Inheritance law is not always regarded as one of the most interesting topics, but over time it can wreak some pretty dramatic changes on a society.
Many readers may already be aware of the peculiar nature of Burgundy region’s ownership structure, and this is a direct result of Le Code Napoleon and the inheritance laws that Napoleon instituted in 1804.
How so? And maybe more importantly, why is it causing wine producers so many headaches today?
Read on to find out.
Le Code Napoleon
After rising to power during the revolutionary wars, Napoleon instituted a new civil code across France, known conveniently as Le Code Napoléon, or the Napoleonic Code.
Among other things, this code decreed that, upon death, a parent's estate was to be divided equally amongst their children, rather than being inherited by the eldest male heir as had previously been the case. The same law still exists today - albeit with a few modernizing amendments.
The result? The vineyards of Burgundy (confiscated from the church and nobility, then sold off to private buyers during the revolution) underwent two centuries of continual subdivision, leading to the splintered family ownership structure we see today.
The impact on Modern-day Burgundy
When their parents pass away, heirs have only a few options open to them. They can agree to run the vineyard as a collective or buy out each other's shares, they can go it alone and further subdivide the property or they can bring in outside investors with very deep pockets - a source of much consternation in Burgundy today.
The Pressure to Sell
In the past couple of decades, the value of French vineyards has increased at a dizzying rate. With inheritance taxes in France among the highest in the world (around 40-45% for properties valued at $100,000 or more), taking over the family estate can ironically be a huge financial burden.
Selling grapes and/or making wine are not the most profitable ventures, operating on thin margins, and due to the inflated value of the vineyard it can often take upwards of ten years for heirs to pay off their inheritance tax - assuming payments aren’t delayed further by disasters like hail or frost.
Faced with this future, it's no surprise that heirs will sometimes choose to forego the difficulty when the alternative is to sell off their shares and retire in relative luxury, or purchase a smaller cheaper vineyard.
Consolidation and Foreign Ownership
The net result is that over time, the smaller rows that are split off from the main vineyards become juicy targets, and many of Burgundy's best vines risk being snapped up by large corporations or outside investors with deep pockets - some French, some foreign.
Ironically, the Code may be partly responsible for creating the current Burgundian environment leading to a plethora of uniquely charming, small, family-owned artisanal wineries. Even so, with today’s economic pressures, many worry that the distinctive nature of Burgundy's family-owned domaines will slowly go the way of Bordeaux or Champagne, which are characterized by large-scale corporate ownership. These may view the estates more as a source of profit than a cultural inheritance, making it an open question as to whether they will produce wine with the same reverence and care for tradition as a family might.
As Bordeaux indicates, corporate ownership in France is not a new phenomenon, but Burgundy has for the most part stayed in the hands of local families. So while it’s not yet a widespread phenomenon, if the course is maintained we may see fewer family-owned Burgundian estates in the decades to come.
The French government has taken note of the risks the inheritance laws pose to their vineyards, and the difficulties imposed on heirs by the estate tax. While the Napoleonic Code is unlikely to be repealed anytime soon, the government is slowly taking steps to reduce the tax burden, increasing tax-free entitlements for heirs and allowing parents to transfer ownership shares to their children during their lifetime.
Will this make the difference, or will consolidation and corporate ownership in Burgundy increase over the years to come?
Only time will tell.