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There are good times ahead for sparkling wine producers all over the world, including Champagne, according to the latest joint just-drinks/IWSR Global Insights report – with non-Champagne fizz set for dramatic growth.

The joint-report from just-drinks and The IWSR into Champagne and sparkling wine is published this week

The joint-report from just-drinks and The IWSR into Champagne and sparkling wine is published this week

At first glance, that might look surprising. After all, overall sparkling wine consumption (including Champagne) only expanded by 0.3% in 2015, with Champagne bucking the recent trend by outperforming its global competition.

But, the figures were skewed by short-term losses in some of the category's major markets, including its European heartland and, in particular, the CIS markets – which shed more than 2m cases in 2015 alone.

Factor in worsening economic conditions in key African markets – especially Nigeria and Angola, both of whom have been impacted by falling oil prices – and it added up to a difficult year for sparkling wines in general.

But, underlying trends are broadly positive.

If the category had a star in 2015, it was Champagne, which surprisingly out-performed non-Champagne fizz thanks to continued gains in the US, Japan and Australia, as well as a return to growth for the UK, the leading Champagne market by volume. This performance gives a clue to the source of future growth for the Champagne houses, with the category poised for a period of "unprecedented and uninterrupted growth" in the years to 2021, reaching just over 28m cases thanks to a compound annual growth rate (CAGR) of +1.7%.

While France will continue to account for more than half of those sales, the country will see its category share erode further as a wide range of markets, including the US, Japan, Australia, Global Travel Retail, Italy, Spain, Canada and Hong Kong all exhibit healthy growth.

As the report notes: "This rising tide will benefit almost all markets, with Champagne's top 18 destinations all set to see their volumes rise [between 2016 and 2021], showing the remarkable geographical diversity and resilience of the category."

Growth for non-Champagne sparkling wine is poised to accelerate even faster in the next five years, according to IWSR predictions, with volumes set to reach 219m cases by 2021, a gain of nearly 30m cases at a CAGR of +2.2%. As with Champagne, only a few of the top 20 sparkling wine markets will decline over that timescale (Ukraine being the most notable), with six leading markets – Russia, the US, Italy, the UK, Argentina and China - set to record "spectacular" growth.

Germany, still by far the world's leading sparkling wine market despite recent challenges, will consolidate its position with solid gains to 2021, with France and Spain, two more leading markets, following suit.

But, Germany's position as the leading consumer of imported sparkling wines could be under threat in the next few years. If the UK continues to grow at rates above 10% - as it has done over the past five years - it will soon overtake Germany.

Much of the growth in the UK – and indeed in the US and many other global markets – is being driven by the Prosecco boom. This, says the report, has become the "go-to option for aperitif seekers", thanks to its perceived status as an everyday mini-luxury.

However, Prosecco has its challenges. In the UK, it is increasingly price-sensitive and there is a dearth of large-scale, credible brands to add value and drive sustainable growth. "Prosecco's current success is in large part accounted for by price," the report notes. "But, for the category to kick on, credible brands – such as Bottega and Bisol – need to gain traction.

"This can partly be achieved by a strong focus on the added value of Prosecco's higher-end DOCG classification, which can build the category's quality credentials."

However, the report adds that few Prosecco drinkers, even in Italy, understand the difference between DOC Prosecco from the plains and higher-quality DOCG wine from the hills.

Another issue facing Prosecco is maintaining supply as demand continues to accelerate around the world. New vineyards are coming on stream for the main volume category, DOC Prosecco, but producers are wary of doing the same for the DOCG area, for fear that quality may be diluted.

Prosecco's dramatic growth has had a negative impact on Cava, which has seen its position as the default sparkling wine eroded in many markets. A backlash linked to the Catalan independence issue has also hit sales in Spain.

However, other domestic sparkling wines are making increasing inroads in their home markets, as consumers become increasingly concerned with the provenance and authenticity of what they drink. Sparkling wines from England and Wales, Australia and New Zealand have all reaped the benefits here.

The success of Prosecco and other sparkling wine segments has undoubtedly reduced Champagne's market share in many major markets, such as the UK and the US – and even in its home market of France.

As Julie Campos, outgoing MD of Champagne Nicolas Feuillatte, tells the report: "Sparkling wine consumption is increasing tremendously and, to be honest, it's not increasing because of Champagne, but because of increased consumption of Prosecco, Cava, Tasmanian sparkling and California sparkling wines."

However, many in the Champagne region are more concerned with longer-term trends, pointing out that increased interest in sparkling wine in general is likely to lead to more people trading up to Champagne for reasons of status and quality in the future.

Global Champagne and sparkling wine insights - market forecasts, product innovation and consumer trends - Click here for full details


Sectors: Wine

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