CHAMPAGNE BULLETIN MARCH 2023
In this month’s Champagne Bulletin we’ll look at just two topics which tend – mistakenly - to be overlooked by many people who are considering creating a private champagne brand:
- Long-term trends for the wine market and
- The right time to launch a brand
Both of these should help you to look a little further into the future
Long terms trends for the wine market
If you are considering creating a private champagne brand, a sound appreciation of the market environment is something you need to familiarise yourself with.
Of course, you need a passion for champagne itself but if your project is to succeed, it is essential to look at the wider business environment and to calmly and realistically assess the chances of your brand achieving the success to which you aspire.
That’s not an easy task in an industry that is subject to so many influences and shifting trends.
The world of alcoholic beverages is nothing if not dynamic: new product categories, new consumer groups and new geographic markets constantly evolve to oblige drinks producers to revise their focus and sometimes even completely to change their strategy.
For example, the explosion of interest in gin that led to the opening of hundreds of artisan gin distilleries is now cooling off as many gin distilleries cease operations and as attention seems to be moving towards rum and vodka.
The seemingly limitless profits to be made from selling wine and spirits into China led, just a few years ago, to a rush by drinks companies to capitalise on that potential. Whilst significant opportunities still exist, the enthusiasm has been dampened by the Chinese government’s restrictions on luxury entertaining.
What’s needed to see clearly through all these variables are sources of reliable and detailed information about the state of the market both now and in the future.
Fortunately, publications such as the International Wines and Spirits Record (IWSR) provide us with exactly the sort of information we need.
You can find many of these reports at https://www.theiwsr.com/news-comment/
but the one we’ll focus on today is called
Key trends for wine in 2023 and beyond
Some of the stand-out phrases in the report don’t make very encouraging reading for anyone involved:
- wine is a category in slow decline and there are few signs of this changing imminently
- Fewer people are drinking less wine every year
- the long-term trend of slowly-declining volumes in many markets expected to continue.
but read further and you’ll find that these headlines hide a much more nuanced reality and that good opportunities still exist for champagne.
Sparkling wine set to buck the trend
On first reading the report may lead you to conclude that now is just not the right time to consider launching a new wine brand into the market, but the report also highlights some anomalies to the general downward trend for wine
Sparkling wine also came out of the pandemic stronger than it went in. The lack of big, formal celebratory occasions led to Prosecco and Champagne, in particular, being drunk more informally at home, and consumers have reassessed their attitude to the category as a result.
Of course, there are regional variations:
In the US and Canada, for example, sparkling wine is much more likely to be seen as suitable for informal consumption at home than it was pre-2020
Furthermore and, as we have discussed in the Champagne Bulletins over the past year, there is noticeable drive towards high-end products and in particular towards premium champagne.
Premium wines are performing significantly better than their lower-priced counterparts and this should continue over the coming years. Premiumisation may be most evident in the sparkling sector, where premium wines are showing strong growth, but it is also true for still wines, albeit at reduced levels.
Despite the headwinds facing many sectors of the wine industry, Champagne would appear to offer something of a safe haven which goes a long way to explain the flurry of acquisitions we’ve seen in the past year or so (and which we’ve covered in previous Champagne Bulletins) of small to medium size champagne houses by large international groups which still see attractive opportunities ahead for premium champagne.
When to launch?
There are many factors to consider and a helpful way to approach them is to look at two sides of the equation: supply and demand
On the supply side, stocks in Champagne are still very tight. Many houses have introduced an allocation system in an attempt to partially satisfy all existing customers; the idea being that no single customer gets as much as they would like, but they all get something.
A more drastic approach, which was a dilemma I experienced personally a few years ago, is to cease supplying some customers entirely. As you can imagine, this strategy created some very unhappy customers, and you have to have huge confidence in the power of your brand to tempt even these offended customers to order again at some time in future when stocks are available again.
With stocks under so much pressure in Champagne and lead times being very extended at the moment, it is unrealistic to think in terms of a new brand being ready to launch by the end of this year unless you are already well advanced in the brand creation process.
Even if you have already made good progress, do think of securing your future orders by paying a deposit now.
The stock situation will not significantly improve until 2025 at the earliest when the wines from the 2022 harvest start to become available and even that depends on this year’s harvest being of a reasonable size.
On the demand size, do bear in mind that many importers and distributors decide in Spring on the range that will carry at the end of the year, so the first quarter of the year is the time to be pitching your new brand concept to the trade.
All the best