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CHAMPAGNE – UK RETAIL: The selling season

As the days draw in and winter approaches, Clinton Cawood finds out what strategies the Champagne trade is devising to maximise sales of the fizzy stuff over the festive season

The festive season will soon be upon us once more, and no one is more aware of this than those sectors of the drinks trade that experience an accompanying peak in sales at this time. As much as there is talk of increasing everyday drinking occasions, and reports of trends that suggest decreasing seasonality in sales, there is no doubt that the final three months of the year are still of critical importance to Champagne.

As the opportunities for celebrations increase towards the end of the year, everyone involved in the Champagne industry, from the Champenois to the retailer, takes part in some way or another – even if they are just ensuring that adequate supplies are available. Carols may not be playing in stores yet, but activity is already well underway for encouraging higher sales of bubbly for Christmas and New Year.

The degree of importance of these seasonal sales to different Champagne houses does vary, of course. This is dependent on a number of factors, such as brand strategy and target market, as well as the particular channels targeted.

Marketing manager for Percy Fox & Co, Colin Cameron, acknowledges that, “there is obviously a lot of focus and attention on the Christmas season, which is typically the time of year when most people are celebrating with Champagne”.

For Jean Marc Lallier, PR and marketing director for Champagne Deutz, “festive season sales, from the middle of October to mid-January, might sometimes represent around 45% of sales”. Champagne Gosset’s export director for Europe, Patrick Ligeron, agrees, saying: “Christmas obviously remains a key selling period for Champagne Gosset. It is a great gifting occasion and the opportunity to increase trial or to encourage consumers to upgrade to a rosé or vintage Champagne increases.”

The strategic timing of a number of recent releases, new packagings and value-added offerings within the Champagne category provides evidence of the ongoing importance of these sales. Krug has unveiled a number of new gift packagings and products recently, including a Grande Cuvée bespoke gift box in the form of a hatbox, designed to hold three bottles, and intended to be part of a new home delivery service.

Gifted opportunity
This emphasis on gifting is important, particularly towards the end of the year. It is an opportunity that many producers take advantage of. Veuve Clicquot, for example, also places significant emphasis on its various gift packs at this time of year.

Champagne Montaudon has timed the release of its new gift packaging for its special cuvée entitled “Classe M” to coincide with the holiday season. Like many of these packagings, while it may not feature any particular festive cues, the intention is unmistakable. As these packagings are only applicable in the off-trade, a different approach is required in the on-trade. As managing director Luc Montaudon explains: “In the on-trade, we motivate our customers to promote the top of our range through our specific range of promotional items.”

The recently updated packaging for Perrier Jouët is also well timed for end of year sales, although Pernod Ricard’s UK head of Champagnes, Chris Seale, explains that there is not a particular reliance on festive season sales. For both Perrier Jouët and Mumm, Pernod operates on annual targets rather than planning for seasonal spikes in sales. Seale does admit that in the on-trade, however, “people go out more, and there are more by-the-glass sales”.

Price matters
There is more to end of year Champagne sales than gift packaging, of course. Price promotion plays a key role overall, with the emphasis for individual producers and retailers varying significantly.

According to brand manager at Maxxium UK, Lindsay Brown, for Piper-Heidsieck, the strategy for this time of year includes both Christmas-specific gift cartons, as well as promotional offers with retailers. Brown accepts that: “Competition between retailers is so intense these days that the big players are always going to want to drive traffic to their stores by publicising attractive prices on highly appealing products like Champagne,” adding that “they can encourage trial and trade-up to higher-priced Champagnes.”

In terms of price promotion, Champagne H Blin’s export manager, Thomas Dewez, also sees the upside, saying: “I really think that they are highly beneficial for the Champagne region. Putting our products in front of the consumer could only be very positive. I only deplore too-sharp promotions, as they could devalue the product. Champagne has to remain an expensive but accessible drink.”

Finding a balance
It is the tension between these two conditions that motivates and informs much of the promotion of Champagne during the festive season, as well as at other times in the year.

Andrew Barraclough, marketing manager for Paragon Vintners, is responsible for Canard Duchêne in the UK. He is candid about the use of discounting, explaining: “In many ways, price promotion is detrimental as it can devalue the brand in question. Nonetheless, it is an important part of the marketing mix these days, as promotional periods can ‘volumise’ the brand and get a glass into the hands of more consumers.”

As Barraclough puts it: “There is a tipping point, and that comes when a brand has lost its consumer franchise and can only sell when it is offered on an aggressive deal.” Lallier adds: “Heavy price discounting has never promoted brand image. On the contrary, it creates confusion.” Ligeron also speaks of consumer confusion, saying: “Champagne has worked hard to build an image as a luxury product with great success and continued price promotions such as the recent ones we have seen will only further confuse the consumer.”

For Cameron, this is not the only effect of discounting activity. “When one house does a deep promotion, it means  that consumers inevitably switch to buying that Champagne, to the detriment of others available.”

Moutardier’s managing director, Jonathan Saxby, explains that his Champagne house has nothing to do with any changes in price throughout the year, placing responsibility for this firmly on agents. “We negotiate our prices on an annual basis. They might have a more supple attitude to their customers, but they have to build that into their price strategy – it’s their problem.”

Saxby also believes that this is not detrimental to the product’s image. “We don’t take an active part in it, but it has no effect on the brand. We’re never going to enter direct competition with what happens in supermarkets, but our agents are trying to build a relationship with their customers, so might give them a little treat toward the end of the year if it’s necessary.”

Customer perception
Brown agrees that price promotion is not overly damaging to brands, saying, “Consumers are well drilled to expect more price offers from the big brands, and their perception is that the price is being cut by the retailer rather than the producer.”

While Cameron’s plans for Heidsieck Monopole in the off-trade consist of “a combination of price promotion and value added activity”, the intention for the on-trade is different. In a channel less prone to price promotion in Champagne Cameron will primarily “ensure that our customers are well stocked with the Pommery Champagnes listed”.

The latter is an obvious concern for festive season sales of Champagne, when pressure is greater on supply, in both the on- and off-trade. As Seale explains, “the maintenance of supply and service levels” is a central issue for Pernod Ricard at this time of year.

For Ligeron, however, a number of the wines in the Gosset range “are on allocation throughout the year, so managing demand is not just a festive challenge”.

Sales statistics
Overall annual sales of Champagne in the UK off-trade remain as promising as ever, showing growth in both value and volume (up by 8% and 2%, respectively, Nielsen MAT 08/07).

These figures also confirm the continued importance of own-label Champagnes, particularly to the supermarket sector. Own-label Champagnes are responsible for about 20% of off-trade volume in the category, but command a lower average bottle price than the majority of the major brands within this channel.

So while some trends may be shifting, the final three months of the year remain a festive time for Champagne – an opportunity to drive sales as well as consumer trial, and to offer a variety of value-added propositions. The only challenge seems to be ensuring that there is enough to go around.

© db October 2007

Retailer perspective: M&S

Christmas sales are of particular importance to Marks & Spencer, according to senior technologist, wine and drinks, Sue Daniels.

A closer look at the retailer’s activity in the lead-up to Christmas therefore provides an insight into this off-trade channel’s relationship with the Champagne category.

Most important is the fact that M&S only sells brands that it has exclusive rights to. According to Daniels, this allows the retailer to “control any price promotions to be advantageous to the whole category”.

According to M&S’s plans to the end of the year, price promotion of Champagne will indeed be modest, with the highest discount amounting to 25%, in place for just over a month. The retailer’s strategy for Champagne and sparkling wine over the festive season involves promotions staggered over various time periods from the end of September to the end of the year.

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