Focus - Champagne looks beyond recession to long-term growth
The downturn has not surprisingly caused a dramatic slide in Champagne sales but the Champenois are less perturbed than some might expect, continuing to plan for long-term growth through the expansion of the vineyard area. But Chris Losh wonders whether extending the appellation is really the best way forward.
Whether you're talking about the lengthy winters or the haughty sang-froid of the locals, Champagne is famous for being one of the coolest wine regions in the world. And certainly, from a business perspective, it is a region that has needed to damp down the temperature over the last few years.
Demand has terribly outstripped supply causing prices to rocket. At market level, this has meant (until recently) tough allocations and also, in most cases, price rises of between 10% and 30% over the last 12 months. At the production level, vineyards are cripplingly expensive, valued at between EUR0.75m (US$1.02m) and EUE1m per hectare, though for the most part, this is an arbitrary figure since nobody is selling.
"It's not such an issue, because there's no market," says Jean-Baptiste Lecaillon, joint director general at Louis Roederer. "When people buy vineyard, it's two rows of vines."
Such overheating is the unavoidable consequence of ten-plus years of steady growth in sales, combined with a finite vineyard area, leading inevitably to pressure on prices.
True, current sales figures do not make pretty reading. At the tail end of 2008, just about every key market was showing a fall in sales, some of them (and most notably the US) double-digit. Yet the Champenois see this as more of a temporary blip than the end of an era. Unlike the 1980s, they say, the growth of Champagne (indeed of sparkling wine in general) has deep roots that will allow sales to pick up again once the world's economy sputters back into life.
This is reflected in the biennial discussions between the growers' unions and the marques where recommendations are made regarding likely grape prices and yield levels for the next couple of years. The growers' unions are trying to postpone the discussions until September, by which time (they presumably hope) the world will be looking somewhat healthier than it does at present, strengthening their case for higher prices.
They are unlikely to succeed. The expectation is that yields will remain at their present high levels, while prices per kilo will fall somewhat. This is not the path chosen by an industry that is worrying too much about where its next sale is coming from.
More significant than yield levels, however, when it comes to fulfilling demand, is the intended scheme to expand the appellation's vineyards. The region's governing body, the Comité Interprofessionnel du Vin de Champagne (CIVC), does not like the term 'expansion', and to be fair it has a point. After all, in 1860 there were 60,000ha of vineyards; after the twin disasters of phylloxera and the First World War, just 12,000ha, while today's total of 32,000ha lies roughly in the middle.
Some of the increase in vineyard area will come from a filling in of 'gaps' in existing villages around Reims and Epernay. Many of the landowners who did not apply to be included the last time the boundaries were established 82 years ago are likely, with land prices where they are, to seek the appellation this time, and quality is unlikely to be a bar to entry.
But the vast majority of the increase in vineyard area will come from expanding the vineyards of the Aube region to the south. Some 40 villages are being considered, with estimates for the enlargement ranging from around 3,000 to 10,000ha. With so much at stake (quality, reputation, finances) it is an intensely political process, and expected to take some 15 years.
"The whole world is looking at us, we have to get this right," says one Champenois. "There's no room for a mistake."
There are, though, two questions that need addressing.
Firstly, the Aube is a good bit warmer than the rest of Champagne, and a key region for Pinot Noir. There could well be noticeable changes to the overall style of the wines, particularly at a time when global warming means that some growers are already picking earlier to preserve the acidity that is so key to the vins clairs. Richer, lusher base wines are not necessarily what the world looks for in its Champagne.
Secondly, it's worth asking whether such a vineyard expansion needs to be happening at all. Before Christmas, Aldi was selling its Veuve Monsigny Champagne at EUR14 and GBP9.99 across Europe - about the same price as a bottle of Lindauer. A 20% increase in the supply of Champagne grapes will make such low prices more rather than less likely - a contradiction that sits uneasily with the category's super-premium image. Might Champagne not be better off leaving the EUR15 level to the Spanish, Italians and New World and instead fishing in the deeper waters around EUR20?
In fact, there is a school of thought that says the reform the region ought to be carrying out is not so much tacking on more vineyards as subdividing what it already has more thoughtfully. Certainly it is hard to believe that the whole of the Ay vineyards (to pick an example at random) are worthy of Grand Cru status, incorporating, as they do, vineyards on the flat, fertile lands near the River Marne and those 130m higher up near the wind-blown summits of the Montagne de Reims, with the best ones (as in Burgundy) halfway up the slope.
A Burgundian classification system that rates the best vineyards more specifically (and more stringently) would, surely, be more meaningful than that currently in existence, though bringing such a system to fruition would not be a challenge for the faint-hearted.
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