Talking decision making with Jean-Guillaume Prats

Felicity Carter speaks to Jean-Guillaume Prats the CEO of DBR (Lafite), about the challenges of balancing innovation and tradition, and how to make business decisions.

Jean-Guillaume Prats by Didier Cocatrix
Jean-Guillaume Prats by Didier Cocatrix

Jean-Guillaume Prats was born and raised in the Médoc, Bordeaux before his studies at the European Business School took him to Paris, London and Madrid. After graduating, he worked at the CIC bank in London, before returning to Bordeaux in 1994. In 1998 he became CEO of Château Cos d’Estournel, a Second Growth, which belonged to his family, although by the time he left in 2013, it had been sold twice. He then became president of the wine division of luxury house LVMH, before being appointed president and CEO of Domaines Barons de Rothschild (Lafite) in 2018. There he oversees a distinguished portfolio that includes châteaux in Bordeaux and Sauternes, and wineries in China, Chile, Argentina and Languedoc. The crown jewel is Château Lafite Rothschild, one of the most renowned wine properties in the world.

 

MEININGER’S: Did you get culture shock going back into wine after working at a bank in London?

PRATS: From what I remember, it’s exactly what I found when I came back to Bordeaux after being away for some five years with LVMH. It’s that the power of these brands, the beauty of the place, the magic of these wines are unique in the world. The more you travel, the more you are in charge of other assets, of other wines, of other equations, the more you realise how Bordeaux is privileged and exceptional. 
 

MEININGER’S: You were at Clos d’Estournel for 15 years. How much input did you have into the wines?

PRATS: I was very much involved in blending decisions and the stylistic evolution of the wine, to the choice of the major equipment, staff where needed, and crafting the style of the wines and the team and the way we operate. Then I moved to LVMH for five years, being the president of the wine division of the group. And it was absolutely fascinating because I was handling assets from China to India to Australia to New Zealand to Brazil to Argentina, California, to Spain.

MEININGER’S: How did you manage the travel?

PRATS: I would never travel for a long time. So I would go to South America or to California or to Australia and New Zealand just for two nights. I rarely spent more than two nights in the spots. The team knew I was there for a very short amount of time, so we had to be extremely impactful in the decision making and the process of management. 

MEININGER’S: When you’re flying in like that, how easy or difficult is it to convince people on the ground of your decision making?

PRATS: I think for me, it’s a very efficient way of leadership. You need to be impactful in three ways. The first one is in your capacity to read the local situation and to have your nose telling you what’s going on: What is the ambience, what are the feelings of the team, what are the major issues? The second is to have a very clear message, which is extremely well understood by the team, so there’s no ambiguity on the way forward. And the third is the follow-up – to clearly follow what has been decided, and more important, not to de-decide what has been decided.

MEININGER’S: Can you explain a bit further what you mean by impactful? 

PRATS: Decisive. Clear. Articulate. A vision which is well structured, well explained and easy to understand by everyone. Most important is not to create any ambiguity. 

MEININGER’S: How confident are you that you can walk into a foreign environment and read whether people are happy or not happy? 

PRATS: First there’s the technical expertise, and the product. The capacity when you walk through the yards to see if it’s well maintained, if it’s well farmed, if there are diseases in the vineyards. If the questions you are putting forward are well answered in an articulate way. Second is tasting the wine, which is the most important. Are there some technical issues? Organoleptic issues? Third is just walking around, and the state of the building, the state of the capex. 

MEININGER’S: If you walk into somewhere and you see a lot of things going wrong, is that a sign of poor morale? Or is it a sign of something else?

PRATS: No. I think it’s very often the sign of no clear vision. No clear direction which has been articulated and delivered to the whole team.

MEININGER’S: Say you’re doing a presentation: how do you ensure you’re being very clear when speaking to different cultures? 

PRATS: My modest experience is that four or five slides are the maximum. It has to be simple and straightforward to understand. This is where we are, this is the vision we have long term, this is what it takes to get it. And then the last slide would be the action plan. And then you open a discussion on that. You have to listen. You have to make some corrections. The most important is not to de-decide what has been decided. Once we own a line, we keep the line.

MEININGER’S: What’s the difference between de-deciding and changing your strategy because conditions have changed?

PRATS: I’ll give you an example. If you are in India and you say, “We are going to launch a new product because it’s a growing category”, and we align the marketing team with the brand platform, with the above-the-line activity, with the amount of marketing we spend. And we put it forward and we develop it. And then eight months afterwards, when all the team has done the job, we say, “No, no, no, actually we don’t like this concept.” That’s a big mistake because you’ve lost energy and you’ve lost the motivation of the team. When you can eventually de-decide is, for example, when you say, “I am going to launch a new distribution system in Karnāţaka in the south of India,” and then nine months afterwards the import duties have changed in Karnāţaka and it makes the business prohibitive. Then, of course you need to change your plan.

MEININGER’S: When you worked for LVMH, were you able to learn from the fashion, perfume and other arms as well?

PRATS: There is an extraordinary cross-fertilisation of talent and knowhow. There is the LVMH House, which I’ve attended on two or three occasions, where you follow courses on leadership, on brand visibility, on finance. So you come together with people who have very different skills, very different backgrounds, but under the same umbrella of creating desirability, creating crafted products, creating a dream and reaching to the consumers.

MEININGER’S: Did it give you a new way of looking at wine that you didn’t have before?

PRATS: Absolutely. Wine is an extraordinary product which is crafted, which is coming from Mother Nature. But you need to talk to the consumer. You need to make these brands desirable. You need to make this brand and this product shine. You need to follow the trend of the markets and you need to keep in mind that it is a very ferocious competition outside and therefore you have to be always on alert. You have to be innovative and not stand on your laurels. What I’m saying here is absolutely known by every people in the business of luxury products. 

MEININGER’S: DBR is going to launch a Chinese wine in 2019. Do you think you can build a brand in China that the Chinese themselves will respect? Secondly, how much of an export market do you think there is for very high-end Chinese wines?

PRATS: There are a few points in your question. The first one is that a great market where fine wine is consumed is always a market where fine wine is produced. There are two exceptions. One is Japan. There is a little bit of production of Kōshū, but it remains quite small. The other is Hong Kong. Even in the UK, which is a big market, you could pretend that the UK used to own the Port industry and the Claret wine industry and now they are producing sparkling in the south of England. So every market where fine wine is consumed is a country where fine wine is produced. That’s the case in the US, Canada, not to mention Australia, New Zealand, and all over the world. China is a big market for consumption, so if it’s possible to produce a great wine in China, it will naturally find its place. That’s the first point. The second point is there are great markets in the world that have a fantastic production of high-quality wines, but very little export. One example is the US. Most of the great wines of California are drunk 90 or 95% on the domestic market. China can produce great wines, although very high-priced on the domestic market, which means very little presence on the exports market.

MEININGER’S: One thing that would be different about China is the cynicism in China about their own agricultural products. Do you think that will be true of wine as well? 

PRATS: I think that they don’t link it to farming. They link it to crafted spirits. Keep in mind that China is a huge market for baijiu and the Chinese market for baijiu is half a billion cases. The world market for vodka, half a billion cases. So just the baijiu category in China is the size of the world market for vodka. Therefore, you have a very deep knowledge of crafted alcohol products. You have a ritual of consumption that is about food, friendship, discussion and moments of celebration. And wine fits in that category. Therefore the size of the prize in the next 10-15 years for wine is astronomical in China. Because you’re going to a country which has no religious restriction on the consumption of alcohol, which has a deep knowledge of crafted products. You go in every obscure, small village in China, you have a baijiu distillery. It’s part of the culture. You are going to a country that drinks alcohol with food. Everything is there.

MEININGER’S: Wine tourism is one of the fastest growing sectors of the wine industry. Are you planning any initiatives?

PRATS: Anyone can make an appointment at Château Lafite. We believe that it’s part of our duty to receive anyone who wants to make an appointment, free of charge. You may need six months to have the appointment, but everyone can visit. We intend to maintain that. We are going into a very big investment at Château Duhart-Milon in Pauillac, where we’re going to build a hospitality facility where we are going to be open to the public in a much larger way. We’re also going to do L’Évangile in a much smaller way. It’s a very small, tiny property very much like in a Burgundian approach but we are also doing some work at L’Évangile to reopen it. 

MEININGER’S: You have come from a business where cross-fertilisation of new ideas is encouraged. Now you’re working with a wine – Lafite – that has such an iconic status, you would only want to make tiny, tiny changes or risk damaging it. As a CEO, how do you put your own stamp on a company like this, while working with the need to preserve? 

PRATS: Lafite is the only machine that works to go back in time in the world. It is linked to an exceptional, extraordinary family who are very much involved in every decision made at Lafite. Saskia de Rothschild is at Lafite every week. So the changes we can make first have to be aligned with her and the Rothschild family. Second, we have to be very cautious, because you don’t change something which is mystical. It doesn’t mean that we cannot be on top of the knowhow in terms of research and development, in terms of bio farming, in terms of new equipment. 

When it comes to the other businesses, the other estates, we can be a bit more avant-garde. We can be a bit more disruptive. This is what we are going to do at Duhart, this is certainly what we are going to do with Rieussec [in Sauternes] and this is certainly what we are doing with our portfolio of branded wines. Basically, you have two ideas in your head. One is full of tradition, is full of respect to the piece of land, the terroir and with a family. On the other one, you can play. You can take some risk. You can be also be quite innovative.

MEININGER’S: What would be innovative for a company like this? What would be the limits of innovation? What is off limits? 

PRATS: I think off limits would be a product which would no longer be a wine made from Vitis vinifera, which would not be the expression of a piece of land and skill and knowhow. That would be the limit we would never cross. But that doesn’t mean you can’t work on packaging. You can work on stylistic evolution. You can work on mixology. You can also work with some different origins. You can work some different varietals. There are many ways of being innovative. You can include the digital part in the way wine is approached, the way the information is carried to the consumer, the wine lovers.

 

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