurent-Perrier SA
32 avenue de Champagne
51150 Tours-sur-Marne
France
Telephone: ( + 33) 3-26-58-91-22
Fax: ( + 33) 3-26-58-77-29
Web site: http://www.finance.laurent-perrier.fr

Public Company
Incorporated: 1881
Employees: 378
Sales: EUR 146.9 million ($162.2 million ) (2000)
Stock Exchanges: Euronext Paris
Ticker Symbol: 923069
NAIC: 312130 Wineries

Laurent-Perrier SA is one of the top five champagne producers and distributors in the world, and one of the leading—and last—independent champagne houses. Located in the heart of the Marne valley champagne district, Laurent-Perrier governs four primary champagne brands ranging from mid-high to high to very high ranges, for a total production of 8.3 million bottles sold in the 2000-2001 year, and sales of EUR 146.9 million. The company produces a range of champagne styles under the Laurent-Perrier name, including the company’s own invention, the champagne rosé and the prestigious Salon brand, one of the rarest of champagnes, produced from a single grape variety (Chardonnay) and fetching up to $150 and more per bottle. Targeting the mid-high range, the company has two brands, Vicomte de Castellane, sold principally through the large retail network; and Delamotte, with sales primarily handled through the company’s own international distribution network. This network operates subsidiaries in Belgium, the United Kingdom, Switzerland, Germany, and the United States. These countries accounted for 32 percent of all of the company sales in 2000; France itself accounted for more than 45 percent of sales. Altogether, Laurent-Perrier’s brands are distributed to more than 100 countries. The chief architect of Laurent-Perrier’s growth has been Bernard de Nonancourt, who continues to serve as company chairman. Joining him is President Yves Jean Marie Paul Dumont. Once ranked only 100th among champagne producers, Laurent-Perrier has set its sights on becoming the number two champagne company, behind leader LVMH, in the early part of the 21st century.

Founding a Champagne Dynasty in the 19th Century

Champagne was only developed in the late 17th century, when a Benedictine monk, Dom Perignon, attempted to harness the “mad wine” of France’s Champagne region, near Reims. Wines produced there had long been subject to an extreme volatility—the region’s cool climate and short growing season tended to produce a bubbly wine subject to fermentation in the bottle. This fermentation—and resulting build-up of carbon dioxide—would often cause bottles to explode. Attempting to do away with this problem, Perignon invented the concept of blending grape varieties—and then went on to develop the modern concept of champagne itself, using thicker bottles and better corking techniques to end the explosive bottle problem.

Champagne soon caught on among the drinking public, and was especially brought to prominence during the reign of Louis XV in the 18th century. The difficult process of creating champagne, which required years of aging and a great deal of capital investment, led the Champagne region’s aristocratic landowners to turn over production to specialized merchants. By mid-century, a number of houses had been dedicated to the production of champagne, all located in the Champagne region. This region remained extremely small—representing less than 3 percent of total grape production in France. Among the earliest houses were those of Ruinart, Moèt, and Cliquot. Another of the earliest houses was Delamotte, located at Mesnil-sur-Oger, which was founded in 1760 and was later to play a key role in the development of Laurent-Perrier. These merchants continued to refine the production process, and by the early 19th century had succeeded in taming the “mad wine” of Champagne.

Laurent-Perrier’s own origins stemmed from 1812, when Alphonse Pierlot founded a champagne firm in Tours-sur-Marne. This location gave the new house a prime position at the heart of the Champagne region, and particularly close to three of the more prominent parcels—Montagne de Reims, Vallée de la Marne, and Côte des Blancs. In the mid-19th century, Pierlot was succeeded at the company by Eugene Laurent and his wife, Mathilde Perrier. The pair gave their combined name to the company in 1881.

After Laurent’s death in 1887, Mathilde Laurent-Perrier took over operation of the champagne house, and created a new champagne, Veuve Laurent-Perrier, in the tradition of other so-called champagne widows (veuve means widow in French). Laurent-Perrier successfully expanded the company’s operations, boosting production to some 600,000 bottles by the end of the century.

World War I, however, devastated Laurent-Perrier as well as the whole of the Champagne region. Some of the war’s most bitter battles were fought in the Marne Valley itself, with much of the countryside, as well as towns and cities, being all but destroyed. Laurent-Perrier suffered on a more personal level as well, as many of Mathilde Laurent-Perrier’s family were killed, leaving the family company with no heirs. When Mathilde Laurent-Perrier died in 1925, the company entered a slow decline.

The years between the world wars brought new difficulties to the champagne industry. The Russian Revolution had cut off a primary market for champagne sales, while Prohibition coupled with the Great Depression eliminated sales in the United States. Laurent-Perrier was among the champagne houses to see its fortunes dwindle steadily during this period. By the outbreak of World War II, the company was left with a stock of only some 12,000 already mortgaged bottles.

In 1939, Laurent-Perrier was acquired by Marie-Louise de Nonancourt, another champagne widow. De Nonancourt herself came from the family behind one of the most noted of Champagne houses, the Lanson Pere et Fils, by then operated by her brothers Victor and Henri, and later part of the Marne & Champagne empire. De Nonancourt had long been involved herself in the champagne trade, having acquired the Delamotte house from Lanson Pere et Fils shortly after World War I. This company she turned over to son Charles de Nonancourt.

Another son, Maurice de Nonancourt, was initially tapped to run Laurent-Perrier. Yet Maurice de Nonancourt was killed by the Gestapo during the war. Instead, another son, Bernard de Nonancourt, was placed in charge of the prestigious yet ailing champagne house in 1949.

Building a Postwar Champagne Dynasty

The Marne Valley once again found itself at the center of the war, now occupied by the Nazi forces. During this period, the Champagne region’s industry, which had been granted AOC (Appelations d’Origin Controlé) status in the 1920s, had succeeded in establishing the Comité Interprofessional du Vin de Champagne - C.I.C.C. This organization helped set minimum purchasing prices for grapes, ensuring that the Champagne region’s growers were able to remain in business.

Laurent-Perrier, meanwhile, was slowly regaining its own momentum. When Bernard de Nonancourt took over the company’s leadership, production had returned to 65,000 bottles per year, placing it near the bottom of the region’s industry with a ranking, by number of bottles produced, of 100th. Yet de Nonancourt was to prove an inspirational leader, building the company into one of the region’s top players over the next 50 years.

In 1958, de Nonancourt launched a new champagne, the Cuvée Grand Siècle. Yet the company’s fortunes took off especially after the introduction of another type of champagne, the Cuvée Rosé Brut, launched in 1968. The first of the so-called rosé champagnes, the new champagne was somewhat fruitier than traditional champagnes and soon became somewhat of a company specialty. Another Laurent-Perrier brand was launched at the beginning of the 1980s, when the Grand Siècle Cuvée Alexandra debuted at the wedding celebration of de Nonancourt’s daughter in 1982.

During the 1970s, Laurent-Perrier, which remained steadfastly independent, became interested in developing an international distribution network, bringing it closer to its retail customers. The company’s first move in this direction came in 1978, when it established a distribution subsidiary in the United Kingdom. The company expanded its distribution activities to include its primary market countries outside of France, that is, Belgium, Switzerland, the United States, and Germany.

In the 1980s, Laurent-Perrier sought a different kind of expansion, now seeking to diversify its holdings to accommodate different brand names. With a larger brand portfolio, Laurent-Perrier sought to position itself through the different quality levels—from mid-high end to very high-end—with the Laurent-Perrier brand remaining its flagship range. The company’s first purchase came in 1983, when it acquired shares in Société Champagne de Castellane, a champagne house founded by the Viscount Florens de Castellane in 1895. De Castellane turned over the company to Fernand Merand soon after the turn of the century, and the house remained in the Merand family’s control until its acquisition by Laurent-Perrier.

A Pure Play Champagne Stock in the 21st Century

Laurent-Perrier soon filled out its champagne offering. In 1987, the company bought up the famed champagne house Salon de Mesnil. Founded by Eugene-Aimé Salon at the dawn of the 20th century, the house’s champagne had initially been reserved for the Salon’s private stock. Salon, a prominent figure in Paris’s Belle Epoque, sought to create the perfect champagne from a single of grape. Salon settled on the Chardonnay variety, and particularly grapes from the vineyards at Mesnil-sur-Oger, in the Côtes des Blancs region.

Company Perspectives:

“I weigh my words when I say that our management team has demonstrated an approach that is realistic, rigorous and honest. They have not made vain promises. They have had a clear-eyed view of the company’s future. They have followed modern management principles without losing sight of the family tradition and the long-standing values that are the foundation of the brand.… Laurent-Perrier is moving forward, with clear vision, good sense and perseverance.”

—Bernard de Nonancourt, chairman

The resulting champagne was the first so-called “blanc des blancs” and was so popular among Salon’s acquaintances that in 1921, Salon established the House of Salon. His champagne was to remain among the most rare and prestigious, and was only produced in the best vintages. As such, over the next 75 years, only 32 Salon vintages had been produced.

A year after acquiring Salon, Laurent-Perrier acquired another prestigious champagne house—and next-door neighbor to the Salon House—Delamotte, purchased from Bernard de Nonancourt’s brother Charles. De Nonancourt now sought to expand Laurent-Perrier still further, seeking to diversify beyond champagnes. Beginning in the late 1980s, the company made a number of acquisitions, including that of Malattie Lagravière, a producer of Bordeaux wines; HPPH, a Cahors region wine producer; and Antonin Rodet, a Burgundy region producer. In 1992, the company added a new distribution subsidiary in Switzerland.

By the early 1990s, some 20 percent of Laurent-Perrier’s sales came from its diversification drive. However, the company had taken on a heavy debt load, and, with the added burden of a worldwide recession, the company slipped into losses. At the end of 1993, Laurent-Perrier had turned to a larger partner, allowing distribution giant Grand Metropolitan plc (later Diageo) to acquire 20 percent of its capital through its United Distillers and Vintners subsidiary. This relationship also gave Laurent-Perrier access to Grand Met’s worldwide distribution network.

Laurent-Perrier’s diversification proved, however, too ambitious and, by the mid-1990s, the company was heavily in debt and facing losses. De Nonancourt brought in a new president, Jean-François Bauer, who was given the task of cleaning up the company’s financial problems. Laurent-Perrier began selling off most of its diversified holdings by 1997. In 1998, the company completed its restructuring, selling Joseph-Perrier to champagne group Alain Thiénot. By then under president Yves Dumont, the company was once again in the black.

Grand Met meanwhile had acquired joint-ownership of rival champagne house Moët with champagne leader LVMH. Yet the agreement between the two giants included a non-competition clause. LVMH therefore placed pressure on Grand Metropolitan to sell off its stake in Laurent-Perrier. The resolution to this conflict came in 1998 when Laurent-Perrier itself bought back Grand Met’s shares. The company was once again a fully independent champagne producer, one of the few remaining after a broader industry consolidation in the late 1990s.

The end of its relationship with Grand Metropolitan encouraged Laurent-Perrier to reinforce its own distribution operations. In 1998 the company opened two new foreign distribution subsidiaries, in Belgium and the United States. The following year, Laurent-Perrier acquired full control of the Castellane champagne operation. Riding high on the wave of orders leading up to the year 2000 celebration, Laurent-Perrier went public in 1999, with a listing on the Paris stock exchange. The de Nonancourt family nonetheless retained control of the company.

Champagne purchases for the year 2000 celebration helped swell the company’s sales to a record high of nearly EUR 170 million in 1999. Yet champagne houses had nonetheless proven too optimistic, and a massive overproduction resulted in a severe hangover for the industry. Paradoxically, widespread concerns of champagne shortages had caused many people to stock up on champagne in 1999, with the result that total industry sales dropped by nearly a third in 2000. Laurent-Perrier too was hit by the sharp drop in sales. However, its concentration on the relatively high-end segments helped to cushion its profits.

The company’s fortunes, along with the rest of the industry, were on the road to improvement in 2001. Laurent-Perrier turned optimistically toward its third century as one of the oldest and most prestigious—and last remaining independent—champagne houses with forecasts of a rise in sales on the order of 15 percent for 2001 alone, and plans to build the company into the number two champagne house, at least in terms of profitability, by 2002. The company also celebrated the new millennium with another event, the June 2001 release of a new Salon champagne vintage.

Principal Subsidiaries

Champagne Laurent-Perrier; Champagne de Castellane; Champagne Lemoine.

Principal Competitors

Allied Domecq PLC; LVMH Mòet Hennessy Louis Vuitton SA; Marne et Champagne SA; Rémy Cointreau S.A.; Vranken Monopole SA.

Key Dates:

1812:: Pierlot champagne business is founded in Tours-sur-Marne.
1881:: Eugene Laurent and his wife Mathilde Perrier assume control of the newly named Laurent-Perrier.
1939:: Marie-Louise de Nonancourt acquires company.
1949:: Bernard de Nonancourt becomes president of company.
1983:: Laurent-Perrier acquires 34 percent of Société Champagne de Castellane, founded in 1895.
1987:: Company buys another prestigious champagne house, Delamotte, founded in 1760 and under the control of the de Nonancourts for much of the 20th century.
1988:: Laurent-Perrier purchases Salon de Mesnil, producer of the first “blanc des blancs” champagnes.
1993:: Grand Metropolitan plc (later Diageo) buys 20 percent of company through its United Distillers and Vintners subsidiary.
1998:: Company buys back Grand Metropolitan’s shares.
1999:: Laurent-Perrier acquires full control of Delamotte, becomes publicly listed on Paris bourse.