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BUSINESS Dallas: New Capital of the Languedoc?

This little-known French region produced good wines, but didn’t know how to market them-until a Dallas importer popped the cork.
By Mark Stuertz |

FRANCE IS WELL KNOWN FOR CELEBRATed wine regions like Burgundy and Bordeaux-and then there is the Languedoc-Roussillon, also known as the Midi, a sun-soaked region hugging the Mediterranean that’s a winemaking powerhouse, accounting for 40 percent of French production. The Languedoc, also called the “wine lake” of France had always held more potential than profit. Until Dallas fine wine importer Martin Sinkoff figured out how to turn that lake, which pumps out roughly 577 million gallons annually-more than the total U.S. wine production-into a gold mine, forever changing the region.

Historically, wines from the Languedoc had a reputation as rustic and thin, perhaps better suited for use as disinfectant than as a juice for taste-bud stimulation. But by the 1950s, as demand for vast quantities of inexpensive everyday wine waned, wine-makers in the region began a 40-year rebuilding process that included the introduction of distinguished grape varieties, sophisticated winemaking techniques and new technologies. But no one knew how to successfully market the gradually improving wines.

Wine experts, including the late, legendary wine grower, merchant and author Alexis Lichine, tried to tap the market- with little or no success.

Sinkoff was among those who tracked the scent of an opportunity in the Languedoc and, in the process of seizing it, revolutionized the way French wine is packaged and marketed to U.S. consumers. He’s also built himself a nice wine import business here in Dallas-a business that traditionally has thrived almost exclusively on the East and West coasts-hitting sales of 200,00 cases and $5 million in revenues in 1996 for his Reserve St. Martin label.

Sinkoff’s success has been part of the impetus for the Languedoc ’s wine growers and makers to continue making improvements, thus opening even more new markets for inexpensive, quality wines. As a result, the region has become one of the most closely watched pieces of wine-producing earth on the planet-one that has the likes of Michael Mondavi of the Robert Mondavi Winery sniffing around for strategic alliances. But Sinkoff, 41, has them beat by more than a decade.

Sinkoff seems an unlikely wine revolutionary. He holds a B.A. in comparative literature from Brown University and an M.B. A. from SMU. He began exploring the Languedoc in 1979 as a young assistant to Alexis Lichine. What the pair discovered were several producers eager to build broad global businesses by forming partnerships. So Lichine assembled a bloc of producers under his own label and introduced il to the United States in the early ’80s. The project bombed. “It was not well-adapted to the market,” says Sinkoff. “[Lichine] was going to try and do in the Languedoc what he had been successful doing in Burgundy, which was to get some of the growers to bottle the wines themselves and to bring them in under the names of the appellations.”

The problem: In 1980, the real excitement was in California wines, and wine consumers had become more and more accustomed to varietal designations (such as chardonnay) and less and less interested in regional designations (such as Bordeaux) and vineyard designations.

This simple fact-the power of the varietal wine market-has been the biggest change in the wine market over the past 15 years, according to Sinkoff.

“People want to know first what the wine is made from; is it a chardonnay, is it a mer-lot? After that, they’re interested in where it comes from and the geography. And [Lichine’s] wines were counter to that growing interest.”

After parting ways with Lichine in 1980, Sinkoff moved to Dallas and was hired by Dallas-based Glazer’s Distributors with a mission to create a fine wine division. Now, the four-state regional wine and spirits wholesaler is the nation’s sixth largest, with revenues near $615 million.

While at Glazer’s in 1986, Sinkoff was approached by Vinerons du Val d ’ Orbieu- one of the largest wine firms in France, producing some 20 million cases annually- to help develop new brands from Languedoc grapes, wines geared toward penetrating the U.S. market. The result was the Reserve St. Martin brand. With the slogan “The French wines that speak English,” Reserve St. Martin was formulated as a value-priced, everyday wine with varietal designations and prices of less than $10. Reserve St. Martin steadily drove Sinkoff’s wine business from nothing in 1987, the year the label was introduced. to current sales of 200,000 cases.

Under his guidance, winemakers in the Languedoc-with its 40 percent of France’s annual 1.44 billion gallon wine production-have had great success with an accessible brand that appeals to consumers both here and abroad.

How was Sinkoff able to accomplish what Lichine could not just seven years earlier? He shrewdly interpreted emerging U.S. wine market trends and tailored the Reserve St. Martin brand to contemporary American tastes and pocketbooks. While French wines had always been produced, marketed and bought by region. Sinkoff focused the wine buyer’s attention on the grape variety, in the American style. With this new angle, Sinkoff gained a solid foothold in a wine region poised to become one of the world’s most important.

And Sinkoff has the opportunity to work with raw winemaking material, rather than simply marketing finished products. He collaborates with winemakers, selecting the raw wines and then planning the specifics of product refinement, packaging, and how to bring the wines to market.

The Languedoc was ripe for change. ’I mean, this was a region that had no marketing at all.” says Sinkof. “So it represented, and still represents, a fantastic opportunity for anyone interested in the wine business.”

In 1991, with the Reserve St. Martin brand well established, Val d’Orbieu asked Sinkoff to head its U.S. operations from Dallas. Sinkoff. who likens running a Dallas-based national importing firm to swimming upstream, immediately began to strengthen the brand by expanding its U.S. distribution base and by moving beyond classic varietals such as chardonnay. cabernet sauvignon, merlot and sauvignon blanc to Mediterranean varietals such as syrah, marsanne, mourve-dre and viognier.

Late in ’95, with his business locked in a steady upward growth track, Sinkoff took a bit of a risk and dissolved his exclusive partnership with Val d’Orbieu to establish Martin Sinkoff Wines. While he still retains the U.S. marketing rights to Val d’Orbieu brands. Sinkoff says his new company gives him the strategic flexibility to duplicate his brand success in other wine regions.

He is now pursuing alliances with producers in the French regions of Champagne. Bordeaux and Burgundy, and he doesn’t discount the possibility of partnerships in Italy, Spain and Portugal.

“What I do well is take old. established- maybe even run-down-real estate, see its future potential and begin to develop it in some way,” says Sinkoff, ’That’s really what I did with the Languedoc. And that scenario will be repeated in lots of different places.”

Luck could push Sinkoff s timing and positioning into even bigger payoffs. During the past two years, domestic wine supplies have been squeezed by back-to-back short wine grape harvests in California and by increasing U.S. demand for premium wines, The chokehold has gotten so tight that wineries such as Fetzer Vineyards and Mondavi imported more than I million gallons of wine from France (primarily the Languedoc) and Chile last year to put into existing U.S. wine brands, just to keep the distribution channel stocked.

Supply constraints also have exerted intense upward pressure on the price of California wines, to the point that the competitive varietal segment of the market- the $4 to $8 varietal wines pioneered by Glen Ellen Winery-is gradually being vacated by California producers. Who’s going to fill that empty glass? Wines from Chile, Eastern Europe-and France.

Between 1985 and 1991. the French (along with most major European producers) consistently lost market share in the United States because French producers fai led to refocus products toward a varietal-conscious U.S. wine consumer, and because of the dollar’s devaluation in relation to the franc, which pushed up prices.

However, in 1994 and 1995. the French and other European producers began to steadily regain some of the wine-market ground they had lost earlier, in part by successfully moving into the highly competitive varietal market, the very market that contributed to the severe market erosion just a few years earlier.

The gains in 1996 were dramatic: From January to August 1996, French bulk table wine shipments to the United States surged to 2.1 million gallons from 261,000 gallons during the same 1995 period, an astounding 1,838 percent increase.

“France realized, slowly, that the traditional wines, the Appellation Contr?lée wines, were losing market share in the major media wine country of the world, the United States,” says Sinkoff. “And you only have to go to a supermarket to see this: rows and rows of California brands or Australian brands, with French brands increasingly occupying a smaller and smaller section with labels that are struggling.

“The major producers of wine outside of the United States understand that we are functioning in a global market not unlike what car manufacturers have to face. And I think most producers outside the United States understand that varietal designation is most probably the way of the future in general wine marketing. This doesn’t mean that traditional [regional, geographical] designations won’t exist.”

Sinkoff, fluent in French and German. says he entered the wine business 20 years ago because it allowed him to incorporate all of his greatest passions: reading, writing, languages and food.

His current business is not in synch with his passionate zeal for the world’s greatest, most highly prized wines. Still, he claims being a merchant of everyday wines is exciting in its own right.

“I remember an article, I think it was in The New York Times,” he says, “about a fellow in Hollywood who had been very successful, and his father was a clothing merchant , and the father told the son that ’ if you want to live with the classes, dress the masses. And if you want to live with the masses, then dress the classes.’

“The idea being that while it’s nice to rub shoulders with an elite clientele, the reality is that the market is small, and therefore, the business can only grow a certain amount. Whereas if you’re dealing with all of us in the everyday, the market is huge, and there’s a lot more business there.”

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