U.S. Billionaire Poised to Snap Up Distressed Bordeaux Chateaux

 Crunching up the gravel drive to Chateau Fonplegade in Saint-Emilion, I spot a horse and plow in its sloping vineyards, the latest eco-friendly improvement by American billionaire owner Stephen Adams.

Adams bought Fonplegade in June 2004 for just under 30 million euros (about $40 million at current conversion rates), one of six chateaux on Bordeaux’s Right Bank he’s snapped up in the past nine years.

Next on his wish-list? A “big one” in the Left Bank’s prestigious Medoc, home to famous first growths like Lafite and Mouton. If the French economy worsens, late this year or early next year will be the time to grab it, said Olivier Nouet, president of Adams’s company, Adams French Vineyards, over a tasting and lunch at the chateau in March.

Adams, 71, likes underperformers he can upgrade. Spare-no- expense renovations at grand cru classe Fonplegade set him back $7 million. Using a horse-powered tiller, for example, costs more than a tractor, but for improving a vineyard’s quality, it’s better than modern machines.

And Fonplegade’s wines are getting better and better. A barrel sample of the 2008 is spicy and rich. The current release, 2006 ($50), is an elegant balance of fruit and minerality.

“Our strategy is to go for a third or fourth growth, but not for more than 100 million euros,” said Nouet.

He and Adams had considered Margaux second-growth Chateau Lascombes, but the price was more than 200 million euros. The majority shareholder is Los Angeles-based Colony Capital LLC, and the chateau is still for sale.

Lost Chateau

It’s not always easy to close a deal. Last spring, Adams told me that he shook hands on the purchase of Chateau Poujeaux in the Left Bank’s Moulis appellation, but that it was sold from under him to the French owner of another St-Emilion estate.

Adams expects France’s financial crisis to deepen in six to 12 months, putting more chateaux on the market, said Nouet.

Thanks to French inheritance laws, family properties often have multiple owners and family members short of cash may press relatives to sell. During the annual en primeur tastings in April, negociants and chateau owners told me that some chateaux are heavily in debt to Credit Agricole SA, France’s second- largest bank.

Adams, who made his fortune in banking, billboards, and recreational vehicles as owner of Ventura, California-based Affinity Group Inc., can afford to wait.

Honeymoon Start

When I had dinner with him last spring in St-Emilion, he appeared to have the requisite patience. A conservative dresser, he wears English tweed jackets, striped suspenders, and round, owl-like horn-rimmed glasses. Though noted for making quick decisions, he moves and speaks slowly, as though telegraphing the temperament required for the long-term wine business.

His interest in getting into the industry began in 1993 when he and his wife Denise married in France and honeymooned in St-Emilion.

He started small with the run-down but pretty Chateau Lagarosse in the downscale Premieres Cotes de Bordeaux appellation. Cost: $4 million.

“It was a money pit,” Adams recalled. The plumbing and roof were bad, the swimming pool was in disrepair, and estimates to remodel the chateau gave him sticker shock. So he concentrated on vineyard and winery improvements and hired world-famous wine consultant Michel Rolland, who now advises all his chateaux.

The wines, while good for the price, reached the limit of improvement given the location. (The 2006 Chateau Lagarosse Les Comtes, the top cuvee, is my favorite: juicy, flavorful and $20.)

Grand Cru

So Adams looked for an estate with better terroir. He bought St-Emilion grand cru Chateau de Candale in 2002.

“It became clear to me that marketing one or two wines is an uphill battle,” he said. “To make a success, I needed a portfolio with wines at different price levels, and a flagship.”

That’s why he snapped up Fonplegade. Its 44 acres (19 hectares) of mostly merlot vines are just down the road from famous chateaux L’Arrosee and Pavie. Quality had dropped so low the wine sold for 8 euros a bottle. Now it goes for 20 euros.

Even as the dollar declined, he bought more. In 2005 it was Chateau de Bel-Air in Lalande de Pomerol; in 2007 Chateau L’Enclos in Pomerol and Chateau Roylland in St-Emilion. I was especially impressed with a juicy, succulent barrel sample of 2008 L’Enclos.

Along the way he’s also added three wineries in California and implemented the kind of vertical strategy he uses for his many RV businesses -- he has his own U.S. wine import company, a wine shipping firm, and wine clubs.

Americans in Bordeaux

Adams is not the only American player in Bordeaux.

The Dillon family bought Chateau Haut-Brion in 1934 and later Chateau La Mission Haut-Brion. Robert G. Wilmers, chairman and chief executive officer of Buffalo, New York-based M & T Bank Corp., has made Chateau Haut-Bailly in Graves a star performer since his purchase a decade ago. Jess Jackson and Barbara Banke, who preside over the vast Kendall-Jackson empire, are partners in St-Emilion’s Chateau Lassegue.

If Adams keeps up his pace, he may become the biggest of them all. He declined to comment on whether the current financial climate is affecting his chateau-buying plans. Nouet said Adams is still aiming for a purchase in 2010.

Come June, Adams and his wife will fly to Bordeaux in one of his four Gulfstream jets. They’ll stay at Fonplegade in a master suite that cost about $1 million to renovate and throw a party or two during biennial trade fair Vinexpo.

And they may be on the lookout for a chateau or two.