FRANCE: Champagne body plays down talk of full recovery
Champagne body CIVC says value growth must be the focus for 2011
The Champagne industry's ruling council has said that there is more work to do to rebuild consumer demand, despite a series of sales rebounds for some of the sector's biggest players.
Champagne sales may have bounced back to 319.5m bottles in 2010, the fourth highest total on record, but the Comité Interprofessionnel des Vins de Champagne (CIVC) is in cautious mood. Value sales remain below those seen before the global financial meltdown.
Value sales of Champagne rose by 8% in 2010, to EUR4bn (US$5.4bn), but that is below the EUR4.5bn in sales registered in 2007, according to CIVC figures. "We lost EUR800m in two years," the CIVC's Daniel Lorson told just-drinks at the end of last week. "We are slowly recovering, but the first growth we need to achieve is growth in value, because we have lost quite a lot since 2007."
Lorson levies the same argument against those Champagne houses currently warning of shortages in 2011, due to the unexpected pace of the rebound in volumes. Within the last month, both Vranken-Pommery Monopole and Moet Hennessy have said that supplies will be tight if sales momentum continues.
"It's a bit exaggerated," said Lorson, adding: "There is more growth in value to do in Champagne before thinking about growth in volume."
Champagne's total inventory is estimated to be equivalent to 1.18bn bottles, which is equivalent to 3.6 years of supply at 2010 levels. In 2009, the inventory to sales ratio was 3.8 years. As a benchmark, the CIVC has historically sought to maintain a ratio of more than 3 times.
There is a suspicion in the industry that some of the major houses are playing politics. The Champagne sector operates a 'quality reserve' system that enables growers to hold onto some of their harvest - equivalent to around 225m bottles in total. Most growers' reserves are thought to be almost full, but they are not keen to release stock lest the extra supply reduces prices. The CIVC has the final say on the release of any reserve.
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