Jiles's Blog

Who Am I?

17 years spent living and working in Champagne has allowed Jiles to build up a vast amount of knowledge about all things bubbly as well as a very extensive network of contacts, especially amongst the smaller and less well-known champagne makers whose champagnes will probably amaze you with their quality and diversity.

A job as area manager for Asia and Australia with Moët et Chandon was what first drew Jiles to Champagne after completing an MBA in Luxury Brand Management at ESSEC, a prestigious business school just outside Paris.

After nearly 9 years at Moët Jiles moved back to the UK where he started one of the first online businesses promoting and selling grower champagnes,

However the draw of ‘The King of Wines and the Wine of Kings’ once again proved irresistible and another 8 year stay in Champagne was the result. During this second stay in Champagne Jiles worked with the Syndicat Général des Vignerons de Champagne as an accedited consultant for small, independent champagne makers before setting up his own consultancy.

Jiles now spends his time between England and Champagne.and puts his knowledge and contacts to work helping wine lovers everywhere learn more about champagne and helping businesses and individuals to create their own private champagne brand.

He is the author of two books on champagne, several concise guides to champagne  and is the creator of an online champagne study course called My Champagne Expert

 


 

CHAMPAGNE BULLETIN MAY 2024

CHAMPAGNE BULLETIN MAY 2024

 

Hello and welcome to the first Champagne Bulletin for a few months. I hope you’ll forgive the gap but there has been little of real note to tell you about. Recently however a few articles have have caught my attention that i'd like to share with you.

Volume versus value

The figures for champagne shipment volumes in the year 2023 were released several weeks ago and showed a total of 299 million bottles - a drop of 8.2% compared to the 326 million shipped in 2022

Champagne shipments 1947 2023

Many figures in Champagne welcome these figures and called them a return to normality after three chaotic years between 2020 and 2022 which saw dramatic falls in shipments followed by equally sensational, and probably unsustainable, increases.

The drop in shipments in 2023 was felt across all three recognised producer categories but to a varying extent: Maisons (the big brands): down 8.2 % vs 2022, Cooperatives (down 16.1%) and Vignerons (the smaller independent producers): down just 2.5%

This might seem to be disappointing news for all concerned but when one looks at the value of those shipments, rather than the volume, the picture is quite different:

For the Maisons, the value of their shipments went up by 10.7 % to reach an average price per bottle of 23.41 euros.

For the Cooperatives, the same figures were: value up by 12.5% and an average price per bottle of 16.30 euros

And for the Vignerons the figures were: value up 7.8% with an average price per bottle of 16.25 euros.

These average prices are useful to anyone looking to purchase champagne – for example, anyone contemplating a private brand – but when looking at these average prices, please bear in mind that:

a) they are averages that inevitably hide large variations

b) they are ex cellars prices, not retail prices which will be several multiples high – typically 3 or 4 x higher depending on the distribution structure and taxation regime in the country in question.

c) they shoudn't be taken to imply that champagnes from the Maisons are intrinsically of 'better' quality that from the other two categories. The higher prices for the Maisons are probably due  to the fact that the Maisons are more skilled and more effective at marketing their brands.

These increases in average prices were driven partly by the necessity of passing on increases in the grapes price and of raw materials in general and more significantly by a deliberate policy of what is called ‘premiumisation’

Putting price up when sales are going down may seem to be contradictory and in many industries, it would be just that. However, it is always worth bearing in mind what the president of one of the major trade bodies in Champagne said recently:

Champagne is produced from a limited geographic area according to strict production regulations which simply do not permit us to sustain rapid increases in volume.

Given this background is it quite logical to pursue a high value strategy and one should not expect prices to come down anytime soon.

Where do the best sales opportunities lie?

Extract from 2023 shipment figures

This is of course, the age-old questions that has no correct answer.

Is it the country with the greatest number of imports and where the value of imports is highest?

Is it in the countries that import only modest amounts of champagne but which may, in percentage terms at least, offer the biggest growth potential?

Then there are other things to consider such as political stability, population growth and many other factors. As Charles de Gaulle once apparently said in the  form of a very back-handed compliment

“Brazil is the country of the future… and always will be”

Whatever you own views may be, one essential consideration is to have some data on which to base one’s estimates and calculations and to help in your deliberations.

You can find the full 2023 shipment volumes and value for 150 countries  by clicking on this link.

 

Opportunities in Africa

For anyone assessing the market in Africa, a recent study by BusinessDay gives some useful data.

There are 5 principal champagne importing countries in Africa:

South Africa,

Côte d’Ivoire,

Democratic Republic of Congo,

Nigeria and

Morocco

However, shipments to Nigeria took a significant knock in 2023 – falling by more than 50% in fact – due to high inflation and devaluation of the currency. Nevertheless, there is clearly a demand in Nigeria and if the current economic issues are overcome one expects that shipments might rebound quite quickly.

Here’s a table showing the volume and value figures for the 9 leading champagne markets in Africa

Top 9 African markets for champagne 2023

 

Performance by style of champagne

 Over the course of 2023 a few trends emerged regarding shipments of the various styles of champagne

Unsurprisingly, brut non-vintage champagne – what the Champenois call BSA or Brut sans Année because it is a blend of wines from several different harvest rather than from just one harvest – fell 8.6%

Is this a disaster signalling a terminal decline in popularity for this style of champagne?

Not really, in my view. After all, BSA still commands 76% share of all champagne shipped and the slight decline in volume rather reflects a growing awareness amongst consumers that other styles of champagne exist and are worth trying and also due to an effort amongst producers to promote different styles that command a slightly higher price.

On the other hand, shipments of Rosé champagne fell by quite a significant 17.2 % in 2023

On the face of it that looks discouraging, but in fact shipments have only returned to the level they were at in 2019 before the three years chaos that followed. It might be more accurate to say that it was the boom in shipment of Rosé over the past few years that was the exception rather than the rule.

Shipments of what are called Prestige cuvées performed relatively well in 2023 : they fell just 6.1%  – a little less than BSA and Rosé but this is not surprising given the widespread efforts at premiumisation mentioned above.

(I have never met anyone who can give me a definition of a Prestige Cuvée, other than that it is more expensive and supposedly of better quality than the rest of the range. As far as I can tell there are no tangible criteria for a Prestige Cuvée and it can be whatever the producer says it is, so the term is not very helpful in my opinion).

In terms of the dosage, the results are a mixed bag

Overall shipments of low dosage champagnes decreased by 3.7 %, but in Italy and Germany shipments of the same style have seen a healthy increase.

In the UK and in Switzerland it was higher dosage champagne that saw the best gains.

Interesting as these figures are, I wouldn’t base my marketing strategy on just one year’s result. I suggest that it is far more relevant and revealing to study your target consumers and try to understand what they want. This can and does vary from one country to the next and even from one region or city to the next, but there’s no substitute to knowing your customers.

I hope you’ve enjoyed this round-up of news from Champagne.

If you have any questions or comments, or if you'd like to discuss a new project you are cnsidering, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it.

All the best

Source : Comité Champagne unless mentioned otherwise.

CHAMPAGNE BULLETIN JANUARY 2024

CHAMPAGNE BULLETIN JANUARY 2024

 

A very Happy New Year to you. I hope it brings you health, happiness and success.

As you will know already, these bulletins are not about tasting notes, nor do they attempt to provide any recommendations about which champagne to enjoy. Instead, they focus on the business of champagne and some of the trends that may have an impact on the business environment and what that might mean for private brands.

Like almost everything else in the world, champagne is subject to cycles that flow one way and then another. These flows sometimes appear to indicate a clear trend, but on closer examination, the underlying influences can tell a more nuanced story.

With that said, In this first Champagne Bulletin for 2024 let’s take a look back on the past couple of years and to what 2024 may have in store for us.

The perpetual see-saw of supply and demand

SEE SAW

Unsurprisingly, 2020 was an unusual year for sales of champagne, as it was for everything else, with shipments collapsing to about 245 million bottles as opposed to the customary level of over 300 million bottles.

This led to a good deal of uncertainty and even pessimism about the future: would champagne ever recover and if so, when? At a crucial moment caution and pessimism prevailed, and with signs of a collapse in shipments already apparent in the first half of the year, it was decided to sharply limit the size of the harvest in September 2020 in order to avoid being overstocked and the consequent risk of prices collapsing.

The strategy appeared to work well because shipments in 2021 bounced back strongly and 322 million bottles were shipped. What’s more, the value of shipments reached a record of 5.7 billion euros.

Great news you might at first think and evidence that the right decisions were made, but as ever, there is another side to the story – demand is one thing but there is also supply to consider.

The harvest in 2021 turned out to be one of the most difficult in living memory. Grape growers were faced with just about every imaginable problem: frost, storms, heavy rain, diseases in the vineyards and more. The grapes that could be picked were of fair quality, but there were not many of them.

This left many champagne makers with a serious supply problem in 2022 after two consecutive small harvests; demand showed no sign of slowing, in fact the opposite was true, and shipments rose again to 326 million bottles.

Faced with this situation, champagne makers had hard choices to make:

No

Some simply discontinued sales to customers whom they considered to be of lesser importance;

Others implemented a system of allocation which restricted the number of bottles each customer could order;

Many followed the lead of the major brands who took the opportunity to raise prices as part of a strategy of ‘premiumisation’.

This worked well and the value of shipments reached over 6 billion euros for the first time ever.

All these things had a significant impact on the private brand market because several champagne makers abandoned this business channel for lack of available bottles.

The wheel starts to turn again

Everything that goes up must come down and nothing stays the same for ever. In 2023 we saw what may be the start of another turn of the wheel.

First, the harvest in Autumn 2022 was excellent in terms of both quality and more importantly in terms of quantity. This, together with other measures to help champagne houses to rebuild their reserves, will ease the supply issue, but we are not yet out of the woods just yet because the wines from the 2022 harvest will not be available to sell for a few years yet.

In parallel to gradual easing of supply, sales are also showing signs of a downturn. We are still awaiting the official figures for shipments for the full year in 2023, but the figures up until October 2023 show a fall of 8.6 % versus 2022 and a moving annual total over 12 months of 304 million bottles – not a disaster by any means, but a distinct fall versus the previous year.

As time goes by the reasons for the recent trends becomes clearer.

It now appears that the high level of shipments in 2022 was due in part to the fact that importers around the world were re-stocking again after their warehouses had been all but emptied in 2021. Indeed, the importers probably over-ordered in 2022 just to be sure that they could get their hands on much-needed stock. They now find themselves with more than enough and therefore orders and shipments have slowed down, although actual consumption may be stable.

What’s more, the increase in interest rates over the past year or more means that importers are much more cautious about managing their funds and decided in 2023 to delay or reduce orders where possible.

Rising prices

Another obvious component in the discussion is the rising price of champagne which we referred to above. It seems reasonable to assume that this is having some negative impact on consumption and if this is true it might indicate that there is a limit to the ‘premiumisation’ strategy used primarily, but not exclusively, by the major brands.

However, even as supply eases over the next few years it is hard to imagine that the recent trend towards higher prices will change any time soon.

Why not? One need look no further than the price of grapes in Champagne which is once again on the rise  - by approximately 40 centimes per kilo in 2023. The price varies quite significantly across the many regions that make up the appellation Champagne and can vary between as much as 8.50 euros per kilo for grapes from the most prestigious Grand Cru villages and 7.50 euros per kilo for grapes from less famous villages*. Bearing in that it requires 1.176 kg of grapes to make every 75cl bottle of champagne, (and that’s before the grapes have even been pressed, let alone anything else) it’s easy to see where the high price of champagne comes from.

Big bunches reduced

The grapes growers also face higher costs due to the increasingly widespread adoption of more environmentally sound practices – all of which have an additional cost attached to them – and to the extremely high cost of vineyard land in Champagne.

* these are the prices on the open market. The price calculation of grapes from one's own vineyard, is different

So where does all this leave us and what lies in store in the next few years, particularly for anyone considering launching a private brand?

First the positive news: my impression is that some champagne makers who, two years ago would not consider releasing stock for a private brand, may be ready to look at this market once again.

The less positive news is that prices will continue to rise.

The total area of Champagne is limited and despite the frequent discussions about expanding the appellation, nothing significant has yet been implemented, or is likely to be in the near future. Accordingly, as things currently stand, production has an absolute limit of about 350 million bottles. We are not at that level yet, but not too far from it. This will inevitably put upward pressure on prices.

Equally, it is unrealistic, in my view, to expect production costs and land prices to do anything but steadily increase and this too will tend to push prices of champagne upwards.

Last but not least, I don’t see established brands abandoning their premium-price strategy and where the big brands lead, others will follow.

Consumer demand

Champagne consumptionOn the demand side, the are signs of that some consumers are reducing the frequency of their champagne purchases and, in some cases, changing to other sparkling wines entirely– one only has to look at the plethora of sparkling wine brands on the market and their almost ubiquitous distribution to appreciate that champagne faces serious and growing competition amongst a certain segment of consumers.

Sparkling wine is one of the only categories of wine to see growth in the past few years. This is especially (but not only) true in the USA because, according to INTEL

“sparkling wine is no longer limited to celebratory occasions in the US. As a result, the segment’s share of the total wine category in the country has grown steadily over the last decade, from 5.4% in 2013 to 7.4% last year.

During the same period, the US went from annual sales of 17m nine-litre cases of sparkling wine to over 26.5m cases.”

https://drinks-intel.com/wine/sparkling-wine-in-the-us-in-2023-market-intel/

However, in my view, this is good for the image and sales of champagne because there is a constant stream of new sparkling wine consumers who, in all probability, will want to try champagne sooner or later.

I also believe that it will be hard if not impossible for other sparkling wines to displace champagne’s image as preeminent in terms of quality and prestige and thus a strong aspirational demand for champagne will always be there.

To comfort me in this view research carried out by Future Market Insights forecasts that the value of champagne shipments will reach 11.2 billion euros in 2032 with an annual compound growth rate of 5.08%

In summary, I remain cautious optimistic for the champagne category as a whole in the next few years and also for the private brand market, not only because it will gradually become easier to find suppliers, but also because consumer demand is growing, prices are rising and the potential for attractive profits remains.

Until next time

Jiles Halling

CHAMPAGNE BULLETIN OCTOBER 2023

CHAMPAGNE BULLETIN OCTOBER 2023

Looking back on the 2023 harvest

You may well have read several reports already about this year’s harvest in Champagne, but the few weeks that have passed since picking and pressing stopped may allow us to get a more complete assessment of the situation and I would say that the verdict is that what promised to be an exceptional year has come up just a little short.

It was a year of contradictions: overall a good vintage, but perhaps not a great vintage.

No solutions, just trade-offs

The weather up until August was fairly benign with no unusual bouts of frost nor any problems with disease in the vineyards. However, August was warm, wet and humid: perfect conditions for rot to set in and this soon became a major concern that threatened to get worse with every passing day.

Pourriture 2

Any bunches affected by rot should not be picked because they can give an unpleasant taste to the juice off the press so, widespread rot means that picking has to be done very carefully to leave out rotten bunches, but this takes more time and, as in so many instances, more time taken to harvest means higher costs, so there’s a trade-off to be found between quality and cost.

The start dates for the harvest were fixed for the first week, or so, of September – the exact date varying from village to village and from one grape variety to another. By this time much warmer weather had arrived which usually means that the sugar level in the grapes (and therefore the potential alcohol) would increase quickly, but this didn’t seem to be happening and the sugar levels were only creeping up slowly.

This presented another dilemma for the wine makers: should they wait a few days longer to allow the sugar levels to rise, or should they pick as soon as possible before rot caused more damage to the crop?

In general, those who decided to harvest sooner rather than later came off better, not least because even for those who waited a few days more, the sugar levels never really got up to 100 which is what would normally be expected.

Usually, this low sugar level would mean that the level of acidity in the grapes, which has an inverse relationship with the level of sugar, would remain fairly high, but somewhat strangely, this year the level of acidity also remained quite low.

Great Champagne always needs a good degree of acidity and of sugar and so the combination of lowish levels of both sugar and acidity could be problematic, but this could turn out to be a blessing in disguise.

The lowish levels of sugar remind some people of the harvests that were common some 15 or 20 years ago which would be no bad thing give the high quality of some of the vintages from that period.

On the positive side, it was a big harvest with the vines fully laden and what’s more, the weight of the bunches was unprecedented with some being as much as 1 kg (2.2 lbs). In theory that should mean more juice from which to make champagne, but the problem with rot meant that not every bunch could be picked so the final yield was not as large as had seemed likely a few months ago.

Chardonnay

 

Big bunches reduced

Another positive measure was the announcement that amount of wine that is allowed to be put into reserves was increased. This is especially important at the moment because stocks have been run right down over the past couple of years as a result of small harvest in 2020 and 2021 coupled with strong increases in sales.

In addition, the relatively low levels of acidity may mean that the champagnes from 2023 will not need quite so many years ageing in the cellars and so will be ready for sale sooner rather than later.

In the days and weeks following the harvest, the first job is to carry out the first alcoholic fermentation that turns the grapes juice into still wine. It’s important that the fermentation takes place slowly and steadily because that preserves the full breadth of aromas in the wine. Normally fermentation takes about 2 weeks to complete but some reports indicate that this year the fermentation was more rapid than usual for reasons which are not entirely clear.

Nevertheless, some vignerons are saying that this year’s wines are very aromatic, so once again we have something of a contradiction at play.

Inox vats

The lowish levels of sugar remind some people of the harvests that were common some 15 or 20 years ago. Who knows if this trend will continue? It seems unlikely given that average temperatures have risen noticeably over the past 15 years or more, but only time will tell.

Other issues

On the subject of rising temperatures, a lot of attention was given, not unsurprisingly, to the fact that at least 4 grape pickers died in the vineyards due to the heat which was well above 300C on some days during the harvest.

I imagine that this will lead to earlier starts for pickers in the morning and perhaps even to harvesting at night.

Also in the news in Champagne were stories about the working conditions for the harvesters, which in some cases were reportedly appalling.

Some 100,000 people come to Champagne each year to take part in the harvest and this puts a huge strain on the local infrastructure. Many travellers come to earn money doing the harvest and it’s a common site to see groups of caravans parked on any spare piece of ground.

Picture1

In past times, pickers were often housed and fed by the champagne makers and this is still true in some cases, and the traditional end-of-harvest meal called 'Le Cochelet' is an experience not to be missed, but stricter regulations about the standard of accommodation led to many champagne makers having to abandon the idea of housing the pickers because the cost of upgrading the facilities was too great.

Tissier meal

In principle, this improvement in standards was a good move designed to make life easier for the grape pickers however, with fewer pickers being lodging ‘in-house’, more of them need somewhere else to stay and that means even more caravan and camping sites where conditions are not good, to say the least.

To make matters worse there have been many allegations of so-called ‘gang-masters’ recruiting workers from outside France and exploiting them in all manner of ways.

The majority of champagne houses are very responsible and pay their pickers decently, but unfortunately there are almost a few ‘bad apples’.

In any event, conditions were said to be so bad in some cases that the story hit the local and national press with the result that an inquiry was set up which should see things much improved for next year.

Thank you for reading this bulletin from Champagne and do come back again next month for more news.

Until then,

All the best

Jiles

CHAMPAGNE BULLETIN AUGUST 2023

CHAMPAGNE BULLETIN AUGUST 2023

This month’s Champagne Bulletin (August) is a few days late coming out because I wanted to wait until 2nd September when the official harvest dates in Champagne were announced.

Many of you will not know that, like so many things in Champagne, even the date on which you can start picking is regulated.

Every year the Comité Champagne publishes a list of start dates for every village within the Appellation area; in addition, the start date for each grape variety is stipulated too. You can see an extract from the official timetable in the screenshot below.

Harvest dates

 

This make perfect sense when you consider the fact that the Champagne region covers an area that is approximately 120 kilometres from the northern most village to the southernmost and roughly the same distance from east to west. Inevitably the weather conditions, and hence the rate at which the grapes reach full maturity, are going to vary considerably and so applying the same start date to everyone would make little sense.

Champagne area

 

Although the dates are announced quite late in the season – in the case of this year, only about 5 days before picking can start – this doesn’t mean that the dates are decided in a hurry. A great deal of work has been going on over the previous month or more, in villages across the length and breadth of Champagne, to monitor the health of the grapes and the pace at which they are developing.

The size and weight of the bunches are measured; the sugar and acidity levels of the grapes are analysed as well as the potential alcohol content. Likewise, the presence of any sign of disease is carefully watched and weather forecasts meticulously consulted. In this way, by the time the official start dates are announced a broad agreement amongst the vignerons has been reached. If any individual grape grower feels that he or she must start picking before the official start date, they can ask for a what is called a ‘dérogation’ to do so.

As this year’s harvest approaches there is more excitement than usual with the 2023 being hailed by some as something very special although others are more cautious and frankly, a little confused by some of the anomalies that are appearing.

The weather since the beginning of the year has been relatively kind to Champagne: no major damage due to spring frosts, mild weather from then on that allowed the flowering to take place as expected and no dramatic events at all. All this means that there will be plenty of grapes to pick which is welcome news because champagne makers still need to rebuild stocks after a few years in which demand has considerably outstripped supply.

What’s more, the weight of the bunches is breaking all records. In some cases, the weight per bunch is reaching 220 – 240 grams which compares with an average from previous years of about 180 grams per bunch. This phenomenon is due, at least in part, to the increased rainfall in August which, on the positive side, has plumped up the grapes to give more juice, but on the negative side, has diluted the sugar content.

 Ripe grapes

In addition, the rain coupled with warm weather has produced high levels of humidity in recent weeks that have caused outbreaks of mildew and rot. This will require pickers to be extra vigilant so as not to cut any bunches that are badly affected.

Pourriture 2

 

The big question that all champagne makers will have to decide on is whether to start picking as soon as possible or to wait a few days more.

Starting early might mean that the health of the bunches is optimised by avoiding the risk of rot becoming more widespread, although that choice could mean that the potential alcohol level is below the generally accepted minimum levels of 10 degrees.

On the other hand, waiting a few days more runs the risk of more widespread rot setting in, but increases the chances of the sugar, and hence the potential alcohol, levels nudging up to and over the optimum benchmark.

As ever, this year’s harvest will be one to watch with great interest, but by the end of September much will be revealed.

I'll report back in a few weeks and keep you updated

All the best

 

Jiles Halling

CHAMPAGNE BULLETIN JUNE 2023

CHAMPAGNE BULLETIN JUNE 2023

 

2023 - So Far So Good

Jiles 1Regular readers of this bulletin will remember how often I have mentioned the shortage of stock that resulted from two small harvests in 2020 and 2021 coupled with a big increase in demand since the end of the worldwide health incident.

The large harvest in 2022 that will gradually bring more bottles onto the market from 2024 onwards, has gone some way to restore the balance between supply and demand but another generous harvest, or two, is needed before one can say things are back to ‘normal’.

It’s encouraging therefore to see that all the signs so far this year would suggest another significant harvest to come in a few months’ time.

Despite a few nights in early Spring when temperatures dropped below freezing point, the damage to the vines was neither widespread nor severe, Generally speaking, temperatures were a little below what we’ve experienced in the past few years and this meant that the budburst was a week or ten days later than might have been expected.

There was some strain on the vines because the winter period was unusually dry, but heavy rain from mid-March through to the end of April, when Champagne had twice the normal number of rainy days, provided a significant amount of water to re-hydrate the soil and fill the underground reserves.

Then right on cue, sunshine and warmer temperatures returned from about mid-May. This accelerated the development of the vines and brought things almost back on track.

Flowering took place between 5th and 15th June which was more or less on the dates expected, although there were the usual variations between different grape varieties: Chardonnay leading the way, followed by the Pinot Noir and finally the Meunier.

The date of flowering has always been a reliable indicator of the date of the harvest. Historically, it used to be that the harvest followed about 100 days after flowering. These days however, 90 days is considered to be more realistic and, on that basis, we should expect picking to start in mid-September.

A lot can happen in 90 days of course, but so far there have been no reports of significant outbreaks of disease and all looks set for exactly the type of generous harvest that is needed to bring stock back into balance with demand.

Having said that, there are some signs that demand is slowing down. Shipments over the past 5 months have dropped by 3.4% versus the previous year and that is a phenomenon seen across all the three regions that are usually monitored: France, European Union and The Rest of the World.

Over the past 12 months total shipments have fallen even more, by 5.2 %, and now stand at 322 million bottles.

Prices

Ripe grapesWhether or not that slight decline in demand continues and whether it has any dampening effect on the price of champagne remains to be seen, but right now that doesn’t seem to be the case; in fact the opposite is true because if we look at the figures for 2022 the total value of champagne shipped went up by 10.9% significantly more than the volume increase in that year which was just 1.5%

What’s driving the increase in price?

First is the price of vineyard land which we touched on in last month’s bulletin. After three years of modest falls in price, 2022 saw an average increase of 2.4% over the previous year.

To put that in more concrete terms, the average price in the Marne area was €1,159 million euros per hectare with the other two principal regions being not far behind: €897,000/hectare in the Aube and €840,100/hectare in the Aisne region.

But vineyards in Champagne have always been very expensive. What’s new is the increase in the cost of dry goods and the impact of higher interest rates which have started to have a significant impact over the past year.

The most obvious input into champagne making is the grapes themselves and 2022 saw an increase of 10% in the price of grapes versus 2021. That’s an average increase and the real change has varied from region to region according to the reputation and quality of the village / area in question.

Nevertheless, the average cost per kilo of grapes is now €7 / kg and when you consider that 1.2 kg are needed to make every bottle of champagne, that’s a considerable cost even before you have started to make the wine.

Other input costs have gone up too.

The price of glass bottles, for example has increased by as much as 40% year-on-year. The price of foils, corks and cardboard packing cases has also jumped, although to a lesser extent.

The increase in interest costs has also has a major impact on costs, particularly because the rules about ageing champagne mean that champagne makers are obliged to carry heavy stocks. The rule of thumb is that you need stock in the cellars equivalent to three years of sales.

The very biggest houses have tens of millions of bottles maturing in their cellars whilst a medium sized house with sales of 100,000 – 200,000 bottles will have between 300,000 and 600,000 in stock each on of which has to be financed and if you assume €10 as the cost of each bottle in the cellar, it’s easy to see that large sums of money are tied up in stock and when the interest rate doubles or trebles that adds a huge burden on a company’s finances.

How are champagne houses responding to these challenges?

Jiles 2 verticalThe obvious and simple answer is that they have responded by increasing prices.

The increases on non-vintage cuvées have been a relatively restrained, but even on those wines champagne houses have been at pains to eliminate less profitable sales which is why sales to supermarkets are on the decline and why there are few, if any, promotions offered on champagne in those outlets.

Brands that have succeeded in establishing a strong demand for their prestige cuvées are seizing the chance to push prices up beyond what is needed just to cover the costs of production.

This strategy is referred to as premiumisation. It requires a great deal of confidence in the strength of the brand and a willingness to accept the loss of a certain percentage of customers who choose not to pay the higher prices.

To some extent the direction of travel towards premiumisation is the same for all brands whatever their size and their brand reputation and equally this is necessary, not just to maintain profit margins in an inflationary environment but also the ensure the future of champagne itself in the face of strong competition from many quarters. The variety, quality and price of other sparkling wines are constantly increasing and if champagne is to maintain its status as the world’s pre-eminent sparkling wine, it cannot be seen to be a cheap alternative – it is obliged to be the reference for both high quality and high price.

In short, don’t expect to find much cheap champagne available.

In the next month’s bulletin we’ll report again on the outlook for this year’s harvest and bring you more news of what’s going on behind the scenes in Champagne

All the best