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Declining sales of discounted Champagne ‘no bad thing’

Declining sales of discounted Champagne in the UK is “no bad thing”, says chairman of the UK Champagne Agents Association, Andrew Hawes.

Shipments of Champagne to the UK during 2016 are believed to have dropped by 3 million bottles

Reacting to news reported by the drinks business in January that shipments of Champagne to the UK during 2016 had dropped by 3 million bottles, Hawes said that sales figures from Nielsen for the UK off-trade “seemed to correlate” with the figure, but played down concerns about the volume decline in the market.

Hawes, who is also managing director of Mentzendorff, the UK importer and distributor for Bollinger, said at the Mentzendorff annual tasting this week that the fall-off in Champagne volumes was due to a reduction in sales of discounted, exclusive-label Champagne through the supermarkets, which, he explained, was in line with the decision by the grocers to do fewer “high-low sales promotions”, a strategy that is partly related to the rise of the German retail chains Aldi and Lidl, who offer shoppers ‘everyday low prices’ (EDLP).

He then said that such a development should not be viewed negatively. “In the medium to long term is it a bad thing if we lose Champagne sold in that way?” he asked rhetorically, before stating, “It’s not necessarily a bad thing.”

Indeed, looking ahead, he said that the UK could see a further fall in volume sales of Champagne in 2017, but commented that we shouldn’t be too concerned about this trend, which he suggested is actually positive.

“We could lose shipment volumes again [in 2017], because the supermarkets are really getting out of the high-low promotions, and promotions on top of promotions, and as a long term trend, this is a good thing,” he said.

However, he said that the UK off-trade was not seeing declining sales for “key brands”, recording that “We are seeing that the major houses are gaining share in a market that is slightly deflationary; in an area that had been artificially inflated.”

With “price increases feeding through in 2017” due to the lower value of the pound relative to the euro following Brexit, Hawes said that this would be “an interesting year”, but noted that he had not seen “dramatic falls” in demand, adding that sales of Champagne for Valentine’s Day were “strong”, before pointing out that this occasion tends to be a good indicator of consumer confidence early on in the year.

Speaking specifically about the UK on-trade, he said, “If you ask restaurant owners and sommeliers about business they say it is going very well but that they are nervous about price increases, and they are nervous about the future, but in the present day business is going well, and it comes down to the consumer attitude to inflation – which will be as much an emotional reaction as it will be a rational reaction.”

When asked about the growth of sparkling wines other than Champagne, in particular traditional-method examples such as cremants from across France, Hawes assured db that he believed that this was not growing at the expense of Champagne in the restaurant sector.

“In the on-trade there are a lot of consumers who are coming straight into sparkling wine, maybe from still wine, but there is not evidence that they are trading down from Champagne. It maybe that Champagne drinkers are just drinking a bit less, but sparkling like Cremant de Loire is selling really well in the independents and on-trade, and that is absolutely not as a cheaper Champagne alternative.”

During an interview with Champagne Bollinger president, Jérôme Philipon at the start of this year, he told db that the brand had enjoyed “another record year in value and volume” in 2016.

“We sold a few 1000 bottles more than in 2015, and 2015 was a true record year, but one where we had the luck of James Bond,” he said, referring to the release of Spectre – the 24th installment in the James Bond film series.

Continuing he said, “I was a bit concerned for 2016 because we had no new vintage launch, no new product initiative at all, and no James Bond, and we still sold 8,000 bottles more than in 2015 – so we broke a record, but just by a fraction – and turnover was slightly over too – so we had a record there too.”

He also recorded that Bollinger had had a “very good year” in 2016 in the UK, but attributed that in part due to a decision not to increase prices, despite the devaluation of the pound.

However, he said that “this year will be different because we increased our prices on January 2nd… it will be a different story because we had to increase prices by 5-7%; we had to.”

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