Champagne: bleak future for weak brands4th March, 2013 by Patrick Schmitt
The future’s bleak for weak Champagne brands believes Stanislas Thiénot, managing director of Groupe Thiénot’s Champagne division.
Considering the year ahead, Thiénot told the drinks business during a discussion in early 2013, “I think those people without a strong enough brand will die.”
A combination of deteriorating demand in Western Europe – where almost 80% of all Champagne is consumed – and increasing grape prices, is making the position increasingly difficult for smaller players without well-known names.
Such houses, without the image or power to pass on price increases, nor revenues to build a following in fast growing emerging markets, appear threatened.
“In 2012, grape prices increased despite the awful economic context – and who can increase prices in 2013? Only the strongest brands,” stated Thiénot.
Citing price increases of 3-4% on grapes in 2010, again in 2011 and then once more last year, Thiénot said, “The small negociant who hasn’t the strong enough brand will die because they can’t increase prices and so their margins reduce – and there’s a point where there’s no more margin and they lose money.”
Considering the longer term, Thiénot said that this was precipitating a shift in the balance of power in the region.
“Now there has been an increase in grape prices despite the bad economic context the smaller players are dying, so the balance of power between the independent small houses and the big companies is changing – the bigger groups are getting bigger.”
However, in terms of any power struggle between the big houses and growers, Thiénot believes a balance is slowly being regained.
“Now we are in a transition period: there was a lack of grapes so the power had moved a bit to the growers but since the crisis of 2008, the lack of grapes is not such an issue, so we have naturally come back to a real balance between the growers and the houses of Champagne.”
As previously reported by db, Champagne shipments to the end of 2012 show a global decline of almost 14.2 million bottles, representing a 4.4% drop.
Confirming Thiénot’s views, Andrew Hawes, managing director at Bollinger’s UK importer Mentzendorff, said that current trading conditions had hit weaker grower labels the hardest.
“Growers have been the most affected category, because during the Champagne boom they increasingly commercialized their own wine, but in the flight to reassurance they have really suffered… the Champagne market is driven by brands,” he said.
Groupe Thiénot’s Champagne division comprises Champagne Alain Thiénot, Canard-Duchêne – which the group bought from LVMH in 2003 – and Joseph Perrier.