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CHATEAU D'YQUEM – THE PERILS OF CONDESCENSION

Source : Family Wars – Grant Gordon & Nigel Nicholson

The Bloodline

In the world of ancient family businesses, Chateau d’Yquem, a Bordeaux, France vineyard renowned for its sweet Sauternes wine since 1593, stood out. Unfortunately, after three centuries, family divisions and neglect eroded its legacy.

The rift stemmed from the family leader’s singleminded approach, alienating fellow shareholders who were taken for granted. Their loyalty waned, and the desire to sell out grew. Despite owning a prestigious wine, pride and family allegiance dwindled over time.

The de Lur-Saluces family entered the business in 1785 when Louis Amedée de Lur-Saluces married Joséphine de Sauvage d’Yquem, a direct descendant of the founders. In the aristocratic arrangement of Lur-Saluces family, one family member safeguarded the winemaking legacy and others, even if part-owners, remained detached. By the late 20th century, the family divided into three groups. The majority, the Hanguerlot branch, held a minority of shares. The controlling interest was split between Eugene, who had the largest stake (47%), and Alexandre, leading the family firm with a 9% stake. These imbalances threatened centuries of stewardship.

Noble Rot

The stimulus for change came from the count himself. His lofty title led to an imperious stance, neglecting family ties and even withholding the family’s famed wine. This perceived disdain fueled jealousy and resentment among relatives.

Small issues magnified in the strained relationships. Shareholders not involved in the business were irked by meager dividends, especially upon learning of funds allocated for new VIP bathrooms at the chateau.

Tensions escalated in 1992 when the count’s attempts to secure his son Bertrand’s succession backfired. Other shareholders, including his daughter and another son, decided to sell their shares. The count underestimated family sentiments and found himself at odds with his brother Eugene, who was also looking to sell part of his stake. This marked the beginning of the end for the Lur-Saluces family’s stewardship of their famous chateau, even as the count clung to power.

Count Out

Renowned businessman Bernard Arnault, the LVMH luxury goods empire chairman, entered the scene, eyeing Chateau D’Yquem as an attractive acquisition. His charm and financial clout persuaded many of the disenchanted outsiders to sell their shares, providing them with a longawaited financial windfall.

In November 1996, Arnault secured a 55% stake in Chateau D’Yquem, gaining majority control. The count, resistant to change, expressed aristocratic outrage and launched legal and PR defenses against Arnault. However, his efforts backfired, leading to isolation within the family.

In 1999, the count and his son Bertrand sold their 9% stake at a higher price than other family members. Despite this, Alexandre retained a board seat. A peace agreement with LVMH allowed the business to move forward.

In 2004, as the count approached his 70th birthday, he retired from the company, gently pushed out by a reduced mandatory retirement age. This marked the end of the Lur-Saluces family’s ties with the chateau. A non-family manager took over. In parting, the count cited “childless jealousy” among family members, ending over four centuries of tradition on a bitter note.