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A glass half empty, or a glass half full?

Despite a fall in shipment volume, champagne is in good shape.


Glass half empry, or glass half full?Official figures for champagne shipments in 2018 will not be released until March but initial reports are that total shipments fell from 307 million bottles in 2017 (25.6 million 9 litre cases) to around 302 million in 2018 ( 25.2 million 9 litre cases).


A fall of 5 million bottles, or 1.5%, is not what you would wish for, but look beyond the headlines and there’s a different story playing out - champagne is in better shape than the headlines imply.


1) From volume to value

Much of the decline in 2018 is in champagne’s two largest markets by volume: France and the U.K.

Both have been on the slide for several years but in France matters were made worse by the ‘Gilet Jaunes’ disturbances during the crucial Christmas selling period that affected both the national mood and the physical distribution of goods.

In the U.K., sales have not been helped by uncertainty surrounding Brexit, although the U.K. remains the largest export market for champagne in terms of volume.

France is a low value market. Consumers have easy access to a whole host of inexpensive brands never seen outside France, and are accustomed to a wide choice of undifferentiated brands at low prices.

The U.K. is heavily influenced by supermarket brands that are sold in huge volumes, but usually at very attractive promotional prices.
But if the decline in these two markets is offset by increases in higher value markets, then perhaps the trend is favourable for the long-term health of champagne.

2) High value markets

While we wait for the 2018 shipment figures, we can infer a few things from the past couple of years.

In 2015 the US market overtook the UK as the highest value export market and in volume terms too, it continues to grow strongly. Shipments in 2017 were up 8.5% y.o.y. to reach 23 million bottles (1.9 million 9 litre cases) and 585 million euros in value: roughly €25 per bottle.

In contrast, the average per bottle value in France is just under €14 and in the U.K. it’s just under €15.
Other markets are growing not just in volume but, perhaps more importantly, in value too: Japan (average value per bottle €24 ), China (€21). South Africa (€23) Nigeria (€29) and Canada (€24)

In fact, the final figures could well show that 2018 was a record year for champagne in terms of value.

Not too shabby and certainly not a cause for undue pessimism

 

 

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