The Wehring Interview - Societe Europeenne de Participations Industrielles Champagne CEO, Cécile Bonnefond - Part II

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The first part of Chris Mercer's interview with Cecile Bonnefond, CEO of Societe Europeenne de Participations Industrielles' Champagne unit, ended with the Champagne veteran holding forth on the need to change consumer attitudes to the category outside of France. In part two, it's all about international markets, a “schizophrenic” supply situation, and women in boardrooms.

EPI's Champagne business exports 85% of its bottles annually, well above the 50-50 split between domestic and export volume sales for the sector in general. It makes sense, then, that Bonnefond has a restless eye, not to mention a few opinions, on the sector's international development.

The race to enter emerging markets is seductive, but Bonnefond makes a surprising case for the US. In 2011, Champagne exports to the US rose by 14% in volume, to 19.4m bottles. “The first priority for us today is the US,” she says. “It's only the number three market for Champagne, and the sector doesn't have many brands there. The US market has the consumers, the trade, the money, the interest; you don't need to go exotic immediately.” 

Piper-Heidsieck is currently the third largest brand by volume in the US. “We've got five new people on the brand there, appointed over 2011 and 2012,” says Bonnefond. But, what about the Russian oligarchs, or the bourgeois business elites of Communist China? “Russia is obviously a country where we have demand for Champagne, as well as some other markets, but, frankly, the US would be to me today the biggest opportunity,” she says.

When talking about Champagne's market opportunities, though, I am always aware of the limits to the sector's capacity. “It's a bit schizophrenic,” agrees Bonnefond. “We know that we can't produce much more Champagne, because Champagne is a limited appellation. Yes, we're talkng about extending the appellation, but that's a ten-year project before we see one bottle. If China suddenly burst, we just couldn't supply them.”

In reality, she believes people would supply China by switching markets. “If China was to blow, many houses would just say, well, we don't go into the French market anymore, or we don't go into UK market anymore, because you can make much more money in China than in the UK,” she adds, speculatively.

Efforts to increase the size of the Champagne appellation could increase production by between 10% and 15%, according to industry estimates. “It will make some difference,” says Bonnefond, but she appears cautious of treating the slow-moving process as a magic bullet.

In the meantime, does this fragility of supply mean that EPI and other houses are wary about how hard to push in emerging markets like China, I ask? “No, we do push,” said Bonnefond, whisking out her smartphone to read me an email received from the company's distribution contact in China at 09:59am that morning. 

Quoting the email verbatim, she says: “The acceleration of our development in the modern on-trade there and the latest trends we have observed should justify a new discussion on the opportunity of a more aggressive plan on China.” What was her reply? “I said, when can we meet?” She adds: “Now, I don't know if the news is as good as they say, but, as you can see, it's an ongoing discussion.”

China's raging thirst for Cognac may have overshadowed Champagne in the country for the time being, but Champagne sales there jumped by one fifth in 2011, to 1.9m bottles. It's only a fraction of global sales, yet I get the impression that Bonnefond is used to bringing people around to her point-of-view. 

She talks fondly of her ten years at Kellogg in France. “We were 12 people, it was tiny. Around 60-70% of sales were cornflakes and we had to convince everyone to have cornflakes with cold milk. They would say: 'on my dead body.' It's not very different from when you go to China today and you say: 'do you want a glass of Champagne?' Try it, it doesn't bite, you know.”

As much as any Champenois, she is convinced of Champagne's unique position within sparkling wine. She is diplomatic enough to say that she “should retry” English sparkling wine, after a bad experience some years ago, but is adamant that “it will never be Champagne. It's the difference between a bag and a Chanel bag. That's what luxury is about.” So, Champagne will continue to rule that luxury space? “I hope we will be clever enough to do that,” she answers. Her team holds monthly wine innovation meetings at both Charles Heidsieck and Piper-Heidsieck. 

Despite her loyalty, Bonnefond says the risk of bad Champagne is ever-present. “If we're not careful, we can be drinking a lot of bad Champagne.” A tough harvest in 2011 is going to test winemakers' mettle. “If you want bad Champagne, wait two years,” she says. “You're going to have a lot of them.” Independent producers will be worst-hit. At EPI, and courtesy of Remy Contreau's investment down the years, she adds: “We have about half-a-harvest of reserve wines, so even if the harvest is average we can use a lot of reserve wines to compensate. When we say average, we mean it's too much 'this'. If you have reserves, you have something that compensates for that.”     

Veering slightly off the subject towards the end of our lunch together, I'm interested to get Bonnefond's views on news that the European Commission is mulling quotas for women in boardrooms. Having previously risen strongly through the likes of Danone, Kellogg and Veuve Clicquot, Bonnefond surely has an opinion? 

“I think a number is a good thing for the short-term,” she says. “What should be the number? We need to have common sense,” she argues. “It's not moving fast enough, so let's accelerate it and then it can be natural. We've tried with subtle means and it hasn't worked.” She adds: “I'm absolutely a firm believer in diversity. If one department has only women, I say 'bring in the men'.”

When it comes to sparkling wine, however, it's got to be Champagne above all others.

To read part one of this interview, click here.

Sectors: Wine

Companies: Remy Cointreau, Groupe Danone

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