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Emirates has invested $500 million to build a 'Fort Knox' of wine

  • James Gaddy

    Bloomberg

New York, United States | Fri, January 6, 2017 | 03:06 pm
Emirates has invested $500 million to build a 'Fort Knox' of wine Boeing 777 Emirates approaching JFK airport, New York 2010. (Shutterstock/Chris Parypa Photography)

On just about any given day, at any given altitude on an Emirates flight, you can order a glass of Dom Pérignon. If you're flying first class, you might find a Premier Grand Cru Classé from Château Figeac, a highly rated red in the Saint-Émilion region of Bordeaux. And if you're really lucky, you might be able to order a 2005 Sauterne from Château d'Yquem, the superior first-growth winery that was a favorite of Thomas Jefferson and is now owned by LVMH.  

Since the Dubai-based airline began its wine program 12 years ago, it has spent more than $500 million to develop the best wine list in the sky. Joost Heymeijer, a senior vice president who runs the inflight catering service at Emirates, says at any point the airline is flying about 70 different types of wine across its network. The list is fluid, based on the flight path and what vintage is drinking best at that particular time. Over a 12-month period, more than 300 vintages will be served, and it's this breadth that Mark Oldman, author of How to Drink Wine Like a Billionaire, finds most impressive. "To rotate the wines out like that is the most labor-intensive part of it," said Oldman.  

The company's secret weapon, though, is a nondescript group of warehouses that Emirates owns in Burgundy, France. Many of the wines served on an Emirates flight were bought years ago, and they are stored until they're ready to serve.

"If you have a vision of limestone cellars with cobwebs, I'm sorry to disappoint you," says Heymeijer. "Ours is more of a Fort Knox-style facility."

(Read also: Organic wine tastes better: Study)

It's a modern, temperature-controlled, light-deprived location that stores 3.75 million bottles of wine in their original packaging, in boxes and on palettes. The company chose Burgundy for the simple reason that ports are a few hours south with temperature-controlled containers where bottles can be shipped to the preferred destination. "It's not very sexy," he says. "But it is highly effective."  

"Just because you’ve got the money doesn’t mean you can buy."

It would be easy to chalk it up as just another advantage that the airline gets from its government subsidies. After all, it allowed its parent company, the Investment Corporation of Dubai, to assume its fuel hedging contracts, and the lobbying group Partnership for Open & Fair Skies has said Emirates received $7.6 billion to construct the Emirates terminal at the Dubai International Airport, giving it a competitive advantage over the Deltas and Lufthansas of the world. (Emirates disputes these figures.) But when it comes to wine, the airline has bought smartly over the years, buying heavily in good vintage years and finding jewels among lesser ones that it believes can age into respectability.

"It’s an investment," said Heymeijer. "We look at it like a commodity." 

What Money Can’t Get

Most airlines employ a wine consultant who will use a number calculated by the finance team to put together a list of 20 wines that are available both in the market and in the volume required. Tim Clark, the president of Emirates, wanted its wine list to be a differentiator. So the airline made the decision to partner with MMI and buy as directly as possible from merchants and vineyards and in smaller quantities, if necessary—10,000-bottle parcels instead of the typical 24,000 or 48,000. 

The toughest challenge for Emirates, at the beginning, was getting credibility in these wine-producing regions. Even though the airline considered its first class the right audience, it still had to show that it would treat the wine in a way that old-school French vintners would appreciate: Pour it at the right temperature and test how altitude and cabin pressure have an influence on what you smell, taste, and eat.

"Just because you’ve got the money doesn’t mean you can buy," said Heymeijer. "They want you to do justice to the wine." 

(Read also: Kitty in a bottle: introducing Hello Kitty wine)

The airline added space for bigger Champagne glasses instead of the traditional flute, so fliers get a more generous glass than what a restaurant might pour. Reds and whites also have a larger glass. Wines are not served out of a bottle but instead decanted into a personal carafe. And Heymeijer maintained that the airline is constantly working from an engineering perspective to provide better humidity and air pressure in its cabins.

"The conditions inside our aircraft are the same as if you were in a mountain in the Swiss Alps," he said. "If you were in a restaurant in the Alps, you wouldn't be asking a sommelier about the altitude."

Buy Early, Buy Smart

The volume involved still requires some compromises.

"They aren't going after houses with microscopic output," said Oldman. "It just wouldn't make sense." Domaine de la Romanée-Conti, for example, makes only 450 cases a year. But other chateaus, including Smith Haute Lafitte, Latour, Haut-Brion, and Mouton-Rothschild, make their wines in much larger quantities.

"We were able to buy decent volumes at first," said Heymeijer. One of the first investments he made was in a dessert wine, a 2005 Sauternes from Château d'Yquem in Bordeaux. "It is one of the grand wines of the world," Heymeijer continued. "It is unbelievably beautiful and intense." It sat in the storage facility until a couple of months ago, when the airline started serving it. 

"It’s an investment. We look at it like a commodity." 

The Sauternes has been a huge success—the airline can't keep it in stock now—but this method comes with risks, as well, trying to split the difference between hard-core aficionados and those who want to feel they are living large.

"Most collectors want their d'Yquem to be 30 or 40 years old," said Charles Antin, senior wine specialist for Zachys. "A 2005 Sauternes is just a baby."

But Oldman said that getting those bragging rights, and the loyalty, of a high-net-worth traveler is worth the the acquisition cost. "It's reinforcing the luxury experience," he said. 

Case in point: More than 9 million glasses of Champagne were poured on Emirates flights last year. Along with Costco, the company is one of, if not the largest, buyer of Dom Pérignon in the world.

Some of the wines the airline bought many years ago for $350 would now run more than $2,000 a bottle. Buyers attend the futures market in the spring and place orders. And most chateaus have some back stock that they could have put out on the market 10 years ago but wanted to see how the wines age over time. So Emirates will also buy some stock that is not on the market and still in the cellars and release it earlier on the flight. "We buy early, and we buy smart," Heymeijer said.  

(Read also: Trend alert: Next generation blue wine)

Bordeaux and Beyond

The airline has been expanding its list, with recent purchases from Burgundy locations in Chevalier-Montrachet and Échezeaux, and in 2015 it purchased 2,000 cases—equivalent to 10 percent of the total production—from the Corton-Charlemagne Grand Cru region, considered to be one of the finest whites in Burgundy. It added such Italian wines as Solaia and Ornellaia for first-class fliers and the Tuscan wine Tignanello for those in business class. You can find New World wines, as well, such as Mount Mary Chardonnay from Australia and a Stag's Leap Chardonnay from Napa Valley. 

But it's more Bordeaux than anything else, and by the middle of this year, a number of first-growth options will appear on the menu. The area is well suited to the airline's needs: It has the volume, quality, and name recognition—Margaux, Cheval Blanc, and Latour are chateaus that are part of an oenophile's vocabulary, wines that they would look forward to drinking en route to their next destination.

"We serve Château Palmer in business class. Most airlines, you’d be lucky if they served that to you in first class," Heymeijer said.

Emirates embraces some risk and buys in years that are not known as being terrific vintage years, knowing it can stash them in the Burgundy facility and wait for them either to be rediscovered or to ripen to their best selves.

"People have written off the 2012 and 2014," he said, "but I've tasted some of them in the last few months, and the right chateaus have made some beautiful wines." As for the 2015 vintage? "I’m very excited," he said. "Not as good as 2010, but in Saint Emilion, Passat, and Margaux, it will be very good, probably better than the 2010."

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