A surprisingly strong resurgence last year saw the Champagne category improve on its pre-Covid performance in many markets. Demand remains high, but this is creating its own issues. Richard Woodard reports.
After the Covid-induced horrors of 2020, when Champagne shipments dipped below 250m bottles, 2021 was an ‘annus mirabilis’: global shipments jumped by 31% year-on-year to just over 320m bottles, according to Comité Champagne figures.
This unexpectedly strong resurgence saw many markets improve on their pre-Covid performances of 2019, including the US, the UK, Belgium, Australia and Italy. The big headline was the confirmation of the US as Champagne’s biggest overseas destination, now outstripping the UK in terms of both volume and value.
The UK also enjoyed a strong bounce-back, with Laurent-Perrier UK MD Adam Guy reporting a continuation of strong retail sales - the consolidation of a trend that began during the lockdowns of 2020.
“Our houses are both facing increased global demand for Champagne, sustained by the post-lockdown rebound in most economies,” says François-Xavier Morizot, VP of Champagne at Pernod Ricard-owned Mumm Perrier-Jouët. “The category is currently facing a strong 'V-shaped' rebound, leading Mumm and Perrier-Jouët to perform extremely well in our key markets. It is a good sign and demonstrates that consumers more than ever want to celebrate and bring conviviality back again. Post-pandemic, we see there is a double stream of consumption, with the at-home consumption and on-trade.”
Champagne Nicolas Feuillatte, part of the new Terroirs et Vignerons de Champagne (TEVC) cooperative group that also owns Champagne Castelnau, enjoyed a record year in 2021, with growth continuing into 2022, according to GM Christophe Juarez. Feuillatte had an especially strong performance in the US and the UK, and is “flourishing” in Canada, Italy and Australia. Juarez also highlights the potential of Japan, Germany and the Scandinavian nations - but, in all the excitement surrounding export destinations, is keen not to forget the still-huge domestic French market.
During the first three months of this year, France proved “dynamic” in the on-premise, with e-commerce and sales from Nicolas Feuillatte’s Paris boutique also rising. “In France, Nicolas Feuillatte has seen some decline in the off-trade due to the strengthening of our low promotion policy,” Juarez acknowledges. “But we keep our strong positioning [in the] off-trade.”
Trends in such a large market as France are diverse. While low-priced grower Champagnes are feeling the squeeze, the same isn't necessarily true for higher-value products. “For Maison Bruno Paillard, France has been steadily progressing over the past three years, because we continued to further establish a distribution network that needed to be developed and consolidated,” says Alice Paillard, who runs the boutique Champagne house established by her father, Bruno Paillard, in 1981. “From our perspective, France is in a better position post-pandemic, but I know it is not the global Champagne perspective.”
Drive to grow exports
For many of the other companies who have been historically reliant on their domestic market to deliver volumes, the drive to grow exports continues. Vranken-Pommery Monopole, owner of brands including Pommery & Greno, Vranken, Heidsieck & Co Monopole and Charles Lafitte (as well as other wine assets), saw turnover grow 23.5% during 2021 to reach EUR301.2m (US$316.2m), largely driven by the group’s Champagne business.
While France remains an important contributor to volumes, exports now represent 67% of sales for Pommery & Greno and Vranken (versus 56% for the category as a whole), thanks to the company’s strong international distribution network, with subsidiaries in the UK, Germany, Switzerland, Portugal, Italy, Belgium, Japan, Australia and the US.
“We do believe that the excellent results for 2021 reflect real changes in the consumption trends in many countries,” says Myriam Renard, the company’s senior international sales director. “The at-home consumption trend that emerged during the pandemic has given our consumers the opportunity to enjoy our Champagnes more often, outside of the traditional celebration moments, to pair them with food.
“The positive consequences have been the increase of our sales of premium cuvées (vintage, rosé, Cuvée Louise), as well as Royal Blue Sky (our Pommery on ice cuvée), which has excellent performances all over the world.”
For 2022, Vranken-Pommery Monopole expects sales growth of at least 5%, driven by continued international development and premiumisation, spearheaded by the likes of the new Cuvée Louise 2005 Parcelle Edition, and Diamant’s Golden range.
Champagne Gosset is another house where exports now make up more than half of volumes, but the scale of the business - annual volumes of about 1m bottles, spread over some 60 markets - dictates a flexible approach. “We are pragmatic, but also selective,” says chef de cave Odilon de Varine. “Since our potential exceeds our production means, we are focused on positioning the brand in the right market and outlets.
“As a consequence, some promising markets for Gosset may be promising for Champagne in general (Sweden and the Nordic countries overall), but some countries that may be considered as small, or secondary from a global Champagne perspective, offer beautiful opportunities for Gosset.” The latter, according to de Varine, includes Africa and South East Asia.
As exports continue to build, so does the demand for higher-value specialist styles. Morizot quotes Comité Champagne figures showing that, while brut non-vintage accounted for 76.5% of export shipments by volume in 2021, this figure was down 3.1 percentage points on 2019, its market share eroded by the growth of rosé (10.9% of exports, and especially strong in the US, India and Germany), low-dosage (2.5%, but up 52% on 2019), vintage (1.4%, +44%) and sweeter Champagnes (3.7%, +27%, with strong demand in Africa).
At Gosset, de Varine acknowledges that NV brut blends still dominate the market, but adds: “We can’t ignore the boom in demand for blanc de blancs (ours was sold out for several weeks in early 2022), and it seems that the rosé trend is being surpassed by the blanc de blancs demand nowadays.”
Blanc de blancs may be hot, but rosé remains highly popular too, with Guy reporting enduring demand for Laurent Perrier’s iconic rosé. Meanwhile, Alice Paillard says: “Our rosé has always been popular for Maison Bruno Paillard (it represents 25% of our production, compared to 10% for the appellation). However, we will not have enough for the entire year.”
High demand and supply chain issues deplete stocks
This highlights one unwelcome consequence of 2021’s spectacular sales figures: stocks running low, or being entirely depleted - a phenomenon exacerbated by the challenges currently affecting the wider supply chain. Champagne’s complex production method takes time, meaning that companies cannot simply turn the tap on (or off) to react to market trends.
“We have experienced disruptions in the purchase of metal, paper and cardboard simultaneously with an unprecedented level of demand on all our cuvées, including the Gosset Celebris prestige range,” says de Varine. “We sold out our 2021 allocation of Celebris Rosé 2008 in two months. We ended up being out of stock in early 2022, for several weeks, and on most of our cuvées. You don’t deal with that - we had to learn to live with it.”
Similar problems affect producers large and small. “It is true that the current increased demand is challenging for us, causing logistics and production tensions,” says Morizot at Mumm Perrier-Jouët. “We are facing an equation of increased demand, a production process that cannot be rushed and some logistical challenges, which is creating tension in some markets.”
The result of this combination of factors - increased demand and significant cost inflation throughout the global supply chain - will inevitably result in rising prices, warns Guy at Laurent-Perrier. This, coming at a time of war in Ukraine and worrying macroeconomic trends around the world, is a concern for a luxury commodity such as Champagne.
“My father always told me: ‘For Champagne to be prosperous, it needs peace, economic prosperity and no ban (religious or political)’,” says Alice Paillard. “So of course, it is quite impossible to read the future in the current circumstances.”
At TEVC, the dedicated 'Covid Committee' has been reconvened as a 'Global Crisis Unit' to monitor events in Ukraine and their knock-on effects elsewhere, but Juarez remains positive about the prospects for 2023 in key markets ranging from the US to Europe and Asia. Looking forward, he expects a “soft landing” after last year’s spike in demand, with consumers drinking “less but better”, socialising and celebrating at home or in small groups.
After the rollercoaster of the past two years, some stability in Champagne would undoubtedly be welcome.
This article was initially published in June's issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
