UK: Price erosion causes Champagne headache
Thirst for cheaper fizz causes industry headache
Nearly half of the growth in Champagne prices in the UK over the last decade was wiped out by discounting during the country's economic recession in 2009.
Pricing in key export markets is the major concern in 2010 for Champagne trade body Comité Interprofessionnel des Vins de Champagne (CIVC).
In the UK, by far Champagne's largest export market, average prices rose by a fifth between 1999 and the end of 2008. But, almost half of this growth was eroded during a few tough months in 2009, shows an index released by the CIVC at its annual briefing in London today (16 March).
"In volumes, we are in a much better position than at this time last year," the CIVC's Daniel Lorson told just-drinks following the briefing. "But, for pricing, that is a different story," he said, adding that the body expects price/mix to remain tough in 2010. "Consumers are still trading down to cheaper bottles," he said.
Average Champagne prices in the UK in 2009 returned to 2006 levels. Some Champagne houses took a hit on volume sales in order to maintain pricing, but a significant number of other producers agreed to offload stock at discount rates.
Global Champagne volume sales fell by 9% in 2009, to 293.3m bottles, while value sales fell by 17%. Stable demand in France helped to soften the blow in export markets, of which the US and Germany slipped back to the volume levels of the early 1990s.
In the UK, which is as large in volume terms as the next three biggest export markets collectively, volume sales fell to around 30.5m bottles in 2009, down 15% compared to 2008.
Andrew Hawes, chairman of the UK Champagne Agents' Association, told just-drinks today that he is "cautiously optimistic" for 2010. Both volume and value sales returned to low single digit growth at the end of 2009, driven by strong Christmas trading, he said.
Despite concern over pricing, Lorson said that 2010 should mark some improvement for Champagne volume and value exports as the world economy begins to recover. "It cannot be worse than 2009," he said.
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