Societe des Produits Marnier-Lapostolle S.A.

views updated

Societe des Produits Marnier-Lapostolle S.A.

91 Boulevard Haussmann
Paris,
France
Telephone: (33 01) 42 66 43 11
Fax: (33 01) 42 66 57 13
Web site: http://www.grand-marnier.com

Public Company
Founded: 1870 as Marnier Lapostolle
Employees: 421
Sales: EUR 137.62 million ($176.2 million) (2005)
Stock Exchanges: Euronext Paris
Ticker Symbols: 38036; MALA
NAIC: 312130 Wineries; 312140 Distilleries

Societe des Produits Marnier-Lapostolle S.A. produces Grand Marnier liqueur, one of the world’s best-selling and most well-known triple sec, or orange, liqueurs. Grand Marnier Cordon Rouge (Red Ribbon), invented in 1880, remains the Paris-based company’s flagship product, and continues to account for 90 percent of its total sales. Other Grand Marnier labels include Louis-Alexandre, which features added cognac for a dryer flavor; Cuvée de Centenaire, based exclusively on cognac distilled from the Grand Champagne zone and aged up to 50 years; and Cuvée du Cent Cinquantenaire, based on both Petit and Grand Champagne zones and aged up to 25 years. The company also distributes Grand Marnier in a number of limited edition bottles. In addition, the company produces Grand Marnier Cordon Jaune, based on a neutral alcohol, used as a cooking liqueur.

Other spirits in the company’s portfolio include Cherry Marnier, one of the family-controlled company’s original recipes dating back to its founding in 1827; a range of VSOP, XO and VS cognacs; the regional fortified wine Pineau de Charentes, and the group’s most recent label, Navan, a vanilla-based liqueur launched specifically in order to target the African-American market in the United States. Marnier-Lapostolle also produces a limited number of wines, including its Chateau de Sancerre white and red and the Cuvée du Connetable, a 100 percent Sauvignon Blanc. Since 1994, the Marnier-Lapostolle family has also controlled Casa Lapostolle in Chile, producing high-end wines under that label. Marnier Lapostolle also owns its own orange plantation in Haiti.

The export market has long generated the major part of Marnier’s sales, with France representing less than nine percent of the group’s total revenues of EUR 137 million ($176 million) in 2005. The United States is the company’s single largest market, accounting for 60 percent of sales, while the rest of Europe adds nearly 18 percent. The company is listed on the Euronext Stock Exchange, and is led by chairman Jacques Marnier Lapostolle.

INVENTING A LIQUEUR LEGEND IN 1880

The Marnier name had been associated with the French wine and spirits community since the family founded a winery in the Sancerre region in the 18th century. Indeed, that winery, Chateau de Sancerre, was itself to become the centerpiece of the Sancerre appellation. In 1876, Louis-Alexandre Marnier, heir to the Sancerre winery, married Julia Lapostolle, setting in motion the birth of the Marnier-Lapostolle legacy.

The Lapostolle family then operated a small but successful distillery, founded in 1827 by Jean-Baptiste Lapostolle in Neauphle-le-Chateau near Paris. That business produced a number of distilled products, and especially liqueurs. Among the company’s original products was its Cherry Marnier, flavored with Morello cherries imported from Turkey.

Lapostolle’s son Eugene took over the family distillery toward the middle of the 19th century. In 1870, the younger Lapostolle had been traveling in France’s west coast, where he discovered the Cognac region, its distilleries, and especially its own distilled spirit, the brandy (literally “burnt”) wine known as cognac.

The Cognac region had long established its reputation for its brandy, based on white Champagne grapes. The region’s soil and climatic conditions proved ideal for the development of this grape variety, and in turn lent a distinctive flavor to its distilled spirits. While this process was known to have been in place as early as the 11th century, distribution of its spirits remained largely confined to the local market. It was only in the 18th century, with the arrival of a pair of British subjects, Jersey’s Jean Martell and Ireland’s Richard Hennessey, that Cognac began to achieve fame beyond the region, and especially in the British empire. This market remained the primary market for cognac until well into the 19th century, while the spirits remained relatively unknown in the region around Paris.

Returning from his travels, Lapostolle brought back a number of bottles of cognac and introduced his family, friends and other acquaintances to what many came to consider the quintessential distilled spirit. Among those invited to the tasting was Louis-Alexandre Marnier, who had been working on distilling his own spirits, known as eau-de-vie, for some time. Marnier was especially interested in creating a new triple sec, or orange liqueur, to rival that created by Edouard and Adolphe Cointreau in Angers in 1849. The liqueur, which used the then extremely rare and exotic orange fruit imported from the French tropics, became a popular drink, especially during the Christmas season when gifts of oranges and other citrus fruits were traditional.

Marnier quickly recognized the potential of basing an orange liqueur on the Cognac brandy and set to work developing the recipe. Marnier’s work continued over the next decade, during which time he joined the Lapostolle family and distillery. That business then became known as Marnier-Lapostolle, which was also adopted as the family name. By 1880, Marnier-Lapostolle had perfected his recipe, which in addition to cognac also used the macerated peels of the Bigarade orange. Also known as bitter oranges, this variety differed greatly from the sweet oranges in general consumption. Among other features, the bitter orange peels retained much of their flavor when dried; the peels were then macerated in neutral alcohol. The resulting liquid provided the principal flavoring ingredient for Marnier’s liqueur. In order to ensure the supply of orange peel necessary for the recipe, Marnier-Lapostolle bought its own orange plantation in Haiti that same year.

COMPANY PERSPECTIVES

A Family Affair. More than 150 years and six generations after it was established, Grand Marnier is still run and controlled by the family that founded it: the Marnier-Lapostolles. Today, the company’s president, Jacques Marnier-Lapostolle, defends the same values as those of his great great-grandfather: quality, authenticity and style.

SUCCESS IN THE 20TH CENTURY

Marnier initially named his liqueur Curaçao Marnier, highlighting the tropical source of its flavor. However, Marnier’s friend, Cesar Ritz—soon to found the Ritz Hotel empire—convinced him that the liqueur deserved a more fitting name. Ritz reportedly proposed the name “Grand Marnier” as a “grand name for a grand drink.” The choice of the word “grand” also served to set the liqueur apart from the prevailing fashion for prefacing products with the word “petit.” The company had also developed a distinctive bottle and red label, including a red wax seal, which led to the label’s full name, “Grand Marnier Cordon Rouge” (Red Ribbon). The drink soon caught on, with Ritz himself playing the role of ambassador for the label, introducing it to the Savoy Hotel in London, where it quickly became popular. Marnier-Lapostolle himself returned the favor, helping Ritz acquire the property on the Place Vendome in Paris, where Ritz built his Ritz Hotel. That site became a prominent Parisian landmark—and source of sales for Marnier-Lapostolle.

By the end of the 19th century, Grand Marnier had already achieved its reputation as one of the world’s finest—if not the finest—liqueurs. The company had won numerous awards, such as the top prizes at the Chicago International Exhibition of 1893, and again in Paris in 1900. Grand Marnier’s status was further aided by its popularity among European royalty, with major customers including Austrian Emperor Franz Joseph and the Prince of Wales and other members of the British royal family. Indeed, the liqueur inspired the creation of the “crepe suzette,” invented in honor of the future king of England, Edward II. The company later developed a special cooking version of its liqueur, based on neutral alcohol instead of cognac, called Grand Marnier Cordon Jaune (Yellow Ribbon).

While the company continued to produce its Cherry Marnier and other spirits, as well as the Chateau du Sancerre wines, Grand Marnier was clearly its flagship product. The liqueur not only maintained this position within the company’s operations into the 21st century, it also became France’s leading liqueur export, outselling all other French liqueurs on the international market.

By the 1920s, Grand Marnier had become a staple on the most exclusive bar shelves—the liqueur was served on the Titanic, for example. In the United States, the orange-flavored liqueur became a popular ingredient in the new fad for cocktails that swept that country, and later the world. One popular Marnier-inspired cocktail was the Red Lion, invented in Chicago in 1933, featuring Grand Marnier, gin, and orange and lemon juices. To commemorate its success, Marnier-Lapostolle released a new and more exclusive liqueur, Grand Marnier Cuvée du Centenaire to celebrate the company’s 100th anniversary in 1927. The new liqueur included only cognac distilled from grapes from the Grand Champagne zone, aged up to 50 years. At the same time, the company, still led by Louis-Alexandre Marnier-Lapostolle, launched a new special edition series of its Grand Marnier Cordon Rouge. While the bottle retained the same iconic shape, the company commissioned noted artists and designers to redevelop the label and sometimes the glass itself. The special edition series soon became a company mainstay—in 2006, for example, the company released its Chocolate bottle, accompanied by a specially designed Chocolate dress modeled by 2002 Miss World Elodie Gousin.

By then, Societe des Produits Marnier-Lapostolle, as the company became known, had acquired its own estate in Cognac, and produced its own range of Marnier cognacs, including VS, VSOP and XO varieties. The company also developed its own Pineau de Charentes, a regionally based fortified wine based on cognac. The third generation of the family, under Julien Marnier-Lapostolle, took over control of the company and continued to develop its range of labels and other promotions. In the 1960s, for example, the company worked with a craftsman to develop a wrought-iron cradle for its bottles; produced by hand, the cradles remained highly limited, and were discontinued when that craftsman retired in 1999.

NEW PRODUCTS FOR THE NEW CENTURY

Other products developed in the last decades of the twentieth century included Grand Marnier Red Velvet Cuvée Speciale, developed in the 1970s and positioned between the company’s Cordon Rouge and Centenaire labels. The company developed a dairy-based liqueur, Grand Marnier Cream, which, although marked by a limited shelf life, enjoyed some success until it was discontinued in 1977. That year, Marnier-Lapostolle celebrated a new anniversary, its 150th, releasing Grand Marnier Cuvée du Cent Cinquantenaire, featured a blend of cognacs and aged up to 25 years. The company also continued to release special editions of its liqueur, such as a run of just 30,000 bottles of Grand Marnier Royal Celebration in honor of the marriage of Prince Charles and Diana Spencer.

KEY DATES

1827:: Jean-Baptiste Lapostolle founds distillery near Paris.
1880:: Son-in-law Louis-Alexandre Marnier-Lapostolle develops Grand Marnier liqueur based on cognac and orange peels; buys orange plantation in Haiti.
1927:: Marnier-Lapostolle releases Marnier Cuvée du Centenaire to celebrate 100th anniversary.
1977:: Launch of Marnier Cuvée du Cent Cinquantenaire to celebrate 150th anniversary.
1994:: Alexandra Marnier-Lapostolle starts up winery in Chile, Casa Lapostolle.
2004:: Company introduces vanilla-flavored Navan liqueur in United States to take advantage of booming cognac sales among African-American population.

At the end of the century, the wine and especially spirits industries underwent a massive wave of consolidation, creating a smaller number of large-scale, multinational giants possessing highly diversified brand portfolios capable of competing on a global level. Marnier-Lapostolle resisted this trend. While the company went public, listing its stock on the Paris Stock Exchange (and counting luxury products group LVMH among its shareholders) it nonetheless remained closely controlled by the Marnier-Lapostolle family, which entered its fifth and then sixth generations, under Jacques Marnier-Lapostolle. The company also largely resisted the temptation to expand beyond its traditional portfolio.

Nonetheless, the company’s portfolio saw some expansion in the 1990s and again in the 2000s. In 1994, Alexandra Marnier-Lapostolle led the company into the market for Chilean wine, founding Casa Lapostolle in that country in that year. Chile had attracted a number of French winemakers in part because the country’s vineyards featured vine types dating back to the 19th century—and more specifically, to before the phylloxera virus had devastated the Bordeaux vineyards. Casa Lapostolle quickly developed itself as a high-quality, high-end wine label, and by the early 2000s had begun to earn a prominent reputation among the world wine community.

The creation of Casa Lapostolle marked a turning point for the tradition-steeped French company. It also paved the way for further changes within the company itself. Into the mid-1990s, the company sought to dust off its image, leading to a major event: in 1996, the company went outside the family for the first time to appoint its chief operating officer. The company brought in Claude de Jouvencel, who had gained his experience at French drinks giant Pernod Ricard. De Jouvencel quickly sought to reposition Grand Marnier, sales of which remained largely limited to the Christmas and New Year holiday season. With the launch of new advertising campaigns, such as the “Spiked with Oranges from the French West Indies” campaign launched in 1998, the company sought to attract a new generation of younger drinkers. The campaign was not without its degree of cynicism. In the early 2000s, Marnier-Lapostolle received international attention for the poor working conditions, low pay and health risks suffered by workers at its Haiti plantation. After workers went on strike, the company was forced to increase its wages and install basic amenities, such as toilets and washing facilities, at its factory there.

The United States by then accounted for the vast majority of the company’s sales—some 60 percent at mid-decade. It also represented a new opportunity for the company, as the massive popularity of rap and hiphop music—and the associated culture of “bling,” that is, the blatant use of luxury brands and items—had brought about immense interest in high-end cognacs. Grand Marnier sought to cash in on this trend, launching a new vanilla-flavored liqueur, called Navan, marketed directly to the African American community. The company hoped to reach new success for this and its main Red Ribbon label, still the company’s flagship after 125 years.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Casa Lapostolle (Chile); Grandes Marques (Netherlands; 85.71%); Marnier Chile; Marnier Investissement S.A. (Switzerland; 99.75%); Marnier Lapostolle Inc (United States; 97%); Marnier Lapostolle S.A.; Marnier Management S.A. (Switzerland).

PRINCIPAL COMPETITORS

Pernod Ricard S.A.; Sapporo Holdings Ltd.; Diageo Scotland Ltd.; Remy Cointreau; Champagne Moët and Chandon SCS; Ricard S.A.; Les Grands Chais de France; Societe Jas Hennessy and Co.; Belvedere S.A.; Bacardi Espana S.A.