FRANCE: Champagne Council bets on growth
Champagne Council (CIVC) relaxes production control for 2011 harvest
Champagne's trade council has continued to relax controls on production in 2011, in anticipation of higher consumer demand for the French fizz.
Producers and growers will be able to harvest up to 12,500kg of grapes per hectare this year, the highest level since 2008, the Comité Interprofessionnel du Vin de Champagne (CIVC) has said. Last year, it set a maximum of 10,500kg and, in 2009, the limit was 9,700kg.
Resurgent consumer demand for Champagne in the past 18 months has played a part in the CIVC's thinking, according to group spokesperson Thibaut le Mailloux. In 2010, global Champagne sales rose by 9% to 319.5m bottles, albeit still below the 321.8m bottles sold in 2006.
The higher production quota represents longer-term optimism about Champagne's prospects. It will be at least three years until grapes from the 2011 harvest reach shop shelves as Champagne and Le Mailloux told just-drinks today (16 August) that the CIVC anticipates global Champagne sales to rise by 2% per year in volume over that period.
Top Champagne houses have spent most of this year campaigning for a less strict production limit, amid rebounding sales. Le Mailloux said that CIVC decided on 12,500kg as a compromise between the big houses and small-scale producers. He added that favourable weather conditions, mainly a wet July after a warm dry spring, have also made a higher production quota feasible in 2011.
Almost a quarter of production from the 2011 harvest is to be placed in producers' reserves, the CIVC has stipulated. Meanwhile, the equivalent of 2,000kg per hectare can be released from current reserves.
Despite the debate over production limits, pricing remains arguably the biggest issue for the Champagne industry in 2011. Years of pricing gains in key markets were eroded overnight when recession took hold in 2008. In 2010, value sales of Champagne rose by 8%, to EUR4bn (US$5.75bn), but that is below the EUR4.5bn in sales registered in 2007, a record year for Champagne and the last full-year prior to the financial crisis.
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 around 3 years.
- Has Diageo added Beer to its 'Non-Core' List?
- Focus - Diageo's FY Performance by Region
- Diageo " knew United Spirits would be complicated”
- Diageo Q4 & FY - Preview
- It's not all bad for Diageo - Analysis
- NPD: Tomatin Contrast, Cù Bòcan
- Challenges remain as Diageo posts flat FY sales
- Diageo, Heineken end South Africa, Namibia JV
- Bacardi creates Bacardi rum marketing role
- Tesco pulls small carton-size Ribena, Rubicon, Cap
- Global gin insights - market data, product innovation and consumer trends research
- Global rum insights - market forecasts, product innovation and consumer trends research
- Global liqueurs insights - market forecasts, product innovation and consumer trends research
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global cachaca insights - market data, product innovation and consumer trends research