2019 - A Year of Mixed Fortunes in Champagne


LVMH announced record sales of 53.7 billion euros for 2019 (+15% versus the previous year) . LVMH a huge and very diverse group covering many sectors of the luxury market and the largest contributor by far to total sales is the Fashion and Leather Goods division.


Moët Hennessy contributed just (?) 5.5 billion euros in sales but that’s nevertheless more than the sales value of the entire Champagne industry which may, with luck and a following wind, just reach 5 billion euros for 2019 according to the estimate recently released by the Comité Champagne.

The big beast in MH’s portfolio is Hennessy Cognac which is the probably the most valuable premium spirts brand in the world, but MH’s range of champagne brands is impressive to say the least: Moët & Chandon, Dom Pérignon, Veuve Clicquot Ponsardin, Ruinart, Krug, plus Mercier which looks slightly uncomfortable in the exalted company of the other brands.


There are, of course, a number of other groups in Champagne


- Louis Roederer (Roederer, Deutz)
- Taittinger (Taittinger, Irroy)
- Bollinger (Bollinger, Ayala)
- Lanson ( Lanson, Chanoine Freres, Maison Burtin, Philipponnat, De Venoge, Boizel, Besserat de Bellefon and Alexandre Bonnet)
- Vranken Pommery (Vranken, Pommery & Greno, Heidsieck Monopole

to mention just a few, but none comes close to MH and the last two both had a tricky year in 2019.


Pommery gates 640Lanson BCC’s posted sales of 250 million euros in 2019 – down more than 9% versus 2018
Whilst sales at Vranken Pommery were slightly larger at 275 million euros, but this too was down on 2018 to the tune of just under 9%


There are two principle reasons for the contrasting results between MH and many other brands.


First, a large proportion of the volume for both Lanson BCC and Vranken Pommery has in the past, been sold in the off trade in France, especially in supermarkets at relatively low prices. The French consumer has been conditioned over many years by having thousands of brands of champagne to choose from all offered by small produces who lack the clout and the marketing resources to achieve higher prices for their product.


For many years this situation produced acceptable results for all concerned. Sales of Champagne in France used to account for well over 50% of total sales, so for many brands the French market was too big to ignore, but all that has changed over the past few years.


These days, the French domestic market is struggling. The national mood is somewhat depressed – look at the Yellow Vest movement – the laws on the advertising and promotion of alcoholic drinks are increasingly restrictive and last but not least, a new law, La Loi EGalim, came into effect in 2019.
This law is supposed to ensure that the balance of power and the share of profits between producers (particularly of agricultural products) and the supermarkets are more equitable.


One effect of this law has been to restrict the supermarkets’ scope to promote ‘loss leaders’ and Buy-One-Get-One-Free offers (BOGOF) are no longer allowed.
This has had a significant impact on sales of many of the brands owned by Lanson BCC and Vranken Pommery which depend on the domestic market.


In marked contrast to this situation, MH, with the exception of Mercier, has never been focussed on the domestic market, and has long had a policy of relentlessly developing higher value sales in export markets. In this way, difficult circumstances in any one country are compensated by sales elsewhere.


The good sense of this strategy is evident to other groups and of course pursuing the same strategy, but they are quite a way behind MH and are likely to stay that way for a long time yet.


Meanwhile grape prices continue to rise year after year at a rate that exceeds some brands ability to raise their selling prices, so margins are being squeezed there too.


The coming few years promise to be interesting as brands seek to achieve more premium pricing and to develop export sales. The good news is that exports of champagne are growing steadily so the opportunities are there, but I don’t think that Moët Hennessy will be too concerned, just yet, that their dominant position is under any threat.