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Posted: Tuesday, 31 December 2019 05:56

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Champagne market in a Soup with Slump in the Domestic Market

Dec 31: Already faced with the threatened 100% imported duty by the US and the Brexit issue looming on their head from these two biggest importers, Champagne producers are facing a slump with the domestic sales also falling, with a drop of 6.4 million bottles last year in a market that saw a 2% drop since 2000 with domestic sales dropping to 147 million bottles last year (2018) compared to 149.7 million in 2000, according to a report in Bloomberg

The sales of champagne within France has decreased from 149.7 million cases in 2007 to 147 million cases in 2018, a drop of 2%. It had increased to 188 m in 2007 and then started falling to the 20-year low of 147 million cases in 2018. Barring a jump only in 2010 of 4 million bottles, the fall has been gradual but continuous since 2007.

The drop in sales has reflected in the market price of shares of the companies owned by public. According to Bloomberg, Laurent-Perrier shares dropped about 7% in the past 12 months, while Vrankel Pommery Monop0le skidded 15% with Lanson –BCC slipping by 10%. This, when the overall share index in France gained 30%.

French supermarkets generally boost their sales during the Christmas holiday season with two-for-one promotions that brings the cost to less than 10 euros ($11). But a new law passed this year to boost grape prices for farmers made it impossible to give such deals. This reportedly resulted in a drop of 34% in Champagne sales during the traditional wine fairs in autumn.

Grower champagnes have seen less of a fall because of the niche they have created during recent times with restaurants and sommeliers preferring to list champagnes from growers. Generally priced higher than the high volume champagnes, they don’t have to worry about the French law this year but they would be devastated even more than other shippers if the US enforces 100% duties as they have a bigger share in the US market and their champagnes will become even more non-competitive.

While globally famous brands like Dom Perignon. Moet Chandon and Perrier-Jouet have seen a jump in export, domestic drinkers remain a key to the industry. About 147 million Champagne bottles were shipped in France last year, roughly three times as many as the combined total of the U.K. and the U.S., the top two export markets.

“In a difficult economic and geopolitical context, the uncertainties linked in particular to Brexit and the French market remain, and still call for much caution,” producer Laurent Perrier said earlier this month. Its Champagne sales fell 0.6% in the first half.

Part of the reason for this drop is that many French have started drinking cheaper Spanish Cava made with the similar method as Champagne and also increasingly Prosecco, both of which cost a fraction of the price and are good substitutes for various occasions. In fact, Prosecco brushed past Champagne in 2013 as the biggest selling bubbly in number and the gap is widening every year with Prosecco alone now selling almost more than double that of Champagne, and counting.

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Subhash Arora

delWine and Indian Wine Academy are of the view that Champagne is the real benchmark and the Real McCoy with no equivalent. We have organised various events and Brunches with Champagne including the coming 300th event of the Delhi Wine Club at Hotel Pullman New Delhi Aerocity on January 11, 2020. But the prices of Champagne are so prohibitive due to the high taxes of 250-350 % and more (the 100% proposed hike in the US is minor comparatively!). Hence we are often obliged to go for the cheaper option of Cava and Prosecco which are very aggressive in marketing their products making it even more difficult to sell champagne-editor

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