Reviews

Champagne: slowing sales?
«Vitrina» December 2008

None of sparkling wines can compete with Champagne in terms of prestige.

It became a luxury product, a symbol of a certain status. Global demand for Champagne continues to rise with an amazing speed despite high prices. It is held back only by a limited production area whose vineyards cannot be expanded any farther.

Any winegrowing region can envy problems which Champagne winemakers face. In the era of global wine overproduction they do not have enough capacity to quench the Champagne thirst from which the world appears to be ‘suffering’. Starting from 2000 wine sales increased by a third and reached almost 339 mln. bottles in 2007. Yet less than half of it is exported, while the rest is consumed in France.

Champagne sales in the past 10 years
Year — Total, mln. bottles — Export, mln. bottles
1998 — 292,4 — 113,5
1999 — 327,0 — 136,6
2000 — 253,2 — 103,6
2001 — 262,7 — 98,2
2002 — 287,7 — 112,7
2003 — 293,5 — 119,3
2004 — 301,4 — 123,1
2005 — 307,7 — 129,3
2006 — 321,7 — 140,7
2007 — 338,7 — 150,9
Source: Interprofessional Committee of the Wines of Champagne

Some experts link Champagne’s impressive success with the simplicity of its market offer. There is a large production area called Champagne AOC that makes only one type of wine with the same name. In fact, the word ‘Champagne’ has become a generic brand that implies wine of certain origin, quality and style.

Vineyards in the appellation can theoretically take 34,000 hectares, of which 32,700 hectares were planted in 2007. The wine register of Champagne counts 319 villages. In spring this year it was decided to review borders of the production zone and add another 40 communes. Historic precedent for enlarging the area already exists and dates 150 years back. Then Champagne vineyards were planted to a double size, although not all were used for production of sparkling wine.

In order to get into the revised register all parcels, both already planted with vines and potentially new, should pass strict tests. The analysis of soils, subsoils, microclimates, plant materials has been launched. It is unique in its nature as such large-scale research had never been conducted since the Champagne AOC was formed in 1927. Obviously, the process cannot be fast, and the step-by-step study of vineyards will take at least 5 years. No one can forecast which plots exactly will be entered in the new production area, but it is estimated that new books will accept up to 3,000 hectares of new vineyards and reject up to 1,000 hectares of those already planted.

Along with economic influence introduction of new areas and rejection of the unsuitable ones has serious financial implications. New communes, which will be lucky to enter the appellation, may witness how land prices will soar up to 200 times. INAO representative responsible for demarcation recently noted that prices for approved vineyards may reach up to 1 mln. euros, while rejected plots will go down to mere 5,000 euros.

In order to satisfy market demand, Champagne winemakers introduced another measure. The yields are increased to the maximum level of 15,5 tonnes (or 100 hectolitres of wine) per hectare. This is the highest allowed yield for quality wine in France and relative to other world’s winemaking zones. Champagne vineyards have dramatically increased production after World War II, as previously winegrowers had about 5 tonnes per hectares. The greatest problem now is caused by sharp swings in yields from one year to another. For example, potential yield in 2003 was at 7,5 tonnes per hectare, while the next year saw it at 23 tonnes! Generally, yields increased due to a larger size of bunches and grapes rather than more bunches per vine.

There are worries that generous yields will negatively affect the quality of Champagne. However, there is no valid proof that there is a direct link between these two parameters. At least, outstanding vintages in Champagne happened when harvests were big, medium and small.

Champagne is an exceptional example of how winemaking, essentially an agricultural activity, can be a source of high income where both growers and producers benefit from it.

Although France consumes more Champagne than any other country, the companies are trying to strengthen export channels where wine has higher added value.

Last year nearly 151 mln. bottles went to international markets, of which a quarter was taken by UK. British are the biggest lovers of Champagne after French, they traditionally take the first place in the international sales charts. Other largest European markets in 2007 in decreasing order were Germany, Italy, Belgium and Switzerland. If last year all above markets showed growth, in 2008 the situation will be less optimistic. Sales of the first six months this year were down in comparison with the same period in 2007 everywhere except Italy and Belgium. The trend is likely to continue until the end of the year due to global financial-economic problems.

Countries outside Europe with the largest Champagne consumption are US and Japan. US is on the second place after UK, it imported almost 22 mln. bottles in 2007. Japan is currently the most important Asian market, it purchased 9,2 mln. bottles last year. Like in Europe, export figures in both countries were down for fist 6 months of this year as compared to the same period in 2007.

Along with volumes, an important measurement for an international market is the share of premium labels — rose Champagne and Prestige Cuvees, also known as Cuvees Specials. Here countries of Eastern Asia have the strongest position. Prestige cuvees have 15-20% in volume sales, and the value is even higher. Japan, Taiwan, South Korea, Malaysia and Singapore lead in the list of 10 top markets with the highest share of prestige cuvees in a general sales structure.

Russia is a swiftly developing market, and Champagne producers place high hopes on it. Once Champagne was a mainstream drink, and today there is a new possibility maybe not to repeat, but to come closer to the historic success.

At present things are moving in the right direction. The market of Champagne in Russia has shown phenomenal growth. In 1998 147,000 bottles were imported in this country, and in 2007 the figure went up to 1,03 mln., thus shipments increased sevenfold!

Shipments to Russia in the past 10 years
Year — Total bottles
1998 — 147,086
1999 — 140,415
2000 — 163,434
2001 — 249,698
2002 — 301,974
2003 — 357,033
2004 — 477,157
2006 — 731,322
2007 — 1,033,477
Source: Interprofessional Committee of the Wines of Champagne

Last year Russia entered an informal club of countries which consume over a million of bottles of Champagne per year. Strong growth is likely to continue. In the first half of 2008 shipments increased by 19% in comparison with the same period last year, thus counting 678,700 bottles. Despite the looming economic crisis demand should continue in autumn and winter, traditional peak of wine sales.

In 2007 Russia received Champagne from 47 houses, with Moet & Chandon being the leader, and also 7 cooperatives and 22 independent growers. Main sales derive from non-vintage Champagne — Brut and Demi-sec (79%), but Russia has a high share of premium labels — 21%. Half of it is made with rose Champagne, a large part accounts for Prestige Cuvees, and a small part — for Vintage Brut.

Champagne in Russia by types in 2007
Type — %
Non-vintage Brut — 70
Demi-sec — 9
Rose — 10
Prestige Cuvee — 8
Vintage Brut — 3
Source: Interprofessional Committee of the Wines of Champagne

Understanding the significance of the Russian market, Interprofessional Committee of the Wines of Champagne (CIVC) continues its educational and promotional programmes. Tatiana Koursounskaya, the committee representative in Russia, states that during the past 5 years CIVC ran master classes on Champagne in key Russian cities and trained over a thousand wine professionals. Official web site of Champagne producers www.champagne-civc.ru was translated into Russian. The committee runs special events for press and plans to continue activities linked to protection of the Champagne name.