Champagne

12 September, 2012

Despite reports of champagne’s struggle to keep cases sales up, Lucy Britner finds that the world has far from fallen out of love with France’s famous export



There’s romance in champagne – the expensive label, the popping cork, the sense of occasion. Over the past few years, though, headlines on the subject might’ve led you to believe it was about as romantic as a cold cup of tea resting on a tax return. Then there are the subjects of the early harvest, US domestically produced ‘champagne’ and the revision of the appellation’s borders. That’s a lot to deal with. But nothing, it seems, champagne can’t handle. 

Recently we have been hearing about champagne ‘losing fizz’, ‘bubbles bursting’ and sales ‘going flat’. Not without reason – worldwide shipments of champagne tumbled from 338.8 million bottles in 2007 to 293.3 bottles in 2009 according to the Comité Interprofessionnel du vin de Champagne.

But 2010 saw a jump back to 319.5 million bottles and by the end of 2011 that figure was 323 million.

During the same period the real GDP (gross domestic profit) growth rate for champagne’s top export markets wasn’t exactly bubbling over. In the UK it was -4.4% in 2009, up 2.1% in 2010 and 0.7% in 2011. In the US, it was -3.5%, up 3% and then 1.7% during the same periods (Eurostat). Hardly numbers worth popping corks over. But carry on reading and you’ll see that we definitely popped a few. Is this a major lesson to draw from these austere times – that quality, or perceived quality, is still worth the investment? 

And while there are austere times in some countries, others are celebrating emerging middle classes and a new presence on the world stage. Now that’s got to be worth a glass of champagne or two. 

The latest CIVC figures for 2011 show global value growth of 7% to US$5.9bn. Emerging markets bolstered volume growth with China up 19%, Russia 25% and India 58%. More mature champagne markets, such as the UK, showed a much slower rate of growth, although it does remain the largest export market and in 2011, 34.5 million bottles made their way to the UK. The next largest market is the US with 19.3 million bottles (CIVC). 

So let’s start by looking at the UK market and Lanson International’s Champagne Category Report 2012. The headline overview says: “With overall 4.3% value growth it [champagne] has seen stable sales in the off-trade as well as significant value growth in the on-trade.”

This ‘significant value growth’ is 8% year on year in the on-trade. The report suggests stable figures in the off-trade were maintained against a backdrop of a 10% increase in the number of price promotions in the grocery sector.

“A number of tactical opportunities have helped deliver this,” the report says. “The Royal Wedding, for instance, drove volume sales in the on-trade by +17.5%.”

Champagne wasn’t the only drink to benefit from events such as royal nuptials. In fact, sparkling wine matched champagne value growth in the on-trade during 2011. Are sparklers taking drinkers away from the category, then? 

Michel Letter, deputy managing director of Champagne GH Mumm & Perrier-Jouët, says: “Champagne shipments increased to 323 million bottles in 2011 (CIVC report), meaning that this year has been the second largest year for champagne for the past 12 years. So champagne sales around the world have never been so good – we haven’t lost our consumers, on the contrary. Champagne holds its rightful position on the premium category of the sparkling wine market.”

Paul Beavis, Lanson International’s managing director for the UK and US, says new consumers are coming to the category and it’s important to look at what they want. 

“Looking back over the past five years, the last four have been the hardest but what’s encouraging is that new consumers are coming in.

“The industry is well positioned to give consumers what they want. Sec and demi-sec styles for example. Also, glass sales are making the barrier to entry lower.”

Beavis’s Lanson Category Report 2012 also looked at consumer buying habits and revealed that price isn’t everything. 

Just ignore work for a second. Imagine you’re going to a party for a close friend and you’re shopping for something fizzy to take along. What’s your first instinct? I’d be tempted to suggest that it depends on how good a friend they are and what they know about wine. You can’t really take a supermarket own-label champagne and neither prosecco nor cava seem to cut it. So you look for a trusty brand that’s on offer, perhaps. Well, you’re not alone.

According to Lanson’s report “few shoppers buy solely on price”, but of the 2,000 shoppers surveyed, 69% do buy on brand and price deals.

Of course, we’re all too aware of the difficulties – with mature markets, getting UK consumers to part with their hard earned cash is a real skill. Beavis says education could be the key. 

Lanson commissioned independent MW Nicola Arcedeckne-Butler to create a flavour map of the key Grands Marques non-vintages. It ranges between fresh fruit, baked fruit, zesty and mellow and it is designed to help shoppers choose the right style of champagne. 

Education goes further than taste, though, and some houses are introducing disgorgement dates and QR-type coding to allow consumers to understand more about what’s in the bottle. 

For example, Krug has introduced an ID code to each bottle of Krug Grand Cuvée which, when entered online at krug.com, provides information about the conditions of the harvest of the year from which the majority of that blend is created.

Meanwhile, Champagne Drappier has taken the decision to introduce disgorgement dates. Drappier’s Michel Drappier says: “It is a demand from the consumer who now understands the process of maturation post-disgorgement. Only educated consumers appreciate it but they are more and more able to make the difference.”

Looking east

Though you can’t argue with its thirst for champagne, the UK market doesn’t offer the same kind of double-digit excitement you can expect from further afield. This isn’t really anything new, though. Imagine it’s 1805. At 27 years old, the widow (Veuve in French) Clicquot has decided to take control of the champagne house and her eye is on the Russian market. That year, 110,000 bottles were shipped from Champagne – 25,000 of them to Russia. 

Skip forward 207 years to 2012 and eyeing new export markets is as important now as it was during Napoleon’s time. I imagine the widow Clicquot would smile a knowing smile to see Russia was up 25% in terms of volume for 2011.

But brands are also looking a little further east than Russia. 2011 shipment figures from the CIVC suggest Japan received almost 8 million bottles, Singapore took 1.45 million, Hong Kong slightly fewer on 1.4 million and China received 1.3 million bottles. 

Indeed, Champagne Jacquart, which exports 55% of its champagne (9% of this to the UK), is looking further afield. Managing director Laurent Reinteau says the UK, Germany, Belgium, Switzerland and Italy are important markets for the brand and the bright lights of Asia and Russia – more specifically Moscow – beckon. “We are present in nearly 40 markets and in the past five years we have been developing Asia Pacific, including Shanghai, Singapore and Hong Kong.” 

Pernod Ricard brands GH Mumm and Perrier-Jouet are beginning to reap the rewards of eastern promise. International sales director for Martell Mumm-Perrier-Jouet Frantz Hotton says: “Asia is an important region for both our champagne brands; Japan is now the number two market for Perrier-Jouët with our prestige cuvée Belle Epoque and China has now become the fourth largest market for the brand. There is a very positive trend towards champagnes at present.

“GH Mumm is also performing really well thanks to some local activation programmes, such as the pop-up GH Mumm champagne bar which opened its doors temporarily at the renowned Fashion Hall Emporium in Thailand from March 20-27 this year.”

Protection

As ‘brand champagne’ makes its way around the world, its reputation travels with it. But in some markets, the term champagne isn’t protected. Take the US for example. 

At the CIVC’s annual briefing, Bruno Paillard, chairman commission communication & appellation champagne – Comité Champagne, expressed his frustration at a few large companies, including Constellation and Gallo in the US, using the term ‘champagne’ to describe their US-made sparkling wine. Paillard says that an informal agreement and letter of recognition has been signed by some companies, including Napa Valley Vintners, Washington State and Oregon Wine. Meanwhile, the CIVC has carried out advertising campaigns called Unmask the Truth.

Michel Letter, deputy managing director champagne GH Mumm & Perrier-Jouët, says it is wrong to mislead consumers. He adds: “Champagne is an internationally recognised appellation and defends the idea that champagne can only be made in Champagne – so each time that a product produced outside the champagne appellation wishes to apply a label mentioning “produced in Champagne”, it clearly misleads the consumer and we can only be against these requests.”

Jacquart’s Reineau agrees that this is a problem but one that could bring people to the category. He says: “US ‘champagne’ – it is an issue but it’s also good that there are local sparkling wines. Consumers get in the habit of drinking bubbles.”

And there’s certainly big business in bubbles.





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