In focus: The relationship between supply and demand in Champagne

Tight allocation

James Simpson, managing director of Pol Roger Ltd, explains how the house has avoided discounting by keeping a tight control on its distribution.

“Our Brut Reserve Non-Vintage has been on a tight allocation for the past few years, so we have not had the stock to supply the major multiples in the UK,” he says. “This means that there has been no deep discounting, thus ensuring that the perceived value of the brand and product has not waivered. We have never compromised on the price point of Champagne Pol Roger in the market, and have always focused on increasing value sales in line with the quality of the wine.”

Lynn Murray, marketing director of Hatch Mansfield, the UK importer of Taittinger, also shares Hawes’ views.

“One of the key drivers in the market around the value increasing and the volume decreasing is the polarisation in the market,” she says. “Consumers are either buying well-known brands like Taittinger or lower-priced Champagnes. We can see that the middle market or ‘soft’ brands are losing share.”

As Leroux notes, the global sparkling wine market has changed, with the Prosecco boom and rising sales of New World fizz.

In 2017, Guillaume Deglise, the former CEO of Vinexpo, noted how sales of Prosecco were expected to surpass 412m bottles by 2020, effectively “taking over from discounted Champagne” in the UK, with the same trend happening in Germany and the Nordics. He predicted that total sales of Champagne would grow by just 1% in volume during the same period.

Jean-Noël Pfaff, director general of Champagne Pannier, believes trying to compete on volume would damage the region’s reputation.

“We have no choice but to stay in the premium sparkling segment,” he says. “Other producers of sparkling wine around the world are better equipped to produce large volumes at low prices, while copying our marketing. As a result, we must continue to premiumise our offer.”

Laurence Tellier, marketing and communications director for Champagne Henriot, agrees: “We are now looking at increasing value sales through more focus on our higher tiers beyond our Brut Souverain Cuvée as well as contributing more to the Champagne category growth in export markets rather than mature markets like France.”

Bertrand Verduzier, director of international business at Champagne Gosset, adds: “Our strategy, as a small to medium-sized maison, is to develop networks wherever hedonists and wine lovers can be found. We have space to grow especially in export markets, with a good volume of stock for long-ageing wines in our cellars.”

Outside of Champagne’s traditional channels, markets are displaying preferences for certain styles and expressions of Champagne.

Le Mailloux explains: “Eighty-five per cent of volume in the UK is non-vintage brut, but the further away you go from Europe the more open-minded the consumers are. And in countries where non-vintage brut makes up only 66% of the volume, it does not mean that consumers are only drinking NV and prestige cuvées, but that they’re drinking more of all the different styles.

“For example, in the US, rosé Champagne constitutes 20% of volume sales, which is particularly high compared with other markets. In Japan, rosé Champagne makes up 11% of volume, and demand for both prestige cuvées and vintage wines is high, representing 10% and 2% of volume sales respectively.”

Michel Drappier

Michel Drappier, however, warns that it is important not to be swayed too much by the figures.

“We are all led astray by statistics,” he says. “If you look at the US you might see there’s a big proportion of sweet Champagne sold, but that’s because of just one brand. However, it is true that we sell more expensive Champagne in the US, because when they want something more affordable, consumers are more likely to buy a local sparkler.

“I believe in the globalisation of consumption. Take Russia as an example – 10 years ago we did not sell a single bottle of brut nature there. People in Russia used to drink sweet wine, brut cuvées or very expensive prestige cuvées. Now the younger generation are travelling and visiting wine bars in cities across the world, and will happily drink styles such as brut nature.”

While larger Champagne houses can tailor their approach to specific markets to drive value growth, smaller producers must focus on individuality and quality to distinguish themselves, believes Bruno Paillard, CEO of Lanson-BCC and owner of Champagne Bruno Paillard.

“I’m making wines to my taste, in French we call them vins d’auteur,” he says. “I wouldn’t compare myself with Picasso, but I don’t think he would have done different types of paintings for different markets.”

Paillard believes the Champagne industry should focus less on depicting the Champagne lifestyle and more on the place where the grapes are grown.

“The only thing that other sparkling wines have in common with Champagne is the bubbles and the shape of the bottle,” he says. “Champagne is unique in three key areas: its soils, its climate and its know-how.”

Christian Holthausen, export director of AR Lenoble, agrees: “People are interested in where the foods they eat and the wines they drink come from.

“Twenty years ago, people used to come to Champagne and sit in a sterile room in Reims and talk about the 18th century and caviar. Now they want to come to Champagne and visit actual vineyards and touch the soil and ask about farming practices.”

Holthausen believes Champagne can no longer rely on its name to prove its worth, but instead must demonstrate its quality.

“The generic name ‘Champagne’ or ‘Bordeaux’ is not an automatic guarantee of quality anymore for the average global consumer,” he says. “There are great and mediocre producers everywhere in the world, and consumers are more aware of that than ever. Personally, I’d rather have an outstanding bottle of sparkling wine from Franciacorta or from Tasmania than a mediocre bottle of Champagne.”

Producers must learn how to better communicate this quality and individuality in a way that the trade can easily feed back to consumers.

One way to do this, Michel Drappier, president of Champagne Drappier, believes, is to travel and make the effort to engage with potential customers in person.

“For some houses it will be pure publicity, but there are few who can afford to do that. For Champagne producers like Drappier, it’s about travelling and meeting people, making contact with our customers, inviting them to visit us – you’ve got to make Champagne sexy,” he says.

Belinda Stone, head of marketing at Castelnau Wine Agencies, agrees. “The Champagne industry could do with re-engaging with the wine trade itself,” she says. “There are so many categories of sparkling wine that are vying for buyers’ attention, Champagne prices continue to rise, and customers want ‘new, new, new’. But disappear from the trade’s eye-line and buying patterns are likely to evolve to the detriment of the region.”

Champagne was one of the first wine-producing regions to collectively promote sustainable vineyard practices. But are the efforts made in the vineyard always reflected at the point of sale, and could more be done?

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