CHAMPAGNE: Culture clash

The promise of Champagne’s emerging markets could be undermined by discounting in the UK, reports Michael Edwards.

The first-half figures of 2010 showed a marked recovery in Champagne exports to world markets. Of course, this recovery in sales was up from the diminished base of 2009, when the businesses of the big houses were on the floor. Also, it’s been essentially a restocking exercise after Champagne inventories internationally were emptied last year at rock-bottom prices. And yet there are signs of cautious optimism.

Ghislain de Montgolfier, president of the Union des Maisons de Champagne, says: “The general trend is good. People are drinking more Champagne and this year we will have sold at least 300 million bottles, and it could well be more like 315-325m. Your own country, the UK, is doing a good job, the government reducing costs, expenses and the deficit. That’s not exactly encouraging for even better Champagne sales just now, but the future looks bright. The US of course is very difficult. There is renewed activity in Asian markets.”

Cautious, steady as we go is the watchword of the moment for the grandes maisons, as it is for intelligent leading merchants in Beaune like Pierre-Henri Gagey of Louis Jadot and Louis-Fabrice Latour, who tend towards a sober but positive view of world markets, taking the record prices at the 2010 Hospices de Beaune sale sceptically in their stride. It’s a time for cool heads.

At the bijou house of Champagne Jacquesson, Jean-Hervé Chiquet is his usual urbane but honest self. Faced with a 2010 harvest of limited quantity and variable quality against a trend of some price rises from growers, he says: “At Jacquesson at least, we are now working with 2006, as a base wine, for our Brut 734 release, so we have a breathing space before having to deal with the making of Champagne on the base of 2010.”

This year’s crop, he explains, is smaller than average but not that small (10,000 kg per ha) and nothing like as minimal as 2003. Grape prices will be slightly up for 2010. However, Chiquet doesn’t think that the market has completely recovered. “The big houses are still offering crazy deals. If we were in full recovery (in a bull market) they wouldn’t be doing it, would they?

The smallness of the current crop makes for good politics when we can polish the image that we never have enough wine to sell. That’s just as well, when you remember that current Champagne exports to China are less than to Luxembourg!

A delicate harvest

For Olivier Piazza, director of highly regarded co-op Beaumont des Crayères, the 2010 harvest has been delicate. But the strength of Beaumont is that most of its member growers have vine plots that are often no larger than a garden. So it is far easier to micromanage the quality of the grapes.

“Our members too are focused on quality,” says Piazza, “and when this year Meunier grapes came in that were rotten, the vignerons accepted that we couldn’t accept them and they were happy for us to make a rigorous selection. Very few co-ops in the Marne Valley can say the same.” For Beaumont, the business showed real growth this year, but certain markets were stronger than others: within a market like the UK, some importers performed very well, some were stable, but others declined.

“For us, the US market came alive again with good orders from two importers,” says Piazza. Certain Asian countries were stars, like Japan, a connoisseur’s market which appreciates the finer, more delicate style of Meunier Champagnes that are Beaumont’s strong suit, its vineyards being on chalkier soils close to Epernay.

Closer to home, the UK market gives some conflicting signals. For James Samson, UK brand manager of Louis Roederer, the ongoing issue for Champagne is “that there is little protective correlation between production costs, particularly proper aging, and pricing in the febrile retail sector. When you nationalise and glamorise a product, it becomes a brand with wide disparities on pricing levels. Celebrities are jumping on this bandwagon.”

Certainly that’s true of new-ish luxury cuvées like Ace of Spades made by Cattier, or the non-vintage Angel, endorsed by Mariah Carey, which sells for $500 to the US rapper market. More extremely priced examples from revered names include Krug Clos d’Ambonnay 1995 and Perrier-Jouët Belle Epoque, Cuvée Spéciale 2000.

As Hugh Johnson has tartly observed, these are wines for billionaires. Yet when the going gets rough, even the finest Champagne, like Louis Roederer Cristal, is discounted by dubious traders. “You don’t find this volatility in the luxury watches or fine art market,” Samson concludes.

On 8 December, I went to see Tim French, wine buyer at Fortnum and Mason, who says this is the busiest day of the year. “It’s much stronger in general terms; the Christmas trade is very brisk,” he adds. But, echoing Samson’s view, French ruefully says: “It doesn’t make my life easy, engulfed as I am with prices on the high street where the grandes maisons are discounting fiercely. I don’t remember a time when so many big names were offered at under £30 a bottle.”

French continues: “All this doesn’t encourage me to champion smaller Champagne growers and bijou houses.” And yet he’s keeping the faith in the grower sector, which may be small but is increasingly of interest to his discerning customers who enjoy Burgundy.

However, he also has his feet on the ground, sagely observing: “Champagne is different from Burgundy, centred as it is on the alchemy of blending.

The best grandes maisons still offer great wines, but the yo-yo prices and the wine and grocery trades’ addiction to discounting mean that once the consumer is used to a low price, it’s very difficult to bring it up again to a sane level with a proper margin.”

He also believes that the grandes maisons shouldn’t be frightened of the emergence of top Champagne growers on the best wine lists. “It makes people talk about Champagne as a fine wine and not as a commodity; it invites them on a voyage of discovery, to entertain conversations about style, vintages and the intricacies of what is a wonderful subject.”

And so to pre-eminent independent British importers who specialise in growers’ Champagnes and Burgundies to fine restaurants – like Nick Brookes of Vine Trail in Bristol, whose company takes the lion’s share of listings in the Michelin-starred restaurants of the capital. “The last four or five months have been very strong for us,” says Brookes. “You wouldn’t be aware that there’s much of a problem for good restaurants throughout 2010 and especially in the run-up to Christmas. Our sales are well up for the last quarter, against the same period last year.”

Do restaurateurs express frustration when faced with the strong discounting by the grandes maisons when they (the restaurateurs) are promoting top growers’ Champagnes? And, more tellingly, do their customers baulk at paying an honest price for the great labels, when their perception of the price is distorted by the discounts in the high street?

“A very interesting question,” says Brookes. “I can’t answer the second half of it. But for the great restaurants and clubs in London – The Square, Chez Bruce, Texture, Annabel’s – the quality of a grower’s Champagne is still the main issue. Price is secondary, as long as the buyers can be assured that, looking forward, the price of the vigneron’s wine will be steady and reasonably stable.”

The situation could change, of course, in 2011. For, with the rise in VAT and the worry for people that they may lose their jobs, it’s quite clear that no-one has a clue how the Champagne market will perform in the New Year. A time for cautious realism – for the houses and growers of the Marne and Aube, for the wine and restaurant trade, and if I may say so, for the freelance writer reporting on the fortunes of the world’s most glamorous wine.

Will Champagne be a natural fine wine properly priced – or a commodity to be wheeled into oblivion?

Michael Edwards, taken from the drinks business Trends Report 2010