Champagne Bulletin July 2020

The big news this month is that’s there’s no news

GridlockFor first time for as long as I can remember and, I suspect, for as long as anyone can remember, the expected announcement about the permitted yield for this year’s harvest in Champagne, was not made.

If you have been following previous bulletins you will recall that the size of each year’s harvest is usually agreed between, on the one hand, the large ‘ Maisons’ who account for the majority of grape purchases each year, and who want to keep their purchases in line with the number bottles they believe that can sell – thus keeping their stocks nicely balanced – and on the other hand, the Vignerons, the small grape growers who need to sell as many grapes as they can in order to cover their costs and make a decent living.

The announcement was be to be made on July 22nd, but instead a statement was issued by the president of the Syndicat Général des Vignerons de la Champagne (SGV) accusing the ‘Maisons’ of focusing solely on their ‘selfish’ objective of reducing their stocks and ignoring the wider interests of the wider Champagne community.

Some people of a cynical disposition suggest that the ‘Maisons’ are deliberately trying to force down the size of the harvest so as to drive some small grape growers out of business and then buy up their vineyards at fire sale prices.

Be that as it may, a further attempt to reach an agreement will be made in the coming days and weeks, but it needs to come sooner rather than later because it will be another early harvest this year with picking starting before the end of August, so the pressure on the negotiators is increasing with every passing week.

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Meanwhile the disagreement between the SGV and the VIC (Les Vignerons Indépendents de Champagne) gets worse – see last month’s bulletin.

ExitYou may recall that the president of the VIC was dissatisfied with the way the SGV was representing the members of the VIC in the discussions about the authorised yield for this year’s harvest and that, in protest, he  instructed VIC members to suspend payment of their subscriptions to the SGV.

The SGV has now hit back and told the VIC to immediately vacate the offices they use in the SGV premises. Where the VIC will now go to and how this will all end is not yet clear.

All this may sound like childish tit-for-tat posturing, but that would be to underestimate the importance of the decision about the authorised yield which, if it is too low could literally mean collapse for some of the small growers.

On the other hand, if the authorised yield is towards the upper end of the range being discussed, that might cause inconvenience and increased costs for the ‘maisons’ but it is unlikely to bring about their immediate demise.

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As regards the prospects for the rest of the year, opinions are mixed depending on whether they come from a glass-half-full or a glass-half-empty person.

CarbotVranken Pommery recently announced sales of champagne down 23% in the first half of 2020 and LVMH’s champagne sales were down 30% in the same period. Sales in China have rebounded strongly and retail sales in the USA were robust too, but not surprisingly sales in bars and restaurants were awful.

All this is bad enough, but actually it’s a little better than some doom-mongers were forecasting just a few weeks ago.

Elsewhere, there are signs that sales are champagne are bouncing back.

The president of Armand de Brignac said in a recent interview that his brand is seeing an uplift in sales in every continent.

Equally, some of the smaller producers I have spoken to recently also report a better, and earlier than expected, upturn in orders received.

One intrepid, small champagne maker in Châlons-en-Champagne ( Champagne Carbot) has ploughed ahead with the launch of their new brand and a champagne museum despite everything that is going on right now. It would have been so easy to postpone, or even cancel, their plans and one can only wish them well in their endeavours.

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In more news, a very recent international survey by the Comité Champagne has thrown some light on current attitudes to champagne and, by implication, what one can expect in the immediate future.

Despite a big decrease in shipments to the UK, the USA, Germany, Japan, Australia and Italy in the first 6 months of 2020 versus the same period in the previous year, there is still a core of ‘loyal’ consumers ( ranging from 18 to 26% of respondents) who said that they would not be changing their champagne drinking habits as a result of COVID and who are prepared to pay the price needed for their preferred champagne.

The findings for the month of June 2020 alone are more encouraging with shipments both to France and to Belgium actually showing an increase versus June 2019 (+1.5 and + 8.3% respectively)

Needless to say, the Belgians are very welcome in Champagne right now. Go Belgium!

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So, it’s a mixed bag of results, but my take on the overall mood is that the general feeling is that things are going in the right direction, albeit not as fast as anyone would like.

Next month promises to be interesting and we should finally find out what the size of the 2020 harvest will be.

Watch this space

JH

July 2020