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Wednesday 30 July 2014

Nigeria’s pop at Europe

10th December, 2012 by db_staff

The Champagne is flowing faster in Africa’s second-largest economy, but a lot of marketing is strangely still focused on conspicuous consumption in austerity Europe, writes Spiros Malandrakis of Euromonitor International

YOU CAN almost still hear the collective gasps that filled the cavernous conference room after the keynote presentation in this year’s Champagne Assembly in London. The attendees, an eclectic mix of brand ambassadors, journalists and aficionados, largely agreed with Euromonitor’s findings. Champagne historically provides a fairly accurate reflection of the prevailing macroeconomic environment, but this time it actually appeared to precede the boom and bust cycles – a canary in the coalmine, raising the alarm before an upcoming downturn.

The conference took place in March. Incidentally, the category’s slowing performance in the UK in 2011 already underlined the heightened probability of the dreaded double-dip scenario. This particular forecast would materialise a couple of months later.

The audience also seemed to support the suggestions that rosé styles, growers’ offerings, and vintage launches will increasingly inform the industry’s future direction, while quietly acknowledging the cannibalising ascent of other sparkling wine and the rising threat of its aggressive competition.

It was the last slide that did it. Looking at the list of markets expected to post the strongest actual gains in total Champagne volumes over 2011-2016, most of the usual suspects were there. Within that context, there is little surprise that France leads the pack, the UK is well up the table, and the booming growth nations of Brazil and China are present, alongside the US powerhouse and the defiantly buoyant Australian market.

CHAMPAGNE LAGOS
However, what did come as a surprise was Nigeria’s second place in these global rankings, and the disbelief from the audience was palpable. No one challenged the data directly and yet many seemed to politely take it with a grain of salt – if only in the light of the dominant, overly optimistic analytical perspective that sees the European debt crisis saga coming to a happy ending by the close of 2012. Why bother with Nigeria anyway if Europe was about to start popping corks again in the immediate future? It did not. By September 2012, Western Europe, Champagne’s bastion, was still struggling with debt, austerity, unemployment and existential  questions.

In France, heavy rain, destructive hailstorms, late frosts and vine disease have lead to the smallest harvest in 20 years according to the Comité Interprofessionnel du Vin de Champagne. Production costs and grape prices are stratospherically higher, while price hikes in Western markets are out of the question. The UK is officially deeper into double dip territory. And Charles Armand de Belenet, global marketing and communications director at Pernod’s GH Mumm and Perrier-Jouët brands, said: “Nigerian Champagne consumption is quite big,” adding, “we are building our network here and it is one of the most attractive places for us at the moment”. The moment is finally here.

SHIPMENTS, BATHS AND APPS

Feature findings
• Nigeria is projected to be the world’s second fastest growing market for Champagne
(by volume) for 2011-16 .
• Champagne sales can be a good indicator of the mood of the economic climate, and they bode poorly for Europe.
• Despite this, optimism prevailed earlier this year, and a lot of marketing was based around conspicuous consumption in Europe, perhaps misguidedly.
• However the continuation of poor economic conditions in mature markets means it is more important than ever not to dismiss surprising new markets such as Nigeria, and change marketing gear accordingly.

According to Euromonitor International, global Champagne sales are set to register 2% total volume growth in 2012. Nevertheless, such a growth rate – as uninspiring as it may look – is actually much closer to reality than the seemingly booming shipment figures paraded around by the PR departments of key Champagne houses. And it gets worse. Considering the deteriorating operating environments across the European periphery and the emerging cracks, even within the once unyielding Eurozone core, ostentatious consumption appears to be increasingly out of sync with the current mood. Not exactly good news for a category that is generically identified with luxury. The emergence of a fad for offering baths in Champagne at a few hotels and bars in London earlier this year couldn’t have been more poorly timed.

On the creative marketing front, while cult film director David Lynch’s signature does add some artistic kudos to Dom Pérignon with their recent collaboration, it is Mumm’s recently launched smartphone app about “how to be a gentleman with Champagne” that really strikes a chord.

At the end of the day, a fresh focus on a stronger social media presence along with a more forward-looking and groundbreaking approach to new product launches are the only routes available for the Champagne industry in financially volatile European markets. Beyond that, avoiding generic, half-hearted innovation ventures in the West while entering the Brics as well as second-tier emerging markets should not be viewed as a surprise anymore. It is now a necessity.

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