HOW CAN I MAKE MONEY FROM A PRIVATE CHAMPAGNE BRAND?
You may already know that Dom Perignon, after whom the famous champagne brand was named, was a real person. He was a monk who lived between 1638 and 1715.
Legend has it that he was blind and, possibly as a result of his blindness, he is said to have had an exceptional sense of taste which was one of the skills that enabled him to make great wine. Anyway, one day when he had just tasted a wine that he thought was outstanding, he is said to have shouted out to his fellow monks “Come quickly. I am tasting the stars!”
Stars of a different kind are involved in the champagne business to this day and a look at this month’s news will show you what I mean and towards the end of the bulletin we’ll discuss some of the things you will need to make your champagne brand a success.
Staying on the theme of Dom Perignon, the brand has just announced a collaboration with Lady Gaga to produce a very limited number - just 110 - of special jeroboams (that’s the equivalent of 4 regular bottles).
According to the announcement, this is likely to be just the first of several joint projects between the singer and the iconic champagne brand and although both parties say that they share a passion for creativity and artistic endeavour, I am sure that the potential financial returns associated with the deal will also have been an important factor in the agreement between the parties.
No figures have been disclosed, but I can imagine that the amounts of money involved will be significant.
Many of you will have heard about The Who, a famous rock band from quite a few years back and of their iconic lead singer Roger Daltry.
Some years ago, Roger and his fellow band member and guitar legend Pete Townsend, launched a charity called Teen Cancer Trust to raise funds for young people affected by this disease. The charity operates in the UK and in the USA.
One of the ways they raise money for the trust is from sales of a champagne brand they created. I have to admit that I have not tasted this champagne; it has received some excellent scores in several wine competitions but at a price of £95 (130 USD) per bottle one would expect it to be well above average.
I imagine that a generous margin has been built into the sales price in order to raise funds for the trust. There’s absolutely nothing wrong with that, of course, and it does demonstrate how effective a vehicle champagne can be as a means of fund-raising for a charity.
Picture credit: Eminent Life
In the spirit world
On the subject of raising money and stardom, Becle, the company behind Jose Cuervo tequila, has secured a US$150m loan to acquire the remaining stake it doesn’t already hold in Conor McGregor’s Proper No.12 Whiskey.
If you don’t know of Conor McGregor, he’s a well-known, even notorious, mixed martial arts fighter who was recently involved in created a brand of Irish whiskey.
With sums of money as high as $150 million changing hands, and that is only for a portion of the shares in the brand, one can quickly see that there is potentially a great deal of money to be made from wines and spirits brands,
but is this type of money only possible for film stars, singers and other people who are already famous?
The honest answer is probably, Yes.
These eye-watering brand valuations are the exception rather than the rule and it would be a serious mistake to imagine that if you create a brand of champagne, or anything else, the money will just fall from the trees.
Who will you sell to?
The key factor for all these celebrities is that they have a huge following of fans who are ready to buy almost anything that they endorse and, sometimes, to buy them at almost any price.
Therefore, if you are considering creating a private champagne brand, the key learning is that you need to have, or have access to, a substantial database of potential clients and you have to give them a good reason to buy your product at least once – once you have secured a first order, it will be down to the effectiveness of your follow-up marketing to generate repeat orders.
It follows that before you go very far down the road of creating a brand, you need to be crystal clear about who you plan to sell to and what those people are looking for. In fact, knowing as much as possible about your target audience is crucial and should be studied in-depth and at length.
Where are those people?
Equally, the question of distribution is of critical importance.
How are you going to deliver your product to your customers once they have placed an order?
Over the past year, with many bars, restaurants and hotels closed, people have not been able to enjoy a drink at a normal hospitality venue. Consequently, we have seen a huge increase in ordering of wine on-line for enjoyment at home. This is a trend that is unlikely to go away anytime soon and it is forecast to carry on getting bigger and bigger. This is a part of your distribution strategy that you can’t afford to ignore.
Distribution is a topic that is hedged around with laws, regulations and taxes no matter which country you are in and if you can’t manage distribution yourself – which you probably can’t – then you need to find a trustworthy, efficient and affordable distribution partner to do the work for you.
Is that it?
Unfortunately not. There are a multitude of other factors to consider, from a web site to launch parties, to the cost of free bottles, and on to cashflow needs, ordering and sales forecasts… the list is a long one.
But, if you have an entrepreneurial spirit and a passion for what you are doing, all these issues can be a source of enjoyment as well as challenge and seeing your vision gradually take shape and become reality will be immensely satifying.
Your ambitions probably need to be a lot lower than Lady Gaga’s or Conor McGregor’s, ( #or maybe not) but whatever your goals, provided the do your homework and keep your investment in line with your expected sales, there is no reason why your project can’t be successful and great fun.
Who knows?Someday, somewhere down the line, someone may want to pay you a lot of money to buy your brand.
What’s in store for champagne in 2021?
In previous bulletins we have already looked at the shipment figures from champagne in 2020 versus 2019 and no one was surprised that there was an overall decline of 17.9% in volume and of 16.7% in value.
These are pretty dramatic declines over just one year, but in fact it was a better result than some had feared at the start of last year.
Now, one year on from the start of the frenzy that overtook the world last year, there are many signs that consumption and shipments will bounce back gradually in the next few years with sparkling wine forecast to recover more quickly than still wine.
International Wines and Spirits Review reports that sales of sparkling wine, of which champagne is a significant part, are expected to regain 2019 levels by 2023. Longer than most of us would wish, but a positive trend nevertheless.
Meanwhile, hidden amongst all the red ink were a few champagne success stories from last year that deserve a mention:
- The Netherlands up 14.5% in volume and up 4.3% in value in 2020 versus 2019
- Norway up 18.4% in volume and up 14.1% in value
- Ivory Coast up 14.8% in volue and up 24.7 % in value
- Sierra Leone up 301.6% in volume and up 642.4 % in value
Sure, the percentage gains look amazing becuse the underlying figures are still small, but
' From little acorns mighty oaks do grow'.
Keep calm and Drink Champagne
Finally in this month’s bulletin, a quirky but appealing story from here in Champagne.
You may have heard of Beer Yoga, a trend that is gathering fans all around the world.
Well, not to be left behind, one enterprising couple at Champagne Louis Brochet has launched Champagne Yoga.
Called ‘Tasting in Full Consciousness’ (Dégustation en Pleine Conscience), the session consists of an hour’s yoga session, outside overlooking the vineyards if the weather is fine, to calm the mind and exercise the body; then a tasting of two of Louis Brochet’s finest cuvées – definitely more up my street than beer yoga.
1st April 2021