Champagne yield limits continue

The Comité Interprofessionnel du Vin de Champagne (CIVC) has set this year’s limit at 10,500kg of grapes per hectare for the 2010 harvest, marginally higher than the 2009 figure of 9,700kg/ha.

While an increase on last year’s figure (which, if the houses had their way, would have been even lower), 10,500kg/ha is still significantly below the yield limit for 2008 which weighed in at a hefty 12,400kg/ha – expandable to 13,600 kg/ha.  

In order to decide on the limit the CIVC has to ensure both the maisons and the vignerons are happy; the former not being inundated with too many grapes weighing them down with excess inventory, and the latter wishing to sell as much as possible to maximize their profits and maintain stocks.

The low level set in 2009 came about when the maisons realized that, as a result of the significant drop in exports at the end of 2008, they needed to limit the amount of Champagne produced so they wouldn’t be overwhelmed with stock.

They initially asked the CIVC to limit grape production to 7,500kg/ha. The vignerons, however, wanted to ensure their income, and said that they would not accept anything below 10,400kg/ha.

This year’s limitation is in aid of building the sector’s volume sales, which are currently enjoying a significant boost in comparison with last year, and consequently helping the maisons to return to higher prices, which dropped sharply during the recession.

As in 2009, the vignerons were keen to keep the level high, partly because they fared significantly better than their giant global brothers, the maisons (internal sales experienced a loss of only 0.24% while exports dropped by 20.45%), and, as a consequence of their relative success, because their reserve stocks were running low.

There is, however, another reason the maisons might have been particularly keen to keep this year’s limit low despite the current growing demand, room for increased prices and the expected bumper crop.

While the CIVC set the limit at 9,700kg/ha in 2009, the buyers would only have to pay for 8,000kg/ha up front, the final payment for the remaining 1,700kg/ha being made in a one-off payment in November this year. The aim of this previously unheard of two-part payment was to stabilise the maisons’ cash flow in the short term – a godsend to many houses who were nearly crippled by the sudden recession-related drop in demand.

The leftover wine will only be classified once it is paid for, which limited the total Champagne inventory in 2009.

The two consecutive years of yield limitation will have a positive impact on the prices, but will also result in a very tangible reduction in the number of bottles produced, especially if demand continues in the current growth trend that it is enjoying.

The result of this will be an ultra premiumisation of the product created through a genuine shortage, heightening the luxury status of Champagne, consequently resulting in an even greater desire for it, in true accordance with Thorstein Veblen’s description of a luxury product.  

Marinel FitzSimons, 09.09.10