Insight - Champagne body upbeat amid fierce discounting
Sales have plummeted, discounting is fierce and there are rumours that some producers are struggling to survive, but Champagne's trade association is insistent that it sees green shoots in the region's vineyards.
Retailer discounting on Champagne ahead of Christmas - the key selling period for the iconic French bubbly - is some of the fiercest the industry has known.
In the UK, the German discount retailers Aldi and Lidl are both selling Champagne at under GBP10 per bottle.
In France, on producers' home turf, things are little better. "The lowest Champagne in price in France was around EUR12 to EUR12.5 a year ago, but this year they are breaking the EUR10 level," Daniel Lorson, of trade association Comité Interprofessionnel du Vin de Champagne (CIVC), told just-drinks yesterday (16 November).
Less than two years since strong demand yielded concerns of a global Champagne shortage, falling demand in the economic downturn has led to a short-term build-up of stocks in distributors' warehouses. This, plus a fall in consumer spending power, has led to deeper discounting on bottles by retailers.
Champagne's fortunes mirror the state of the economy more than perhaps any other drinks category. The CIVC expects Champagne sales to be down by up to 15% for 2009, although a relatively solid performance in France masks an export volume decline of around a third, compared to 2008.
Lorson said that the CIVC is largely unconcerned about the level of seasonal discounting in 2009. "Discounting on Champagne happens every year. It would be a concern only if this period increased and if it spread out," he said.
Discounting, he added, attracts "consumers that are not really the natural drinkers of Champagne. When the Champagne gets more expensive, they will switch to sparkling wine or another product".
Lorson said that the CIVC is increasingly upbeat about Champagne's prospects.
A 15% volume decline for 2009 would be considered "not bad" in the current conditions. "At the end of 2009 we will say it has been a difficult year, but we are relatively optimistic. We think the worst is behind us," he said.
Ex-cellar prices of Champagne are "slowly going up", Lorson added.
Still, there are rumours that producers in the region face going out of business.
Lorson said that the CIVC is "conscious of problems" but that the atmosphere in the region is "relatively serene". The situation is "not desperate", he said, adding that producers had time to save proceeds from a boom period for Champagne that lasted from the mid-1990s until 2008.
The CIVC's stance epitomises a philosophical approach taken by some industry leaders in the downturn in demand for Champagne in 2009.
Champagne sales by volume can only afford to grow by an average 2% annually for the next decade, otherwise there will by supply shortages, Ghislain de Montgolfier, president of the Union des Maisons de Champagne (UMC), said earlier this year.
A planned expansion of the planting area for Champagne-producing vines is not expected to come into force until 2017.
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