CHAMPAGNE BULLETIN JUNE 2020

Hot air and cold hard facts

If you had assumed that things have been fairly quiet in Champagne over the past few weeks, nothing could be further from the truth.

Heated, even bitter, arguments have broken out in some quarters and whilst some people are predicting that champagne is facing a long haul to get back to pre-COVID sales, that hasn’t stopped others from seeing a profitable future and what’s more, putting up the money to back  their vision

Wine tourism opening up again very slowly

Tasting with David Pehu resizedChampagne has made great efforts over the past couple of years to promote wine tourism so the COVID crisis, which meant that there were no tourists at all, was a severe blow just when those efforts seemed to be bearing fruit.

Happily, the first tentative signs of a recovery have been seen over the past couple of weeks as many of the big houses have opened up to visitors once again, albeit with new guideline in place. Pommery, Veuve Clicquot, Moët et Chandon, Ruinart, Lanson and several others have all opened their doors once again.

Meanwhile bars and restaurants have also opened up again and people are once enjoying the good weather and the café lifestyle.

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Carry on regardless

Another piece of positive news has come from the Syndicat General des Vignerons de la Champagne (SGV) that represents the many thousand independent champagne makers. It has pressed ahead with its advertising campaign aimed at encouraging consumers to enjoy champagne on occasions other than special celebrations.

SGV CampaignThe 4 visuals feature champagne with pizza, doughnuts and other snacks with tag line that, roughly translated, mean

  • Just pop the cork to jump out of the usual routine
  • Give yourself a grand moment
  • Sometimes. A few bubbles are all you need to get out of your own
  • As soon as champagne appears things stop being ordinary

The campaign is being rolled out across France, but you won’t see it anywhere outside France because the mandate of the SGV does not extend to advertising in export markets. This is because the ad will be paid for out of the members’ subscriptions and, since not all members are able or willing to take advantage of opportunities in export markets, the campaign has to be limited to French market where all members can, in theory, enjoy the benefits of the increased exposure.

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To pick, or not to pick

Behind the scenes, meanwhile, the SGV finds itself embroiled in an internal dispute that is causing quite a stir.

By way of background, representatives of the SGV sit on the committee that decides the size of the harvest each year, the other people on the committee being representatives of the large houses.

Handling the caissesI touched on the issue of the size of the harvest last month, but to recap briefly: with sales of champagne dropping due to the COVID outbreak, the large houses which account for the majority of all champagne sales and buy the majority of the grapes,  are sitting on large stocks of champagne in their cellars which they want to reduce. Therefore, they prefer a small harvest this year. Some reports say that they would favour a harvest as low as 5,000 kg per hectare (a ‘normal’ year would be around 10,000 kg/hectare)

On the other side of the argument are the small houses and independent growers who fear too dramatic a reduction of the authorised harvest because

  • Too small a harvest might leave the small houses with insufficient grapes to make all the bottles that can and need to sell
  • Too small a harvest might mean that the grape growers would not have enough grapes to sell to cover their costs, leaving them on the verge of going under. They are asking for a 9,000 kg or even a 10,000 kg/hectare harvest.

Matters came to a head recently when the president of the  Les Vignerons Indépendents de Champagne (The Independent Vignerons of Champagne/ VIC) whose views are usually made known via the SGV, accused the SGV of a lack of influence in the discussions about the harvest and of not adequately defending the point of view of the independent growers.

The president of the VIC demanded that he have a seat at the table when the decision on the size of the harvest is taken and when this was refused by the SGV, he went further and advised his 400 + members to withhold their subscription to the SGV until at least 22nd July when the decision on the harvest is due to be taken.

If you’ve managed to find your way through all these acronyms and the twists and turns of the debate you’ll see that it’s not a pretty situation and all eyes and minds are focused on July 22nd.

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Buy, buy, buy

Despite all the turmoil at the moment some people are keeping their eyes fixed firmly on the future which they believe will be rosy.

LallierThe Italian drinks group Campari has reached an advanced stage in negotiations to acquire 80% of Champagne Lallier in Aÿ. The acquisition would be notable as the first venture into the world of Champagne by an Italian company.

In addition, Rémy Cointreau has announced that it is in discussions to acquire Champagne De Telmont in Damery.

Rémy Cointreau used to own Charles and Piper Heidsieck but exited the champagne business back in 2011. It’s intriguing and encouraging that they want to regain a presence in champagne and that they have chosen now to do so.

Both Lallier and De Telmont produce about 1 million bottles per year. That’s far fewer than the major brands, but the quality of both is good and no doubt the ambition of both Campari and Rémy Cointreau would be to increase this volume.

They are both in a position to do that thanks to their existing distribution networks and it’s often the distribution power, rather than any other factor,  that determines the success of any brand.

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Frederic RouzaudFinally, to finish on a note of optimism, here are the words (translated) of Frédéric Rouzaud president of Champagne Louis Roederer

I’m not worried. Champagne will get through this and we’ve seen many other crises.

Despite the current concerns, it’s hard to argue against M. Rouzaud. If you look at the history of Champagne there’s a crisis every 10 or 15 years and after every crisis Champagne has bounced back, usually stronger than before.

Mind you, it does help if you have deep pockets and can afford to take the long view as is the case of Champagne Louis Roederer, but then again, champagne has always been about the long-term and as they say: when you start a champagne company, the first 100 years are always the hardest!

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So, the stage is set for the announcement of the harvest size on 22nd July. Watch this space.