Thanks to the credit crunch created by the recession, Champagne sales have fallen by a third even though there has been increase in sale of more affordable sparkling wines like Prosecco, Cava and the German Sekt, which have risen by over half, according to research by Mintel.
According to Mintel, the Brits spent a record £1 billion+ on Champagne in 2007. In comparison they will spend only£690 million this year, resulting in a drop of 32%. Sale of sparkling wine is expected to rise by 55 per cent over the same period, from £465 million in 2007 to £720 million at the end of 2012, thus overtaking Champagne sale for the first time. What should worry the Champagne producers is that the research indicates that in the next 5 years, the gap is expected to widen; Champagne sale is expected to come down further to £609 million by 2017 even as the sales of sparkling wine rises to £835 million.
A quarter of Britons feel that Champagne is too expensive to buy and drink regularly, while a fifth say that the drink is an unnecessary indulgence in the current economic scenario. Champagne has been an aspirational drink in UK where they have started to re-evaluate how they spend their money. They still like to enjoy the luxury but are looking for cheaper options. They like to spend less on luxury food and drinks.
The recession may have taken the sheen out of Champagne but the drink continues to benefit from its centuries-old tradition of association with special occasions. Although 40% of those surveyed find sparkling wine as a credible alternative for events like weddings and birthday parties, a fifth still feel that they would not consider substituting Champagne with a bubbly like say, Prosecco or Cava at special occasions.
Champagne producers are already focusing on newer markets to make up for the shortfall of sales in the lucrative British market. Russia, the country of erstwhile czars has a new class of nouveau riche who made unlimited money during the last couple of decades during the transition, taking up the growth of Champagne market to 24.5% last year. For similar reasons, the French-loving China has seen a growth of 19.4% while Hong Kong has seen a jump of a more grounded 15.1%. Although these three markets have a sale of only 4.1 million bottles, it has helped keep the total Champagne exports to 141 million bottles, second highest sales ever but still quite behind the record of 150.7 million bottles achieved during the peak year of 2007 when the total production had crossed 330 million bottles.
In India where Champagne has its own brand image, the sales are being propped up by unlimited service at Sunday brunches making it a great value- for-money bargain which is not possible for sparkling wines to compete against.
However, Prosecco and Cava, especially the former, have made a significant jump as they are easy on the palate and wallet. Most casual drinkers do not know the difference between Champagne and a sparkling wine. The champagne retails for over Rs.5500 ($100) whereas a semi-decent Prosecco or Cava can be purchased for a third the price or even less. The difference is even more pronounced with Rose Champagnes or Vintage Champagnes more and more of which are being released every year and are sold at higher prices.
At a recent private tasting of 6 different Cavas from Castell d’Age, the tasters loved them and polished off a dozen bottles, finding them pleasant and very quaffable. The Rosé might be available for a fourth the price of the Real McCoy, giving the Indian bubblies a run for the money too. Interestingly, the Indian bubbles, especially the Rose variants are of good quality and at a price that is 30-50% lower than any imported sparkling wine.
In the current scenario, champagne can increase its sales only by increasing its share in the newer markets like Russia and China. India will need to wait till the much trumpeted customs duty reduction comes into place-that won’t be in place for at least 2 years, at the pace our bureaucracy and polity is moving; or more and more unlimited-champagne Sunday brunches become de rigueur
Subhash Arora
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