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Posted: Monday, July 27 2009. 13:35

Champagne Losing Fizz in World Market

Reversing a long-term era of continuous sales growth, the sale of Champagne which underwent a 7.8% drop last year is seeing a decline with some houses reporting up to 40% drop, with India reducing imports by 70% during the first five months this year, reports Subhash Arora.

Photo By :: Subhash Arora

While reporting the results of April-June 2009 last Thursday, the Paris- based wine and spirits group, Remy Cointreau announced a 39% drop in sales by the Champagne division which produces Piper-Heidsieck and Charles Heidsieck labels, citing difficult worldwide trading conditions as the main reason.

Reducing inventories by customers at various levels is said to be also a contributing factor. Its flagship division producing the world-famous cognac suffered only 4.5% fall in the same period.

The LVMH group producing the ubiquitous Moët Chandon, Dom Pérignon, Veuve Clicquot Ponsardin, Krug, Ruinart and Mercier labels concedes that the shipments from its cellars fell by 35% during the first quarter of this year. During the same period Laurent Perrier suffered a drop of 25% with respect to the previous year’s level.

United Kingdom, one of the strongest markets for the world’s most celebrated bubbly has also noted a drop of 39%, according to the latest figures released by CIVC, the Comité Interprofessionnel du Vin de Champagne, the all-powerful professional body of the producers of the region.

Discounting is said to be the order of the day causing apprehensions that it may not be easy for the people offering rock-bottom prices now to re-introduce higher prices once the market starts looking up. Many retailers are running a 50% off price promotion on purchases of two bottles on many of their champagnes including Moët Chandon- translating into the typical ‘buy one and get one free’ offers. Decanter reports rumours that one Grande Marque champagne house is selling to a prestige customer at only $14 a bottle.

Smaller houses which represent elite and expensive end of the spectrum admit privately that the volumes have not been affected but the focus of buyers has shifted from the higher priced prestige cuvees and Vintage Champagnes to the non vintage labels.

While everyone in Champagne openly admits it is a difficult market, in private they admit the situation to be dire and disastrous, reports Decanter. However, London where some restaurants sell 6-8 labels of Champagne by the glass to the bubble-thirsty clients, reports a marginal improvement in the sales to individual clients. However, corporates are still under pressure not to splurge on Champagne.

According to the figures  released recently by the Federation des Exportateurs de Vin et Spiritueux de France, exports of Champagne to India suffered a bewildering drop of 70% in the first five months of this year. A total of 3122 cases of Champagne were imported till May 2009, at a reduction of 69.8%. The total import of 4422 cases of sparkling wine, which includes Ladubay from the Loire Valley by UB showed a drop of 59.4% from the corresponding period last year.

The reason for this free fall is not difficult to comprehend. The biggest market for Champagne has been traditionally Mumbai followed by Delhi. Both have been hit by recession, but Mumbai had been struck by the excise lightning with the duty of 200% making even the politicians, bureaucrats and the high net worth individuals blink.

The figures might have been even worse if it were not for the highly popular Sunday Champagne brunches where one can have unlimited amount of Champagne with majestic buffet for less than Rs.3000. Moet, VCP, Taittinger, Laurent Pierre and Pommery are some of the labels that are available for tasting, sipping, drinking and even guzzling. Hyatt Regency Hotel, both the Taj Palace and Mahal hotels, Oberoi, ITC Maurya and Shangri-la are a few of the 5-star hotels offering unlimited champagne with exquisite cuisine (Hyatt offers different cuisines in The China Kitchen, TK, La Piazza and the Café with different bubblies).

The trend was started by Mumbai and quickly emulated in Delhi where the duty free purchase and the extremely low supermarket prices offered by the suppliers fighting hard the challenge from Moet and Chandon made it a winning situation for the consumers and the producers who could at least sell higher numbers. With the streamlining of excise duties in Mumbai and the imposition of high duties in Delhi, the scene should see a shift in the Champagne drinking culture back to Mumbai and possibly the excise-duty free 5-star properties in Gurgaon, with a net gain in the consumption though value-wise the Champagne imports will continue to remain under pressure. The current market for Champagne is estimated to be around 20,000 cases, around 9-10% of the total imports.  

Lily Bollinger who managed the Bollinger family champagne business from 1941 to 1971  is famous for the following most-oft used quote: 

“I drink it when I’m happy and when I’m sad.
Sometimes I drink it when I’m alone.
When I have company I consider it obligatory.
I trifle with it if I’m not hungry and drink it when I am.
 Otherwise, I never touch it – unless I’m thirsty.

It is difficult to believe that people are  happy with the current global economic scenario. It looks like they don’t drink champagne anymore when they are sad and are perhaps switching over to Cava from Spain and Prosecco from Italy, costing a fourth of the real McCoy. Perhaps the producers in Champagne may be sad enough to consume a lot more of their own bubbles in the time of the current dark period- wondering why Champagne is losing fizz in the world market.

Subhash Arora 

       

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