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A classification in crisis? What’s next for Saint-Émilion

There’s a new orthodoxy suggesting the Saint-Émilion classification is proof that renewable and competitive systems of classification simply do not work. However, our Bordeaux correspondent Colin Hay, disagrees, arguing that far from celebrating the seeming demise of this most contested of vinous classificatory schema, we should be striving to restore and perfect it. 

The Saint-Émilion classification seems to be in the process of becoming, if it has not already become, exhibit A for the argument that renewable and competitive systems of classification simply do not work. This, it seems, has become something of an orthodoxy in recent weeks. But I want to suggest that it is wrong. In the process, I want also to suggest that far from celebrating the seeming demise of this most contested of vinous classificatory schema we should be striving to restore and perfect it. And I want, above all, to start to consider what that might entail. In so doing my aim is to defend the principle, if not necessarily the current practice, of competitive classification – above all for the wines of Saint-Émilion – and to explore the prospects for a more harmonious and better functioning classification for Saint-Émilion specifically.

Why, you might well ask, would I wish to do any of this? The answer is simple and, in fact, empirically based. It comes in three parts. First, there is plenty of evidence (the details of which we will come to presently) that the classification helps in the effective functioning of the fine wine market, above all in providing much needed information to the consumer. In effect, a well-functioning system of classification reduces the risk of the investment the consumer makes (and, in the process, increases the likelihood of such an investment). Secondly, it does so better and more reliably when that classification is competitive and periodic (rather than arbitrary and/or permanent). Finally, and no less significantly, I also want to suggest that the critical appraisal of wines by international critics is not, as is often assumed, an alternative and a substitute for systems of classification – that, in effect, it is a simpler, more modern and more effective way of doing things. All the evidence in fact suggests that they work best together as they perform rather different and, in the end, complementary functions.

But more important that any of this is my simple conviction that the impressive progression in the wines of St Emilion in recent vintages that many have noted – and that has taken place despite the challenges of climate change – is at least in part a product of the incentives provided by a competitive and dynamic system of classification.

The role of classification in fine wine price formation

As the above paragraphs perhaps already imply, the operation of fine wine markets is perhaps surprisingly badly understood by many commentators – not least those quick to see the departure of 3 of the 4 current stars of the Saint-Émilion classification as an opportunity to consign the entire classification to an early grave.

To understand the nature of that misconception, we need to put ourselves in the position of the consumer in such a market. She, the consumer, typically purchases a case of wine en primeur (or, indeed later) without having tasted it and at a point in its life when it would be difficult to appreciate even if she had the chance to taste it. This is what economists call a futures market (and what is often not appreciated is that it remains a futures market long after the wine becomes physical, too). It is also a rather peculiar futures market in that the good purchased is perishable and it has a value that is almost entirely subjective (a question of taste).

Purchasing a good of this kind is fraught with risk, since the consumer has little or no genuine idea of its quality (either the subjective quality to her palate at some point in the future when she might choose to pull the cork or the more objective economic value at some point in the future when she might seek to re-sell it). Its anticipated value is, and can only ever be, a projection. It is, moreover, a projection that the consumer is typically ill-placed to make on her own since she lacks most of the relevant information. Indeed, even for those better placed than her, information is scarce and it may also be unreliable (how many ‘vintages of the century’ can there really be?).

On her own, then, there are plenty of good reasons for deferring consumption or simply buying something else. But in Saint-Émilion, and this is the point, she is not on her own. She is helped, if that is the right word, by at least two sources of highly relevant (if far from unimpeachable) information. Both of these serve as proxies of quality and hence value. They are, of course: (i) the position in the classification; and (ii) the acclaim (or otherwise) of acknowledged international critics.

Here we discover, in the popular wine press and more generally, a first important misconception. That misconception is that one of these sources of ‘information’ (let’s call it that, for now) is redundant, since they both perform essentially the same function. There is, in effect, a form of duplication here, or so the argument goes. We don’t need the classification since we have the critics’ scores; we don’t need the critics’ scores since we have the classification. And given the choice between the two, how could we not prefer independent, vintage-specific critical appreciation over the opaque and institutionalised tradition of a classification?

This might seem intuitively plausible. Yet the peer-reviewed academic scholarship on the topic shows it to be false – and in some quite interesting and illuminating ways.

This is probably where I need to come clean. In my ‘other’ life, as an academic, I am one of those to have contributed to that academic debate. What my own and others’ empirical research has consistently shown, is that even at the high-point of Robert Parker’s influence on Bordeaux price formation, his scores worked with, not against, the grain of the system of classification in shaping both release prices and post-release price trajectories. That was true then in both the Médoc and in Saint-Émilion; and it remains true today. Indeed, in a context in which there is no longer a single definitive critical voice with the capacity to influence prices, classification is more important that it has been for a number of decades.

The conclusions of that body of academic literature can be summarised in the following core claims:

  1. In general, the position of a chateau in the classification provides the market with a measure of (or more accurately, a proxy for) long-term reputation whilst the ratings of critics provide vintage-specific nuance;
  2. In more detail, the position of a chateau in the classification sets, in effect, an upper and a lower limit on the potential release price of a wine in a given vintage, with the classification operating a bit like a price-banding system;
  3. Critics influence the upper and the lower limit (the band-range or band-width in effect) on the basis of their assessment of the quality and reputation of the vintage;
  4. And, crucially, they also influence the specific position of chateaux relative to one another within that band-width (all things being equal, high scoring wines at a given point in the classification release at higher prices);
  5. Finally, the critics’ scores are most important and have most influence on prices where they help previously poorly performing chateaux (at a particular level of the classification – a Médoc third growth, for instance) recover a price-point closer to that of its classification peers (the other third growths, in this case).

The implication of all of this is that the classification and the acclaim of acknowledged international critics play different but complementary roles in the process of price formation.

Even if it is not well appreciated in much of the fine wine press, my experience is that this is very well understood by the chateaux themselves – not least because they have often followed the debate more closely.

There is perhaps a further point here too. It relates less to release price formation than to subsequent post-release price trajectories (whether the wine appreciates or depreciates in value after release on the secondary market). There is little doubt that the existence of systems of classification helps what are sometimes called ‘investment grade wines’ to retain their value after the point of purchase. It contributes, in other words, to post-release price stability or, more accurately perhaps, to stable price trends (as we know, these wines tend to increase in value year-on-year above the rate of inflation). That is good for the consumer; and it is crucial for the properties themselves. Quite simply, consumers are more likely to purchase these wines as futures (or later) if they expect the price trend to be stable and/or predictable, since they are taking less of a risk.

But here especially we need to careful in the inferences we draw from this. For this is not to suggest that we should expect the post-release price trajectories of Ausone, Cheval Blanc and Angélus to become more volatile now that they have left the classification. It is to suggest, however, that were the classification ever to be suspended, we would expect to see an increase in post-release price volatility. And we would expect to see that even for wines that have already left the classification.

In this respect (and many others too), Ausone, Cheval Blanc and Angélus will continue to benefit from the classification even after they have left it – and they will do so for as long as it remains in place. What is important is the reputational gain they have already received from having been identified as Premiers Grands Crus Classés A; that reputational gain is not lost by having left the classification for as long as the classification remains relevant.

Those who wish for the demise of the classification, then, need to be careful what they wish for. If the above argument is correct, the effect of its suspension would be greater market volatility. Whilst some might welcome the opportunities for speculation that such volatility might be expected to provide, the more obvious and significant effect is that the wines of Saint-Émilion (and perhaps Bordeaux more generally) would become a less sure and a less attractive investment. Not many, I suspect, would vote for that.

As this already implies, whatever its specific difficulties – and there are plenty to which we will return – in the most general terms, Saint-Émilion needs a classification.

In defence of competitive classification

The second part of my argument is that Saint-Émilion needs a classification that is competitive; and, for it to be genuinely competitive, it needs to be renewed periodically (indeed, relatively frequently) as it is now.

This, you might think, is the easy part of the argument to defend. Who, after all, is willing to defend a non-competitive (and hence arbitrary) classification and/or one that is fixed and immutable? Well, judging by recent debate, more than you might think. The announcement, above all, of the departure of Angélus from the classification brought with it a great deal of comment and analysis – some of it well-informed, some of it less so. But common to much of it was the idea that this represented not just a hammer blow to the Saint-Émilion classification itself but to competitive systems of classification more generally.

That, I must confess, initially surprised me. But it is perhaps not difficult to see where such an argument comes from. For competitive systems of classification are difficult to put in place and are always likely to generate hostility, especially on the part of those disappointed by their arbitration. Some of this is almost bound to end up in the courts. For the greater the stakes, the greater the offense likely to be caused by categorical judgements of this kind. Nowhere is that more evident than in Saint-Émilion, especially since 2012. It simply goes with the territory; for the stakes are very high indeed (a point to which we return presently).

In a way Saint-Émilion lacks the good fortune to have had the benign historical accident of an ancient classification that stuck. But in the absence of that, there really is no alternative to a competitive, renewable and periodic classification – whatever the likely consequences.

But let’s not linger too long on the misfortune of Saint-Émilion not to have had (and to continue to have today) its own version of the 1855 classification. For the disadvantages of traditional and non-renewable classificatory schema should not be under-estimated either, particularly today. Again, I need to be crystal clear here so as not to be misinterpreted. This is categorically not an argument for replacing the 1855 classification of the Médoc with something renewed on a periodic and competitive basis; but it is an argument against trying to replicate a classification of that kind in Saint-Émilion (or anywhere else where it does not already exist for that matter).

The classic defence of traditional and non-renewable classificatory schema, such as that for the Médoc, is that they are (or were when constructed) based essentially on the evaluation of the timeless quality of the terroir itself. That is fine, up to a point. But only up to a point – not least, as it’s not entirely true. But even putting that to one side, there are at least two obvious flaws in an argument of this kind – one old, one new.

First, since it was the property rather than the vineyard itself that was classified (unlike, for instance, in the Burgundian system of classification) there has never been any guarantee that classified chateaux would retain the very terroir that ostensibly led them to be classified in the first place. Defenders of this type of classification typically now interject by suggesting that the fact of having been classified makes one sufficiently resource-rich that one is: (a) unlikely to have to sell that terroir; and (b) likely to be able to augment one’s vineyard holdings with terroir of an equivalent quality, whilst being very selective about the use of parcels from ostensibly lesser terroirs. Perhaps, but the basic point remains.

A second and, arguably ever more salient point, is that what was regarded as great terroir in 1855 might still be regarded as great terroir today. But, in a context of climate change (and perhaps the cumulative effect of industrial mono-viticulture too), it might well not retain all of that greatness tomorrow. Terroir, in other words, might have ceased to be timeless. We don’t – yet – talk much about this; but the time will surely come when we will need do so. But that is a story for another occasion.

The point, for now, is that both of these arguments point to the significant relative advantage of renewable and competitive systems of classification, warts and all.

The trials and tribulations of Saint-Émilion today

So what are the implications of all of this for the Saint-Émilion classification today (by which I mean this side of the 2022 classification) and, indeed, tomorrow (by which I mean post-2022)? Here a quick primer on the recent trials (many of them all too literal) and tribulations of the appellation is in order.

I have already commented at length on the decisions of Ausone and Cheval Blanc to leave the classification. Sad though in a sense they are, these are choices that I both understand and respect. There is no need to explore them again in any great detail. The key point here, I think, is that Ausone and Cheval Blanc’s departures were motivated neither by hostility towards the classification itself nor towards the competitive character of the classification per se – a classification from which both properties had clearly benefited (and, as I have argued, are likely to continue to benefit long after they have left). Their (long-standing) problem was with the specific content of the rules governing the classification exercise in both 2012 and 2022. They have left the classification for now. But if that reading of their motives for so doing is correct, there is no reason in principal why they might not be persuaded to re-enter the competition for the classification in 2032 (or, indeed, at some later point). To be clear, once again, that is an observation and not in any sense a prediction.

Angélus’ departure is a very different thing. Lots of ink has already been spilt on this – not all of it terribly well deployed in my view. For the argument that I am here seeking to make, there is no need to turn the puddle into a river. Angélus’ decision, too, is one that I both understand and respect, even if it came as a surprise. Looking back on it with hindsight I feel that I should have anticipated it; but I didn’t, and I am not alone in having failed to do so.

It seems obvious now, although not at the time, because that decision only became possible once Ausone and Cheval Blanc had already announced their own intentions to leave the classification (as Stéphanie de Boüard-Rivoal in effect made clear to Jane Anson in one of the very best and characteristically well-informed pieces on the subject). One might even go so far as to suggest that once Ausone and Cheval Blanc had made their decision, Angélus’ own decision was inevitable. It certainly has a very clear rationale.

Without dwelling on the detail, and rightly or wrongly, for Angélus the classification had quite simply become a source of ongoing potential reputational damage and almost constant tension and anguish too. Its decision to leave the classification – at the first available opportunity to do so without risk to its future price trajectory – is a simple reflection of that fact.

Whether it might ever be persuaded to return to the fold is an intriguing if delicate question. 2032 is, of course, a decade from now; and a decade is a long time, even in St Emilion. But memories, above all painful memories, linger. So whilst such a return is certainly possible, especially if again Ausone and Cheval Blanc pave the way back to the classification, it is difficult at this point to see it as likely for Angélus.

This brings us more or less directly to the intriguing cases of Chateaux Tour Saint Christophe and Croix de Labrie. Both properties deserve to feature prominently in any recent history of Saint-Émilion simply for the quality of their wines. But the respective stories of their recent disputes with the INAO would almost certainly not have acquired much attention at all had they not been referred to (albeit tangentially) in Angélus’ much pored-over press release announcing its decision to leave the classification on the 5th of January 2022.

The largely technical details of the respective cases here again need not concern us. But, put as succinctly as possible, Tour Saint Christophe and Croix de Labrie appealed the ostensibly similar decisions of the INAO not to permit the further consideration of their dossiers for classification on the basis of (perceived) technical infringements of the rules. For Tour Saint Christophe, this related to the proportion of first wine in the total production of the property; and in the case of Croix de Labrie, the size of the vineyard for which Grand Cru Classé status was sought relative to the size of the vineyard at the start of the 10-year evaluation period. In both cases the properties claimed that a simple administrative error had been made; and in both cases (which were processed together), the officiating judge in le tribunal administrative de Bordeaux decided in favour of the plaintiff, instructing the INAO to permit each chateaux’ dossiers to be re-entered into the competition.

What is interesting for us about these two closely-linked cases is not so much the result of the appeal as the manner of its reporting. For in almost all of the press coverage that these cases attracted, the properties were presented as having ‘attacked’ the classification. Indeed, so dominant and uncontested was this (fallacious) depiction of events, that Jean-Christophe Meyrou, the General Director of Vignobles K’s right-bank estates (including, of course, Tour Saint Christophe) felt obliged to correct the record with his own press release published on the 12th January 2022. Pierre Courdurié of Croix de Labrie followed suit, shortly afterwards, and in very similar terms.

The press releases make for fascinating reading. As both explain, the intention of neither property at any stage was to challenge, far less to attack, the classification. All each property did was to use the only mechanism available to it – one specifically identified in the rules of the classification – to challenge the interpretation of a technical detail. The legal process, including the exchanges between the two sides was, as Jean-Christophe Meyrou goes on to explain, “calm and constructive”. As the press release continues, “contrary to what has been implied, this was never an attack on the INAO, which simply did its job and which has always been available to respond to our questions, but in fact the only possible way in which Tour Saint Christophe could assert its right” (my translation). It concludes, “as owners of Chateau Bellefont-Belcier [Grand Cru Classé], we are totally invested in the fantastic collective endeavour that is the classification. It would have been completely incongruous for us to chop the branch on which we are perched”.

We learn, I think, quite a lot about Saint-Émilion from this. The classification is very important to the commercialisation of the wines of the appellation and, for almost all of those reliant upon it and those aspiring to be part of it, they have little or no alternative other than to adapt themselves to its rules and regulations, whatever they may privately think of them. The stakes are very high indeed. These properties, arguably the heart and soul of the appellation, need the classification and, in a way, the classification exists for them. It is a collective good, a collective value, that needs defending collectively. And what is just as clear is that they understand and acknowledge that; they are willing and prepared to defend it.

The future of the classification

So how might that be done? What are the lessons of all this for the future of the classification beyond the current 2022 reclassification exercise? How, in other words, might the competitive classification of the wines of Saint-Émilion be reformed?

I enter here, of course, highly controversial territory. What I offer, by way of conclusion, is a series of tentative – if no doubt still provocative – suggestions from an outsider as to potential ways forward that are consistent with the analysis I have presented.

The principle implication of my analysis and my argument more generally is that the Saint-Émilion classification needs not just routine reform (of the kind that typically takes place after each re-classification exercise), but a more significant and in a sense public process of renewal. If the classification is, indeed, in crisis, then it needs to be seen to respond to that crisis.

But there is an irony here too. For in a way it needs to be seen to be reformed more than it may actually need to be reformed substantively. Its rules may not need to change massively; but its rules need to be seen to have been discussed, debated and agreed upon collectively. They need (renewed) legitimacy and a form of collective buy-in from those who will ultimately be bound by them if trust in the classification amongst those with the biggest stake in it is to be restored.

That, for me, almost logically entails a process of consultation and perhaps an independent commission charged with initiating and leading the conversation.

That process could well be led (and ‘commissioned’) by l’Association des Grands Crus Classés de Saint-Émilion and its most trusted and respected President, François Despagne. But what is also clear is that any such commission and any such conversation needs to be seen to be neutral and, almost certainly, independent. And it needs to lead a conversation that is not just a private debate amongst the Grands Crus Classés themselves.

This can, of course, only happen after the dust of the 2022 reclassification has settled and any resulting legal processes have been concluded. And the difficulties should not be underestimated. Above all, those properties that have internalised the rules and invested wisely in putting in place at considerable expense to themselves a long-term strategy to seek classification (or promotion within the classification) and have done so successfully, will be (understandably) reluctant to see the rules under which they were promoted significantly revised. They may well wish to veto substantive and significant change.

But some significant reform is almost certainly a pre-condition of the return of Ausone, Cheval Blanc and Angélus to the fold. That, however, should probably not be a goal in itself; and it is not the test of the success of any reform of the classification. Indeed, the best enticement for these three former Premier Grand Crus Classés A chateaux to re-enter the classification is a transparent, well-functioning and well-regulated competitive system capable of commanding the respect and restoring the trust of the entire appellation.

I am not so naïve as to presume that this will happen. But I am confident that there is a large and growing number of prominent actors and voices in Saint-Émilion who both understand the need for a better functioning competitive classification and who are both willing and committed to ensuring that the required debate now takes place.

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