Champagne consumption remains low in key emerging markets

Champagne consumption remains low in key emerging markets

Champagne is rebounding faster from the global economic downturn than following previous crises, but the industry still faces a challenge to win over emerging market consumers, Champagne Jacquart's CEO has told just-drinks.

The heads of France's Champagne houses will likely be sleeping much more easily in 2011, after seeing consumer demand return strongly in the past 12 months.

"This year, things are much better," Champagne Jacquart's CEO, Laurent Reintau, told just-drinks. "The prices are still below the levels of 2008, but they are recovering," he said during an interview at last week's London International Wine Fair (LIWF).

In 2010, total Champagne sales rose by 9% in volume to 319.5m bottles. Value sales increased by 8%, to EUR4bn (US$5.64bn).

When asked to compare Champagne's current performance against that following economic crises of the recent past, Reintau said: "This time, Champagne recovers much faster than in the previous crisis."

However, Champagne producers know that there is much work left to be done, particularly in emerging markets. "We must be cautious about our business model," said Reintau, referring to Champagne's relative lack of presence in the world's rising economies.

Last week, Champagne's trade body, the Comité Interprofessionnel du Vin de Champagne (CIVC), confirmed to just-drinks that it has opened an office in Russia. It plans to open one in Brazil later this year, giving it a presence in all countries within the so-called BRIC quartet of Brazil, Russia, India and China.

"Champagne is very concentrated in a few markets, such as in France and the UK," said Reintau. "Consumption in the US and in emerging markets is still very low per capita." Brazil and Russia imported around 1m bottles each in 2010, according to CIVC figures.

In 2009, the BRIC countries only accounted for 1.9m litres of global Champagne sales, less than 1% of the total, according to figures from market research group Datamonitor.

What's more, Champagne volume sales in the BRIC bloc is forecast to remain flat up to 2014. According to Datamonitor forecasts, published in late-2010, Champagne volumes in Russia will fall by 5% per year up to 2014, while China will only report annual growth of 0.3%. The forecasts mark a considerable slowdown from annual growth rates in the same countries between 2004 and 2009.

Reintau said that more education is needed to win over consumers in emerging markets. "The mistake would be to slow down in investments in these markets," he said.

At the same time, strict regulations on Champagne growing areas mean that producers do not need to go chasing large volumes. "Long-term, Champagne is about value and quality," said Reintau. "We've got around 35,000 hectares and we won't be able to grow that by a lot, so it's limited."