Champagne Bulletin August 2022
In this month’s Champagne Bulletin
- Latest news from this year’s harvest
- What challenges to expect if you’re thinking of creating a private brand champagne
- Supply constraints and forecasting
- Prices are on the up
- The importance of market research
Harvest 2022 – First impressions
Well, for a moment or two in the run-up to the harvest, it looked as though a very rare beast indeed was about to make an appearance: the happy vigneron.
For a few weeks it appeared that all the lights were on green for a superb harvest
- No significant attacks of mildew or other diseases all year
- Relatively little damage done by Spring frost
- Plenty of sunshine to ripen the grapes
- No major hailstorms to devastate the vineyards
- Vines laden with bunches to give an abundant yield
In short, everything a vigneron could hope for.
Alas, it was not quite as good as they had hoped, but on the whole things have turned out pretty well after the last two difficult years.
So, what is preventing an outburst of unbridled joy in Champagne?
The sugar levels in the grape were exceptionally high due to all the sunshine this summer, but consequently the level of acidity was on the low side. This probably means that vintage champagne for 2022 probably won’t have as long an ageing potential as some of the really great vintages.
The lack of rain for much of the year has produced quite small grapes with thick skins. This not only makes pressing more difficult, it also means that the total weight of the bunches is on the low side too; this in turn means that the total yield is not a high as some had been hoping for.
Still, these are fairly minor complaints and there is still much to be grateful for and any vigneron that complains too loudly must take a lot of pleasing.
As ever, the first real indicators of the quality of wines from this vintage will only be known when the still wines are tasted in Springtime next year, but it’s ‘ So far, so good’.
Supply constraints and forecasting
One of the most critical factors in making, marketing and selling champagne is the importance of forecasting. In fact, this cannot be emphasised enough
Understandably, many of my clients have high ambitions for the number of bottles of their private brand that they plan to sell. On the one hand, this is great – it’s important to be ambitious and to believe in your future success; on the other hand, it’s also critical to understand what is and what is not possible.
Unlike products like vodka and gin which can be made almost anywhere, and which can be produced in a short amount of time, champagne needs a minimum of 15 months ageing in the cellars before it can be sold and generally speaking, it’s better, in the interests of quality, to leave the champagne to age for 2,3,4 years or more before it is sold.
It follows that if your initial sales forecast is for 5,000 bottles, but you find that these sell out so quickly that you want to order another 20,000 bottles for delivery as soon as possible, that probably will not be possible.
Although a certain amount of flexibility is built into all good sales and production plans, it is vitally important to understand that forecasting in far more important for champagne than for many other products.
What makes the situation even more tricky at the moment is that current stocks in Champagne are as low as they have been for 20 years or so due to two years of small harvests coupled with a huge increase in demand from all around the world. Things are so tight that some champagne makers are simply refusing new orders or limiting the number of bottles they sell to each customer.
A case in point is the new champagne launched by Pommery in collaboration with the Japanese rockstar Yoshiki. The new champagne was launched on September 1st and the initial 10,000 bottle production sold out in 10 minutes.
That sounds great, but it will be next year before Pommery can supply more bottles to get sales going again.
Despite these difficulties, there are still many champagne makers with some spare capacity who are interested in working on private brands… if you know where to look and who to contact.
Prices on the up
After reading about the supply issues, you won’t be too surprised to learn that prices are going up and will probably continue on that path for the foreseeable future. That is what inevitably happens when strong demand comes up against limited supply.
In addition, the price of grapes is going up partly because the market is being affected by major brands offering more-than-usually-generous deals to growers in order to secure grape supplies
Add into this mix the already high prices for vineyards in Champagne, plus price increases for other raw materials and it’s easy to see that the days when you could source champagne at €10/bottle are long gone and a more realistic minimum these days is €15/bottle unless you are placing a particularly large order.
Nevertheless, there is much evidence that consumers are prepared to pay good prices for quality champagne and consequently attractive margins are available for better quality champagne that is attractively presented and well marketed.
The importance of market research
A few days ago, I came across an article that at first, I thought had no relevance whatsoever for the champagne business and even less for anyone who planning to create a private champagne brand. However, on reflection I realised that the article highlighted one really important principle about launching any new brand, including a private champagne brand.
The article was about the market for plant-based meat substitutes which has turned very quickly from boom to bust.
A few years ago, plant-based meat substitutes were a hot topic that attracted several start-up companies with high expectations. The authors of the article suggest that ‘This was always about billionaire investor push, not consumer pull. It will be one of the biggest failures in food industry history.’
The article goes on to ask ‘Why did so many people ignore the clear technical, taste and texture challenges faced by meat substitutes? Why did they ignore the weak marketing proposition? Why did they ignore the risk in the investor-fuelled hype? Why did they ignore the food culture barriers to this category? Why? Because they preferred 'believing' over 'thinking'.
But what’s this got to do with champagne? Quite a lot as it happens and it’s all about the taste of the champagne.
When my clients visit Champagne to meet champagne makers and to taste a range of champagnes to find the one that they prefer, I always emphasise that it is not necessarily the client’s own taste preference that matters, it’s what their target customers want that is the crucial factor.
To give one example, there’s been a tendency in Champagne over the past few years to reduce the amount of added sugar to create a drier taste profile. This added sugar is called the ‘dosage’ in French and broadly speaking it has been reduced from about 10 – 12 grams of sugar per litre to nearer 7 – 8 g/l
This is the level of added sugar used by many of the best-selling brands in the world and one can reasonably conclude that for most consumers, this is the level of sweetness that they expect and enjoy in champagne.
Nevertheless, amongst those whose knowledge of champagne is much more developed – journalists, sommeliers and many people actively engaged in the wine trade – the accepted wisdom is that the lower the amount of added sugar, the better, even down to zero added sugar.
The risk of this approach is that it may put too much focus on the preferences of the relatively few people with expert-level knowledge whilst ignoring what the general public wants.
If we refer back to the article about plant-based meat substitutes, the moral of the story is that what is needed is more thinking and less believing
Rather than choosing what you like and believing that other people will like the same thing, it is crucial to identify your target customers and understand their tastes and expectations. The two things may be the same, but it is dangerous to assume that they are without careful consideration.
Until next month