Champagne Bulletin May 2020
The easy stuff
The 3 Saints Glaces in mid-May (the three saint’s days after which tradition has it that the risk of frost has passed) have come and gone without incident and the vines are developing nicely with flowering expected any day now. By the time you read this, it may well have taken place already.
The date of flowering gives a good indicator of the date when harvesting will start.
Another traditional adage – there are lots of them when it comes to farming and the weather - says that picking will start 100 days after flowering, however, these days as a result of the warmer temperatures over the past decade and more, it is more accurate to assume 90 days from flowering to harvest. That would bring us to another early harvest possibly before the end of August. Until a few years ago an August harvest was almost unheard of, but it seems that the champenois may have to get used to them.
Now it gets more difficult
However, the main topic of discussion in Champagne at the moment is not the date of this year’s harvest but the size of it. What will be the permitted yield per hectare when it is announced in due course?
In normal times, the decision about the permitted yield is taken by representatives of the main players in the industry with a view to maintaining supply of champagne in line with market demand and thereby maintaining stable prices
Sales of champagne have been declining slightly for a few years now and dipped just under the psychologically significant barrier of 300 million bottles last year.
This, coupled with the COVID 19 crisis, means that demand is down, and that grape buyers, predominantly the big houses - in particular, the Moët Hennessy group - will not be wanting to purchase more grapes than they need in a declining market. To do so would risk seeing their stocks ballooning and their costs doing the same and, as I alluded to above, a large surplus of supply over demand would put severe downward pressure on the price of champagne which is the last thing that anyone in Champagne wishes after many years’ effort to bring about exactly the reverse.
Two measures towards price stability
- To avoid prices falling, a temporary ban has been declared on the sales of what are called vins sur latte. These are bottles already maturing in a champagne maker’s cellars which can be sold on to another champagne maker for the buyer to complete the ageing and sell the champagne under their own brand name.
The practice is frowned upon by some because the champagne is not sold by the person who originally blended and bottled it. On the other hand it can be a lifeline for a seller in need of cash and a real bargain for the buyers because vins sur latte are often sold at discounted prices
With plenty of champagne makers in financial difficulty right now and in need of funds, the ban was introduced to prevent a flood of cheap bottles becoming available which might eventually find their way on to the retail market at knock down prices
- Another tool to manage supply and demand is regulating the yield per hectare that is allowed to be picked at harvest time.
Last year is was 10,200 kg per hectare and at this level both sellers and buyers are content in a normal year
A very approximate calculation shows that with about 34,000 hectares of vines under cultivation in Champagne and with a yield of 10,200 kg per hectare, roughly 350 million kg of grapes would be harvested: enough to make about 285 million bottles of champagne – pretty much in line with the 297 million bottles shipped in 2019.
But how many grapes would be needed if shipments fell to 250 million bottles in 2020, or even to 200 million?
There has been talk of the yield being reduced to near 8,000 kg per hectare and in some quarters a figure of just 5,200 kg/hectare has been mentioned.
That might suit the buyers’ need to control their stocks to cope with what they hope will be a temporary drop in demand, but at that level grape growers couldn’t even cover their costs and for many of them such a decision would spell disaster.
Here we enter the realms of conspiracy theories because if there were to be a series of bankruptcies who would be first in line to buy up the vineyards? Could that be the big groups such as Mpët Hennessy who have long been on the lookout for more vineyards?
For their part, the growers point out that the decision makers must keep in mind that bottles put into the cellars now will not be sold for 2 or 3 years at the very least, and if the market recovers as hoped, all those bottle will be needed - this is not the time to cut back too drastically, they say.
Taking the right decision is a complex balancing act and one that, to a lesser extent, is played out every year, but 2020 is nothing like a normal year and the stakes are much higher than usual. The debate is animated to say the least, and it will be fascinating to see how the situation develops.
On a more positive note, people still celebrate with champagne
Lockdown rules are beginning to be relaxed in France and the French have turned to champagne to celebrate, and even to anticipate, the occasion. According to the market research company Nielsen, on May 9th – two days before the new rules came into effect - off-premise sales of champagne rose by 74%
Not enough to compensate for the huge loss of sales in bars and restaurants, but a sign that there is reason to hope for a recovery in the coming few months.
Espionage in Champagne
I’m not sure what the appropriate reaction to this story should be: amusement or sympathy?
A champagne maker has been swindled out of £120,000 and many thousands of bottles of champagne by criminals who assured him that the money and bottles were needed as part of elaborate spy missions linked to former US president Barack Obama and other highly placed people in the world of politics and in the film industry.
Although the story has only come to light recently, the scam started back in 2007 and only ended when the champagne maker went bankrupt in 2012.
It’s a sad ending to a bizarre story and only goes to prove that sometimes the truth is stranger than fiction.