Jiles's Blog

Who Am I?

17 years spent living and working in Champagne has allowed Jiles to build up a vast amount of knowledge about all things bubbly as well as a very extensive network of contacts, especially amongst the smaller and less well-known champagne makers whose champagnes will probably amaze you with their quality and diversity.

A job as area manager for Asia and Australia with Moët et Chandon was what first drew Jiles to Champagne after completing an MBA in Luxury Brand Management at ESSEC, a prestigious business school just outside Paris.

After nearly 9 years at Moët Jiles moved back to the UK where he started one of the first online businesses promoting and selling grower champagnes,

However the draw of ‘The King of Wines and the Wine of Kings’ once again proved irresistible and another 8 year stay in Champagne was the result. During this second stay in Champagne Jiles worked with the Syndicat Général des Vignerons de Champagne as an accedited consultant for small, independent champagne makers before setting up his own consultancy.

Jiles now spends his time between England and Champagne.and puts his knowledge and contacts to work helping wine lovers everywhere learn more about champagne and helping businesses and individuals to create their own private champagne brand.

He is the author of two books on champagne, several concise guides to champagne  and is the creator of an online champagne study course called My Champagne Expert

 


 

CHAMPAGNE BULLETIN MAY 2022

 

MMIC logo in colour

 

CHAMPAGNE BULLETIN MAY 2022

 

Hello and welcome to the May edition of the Champagne Bulletin

In this month’s bulletin…

  • Ever thought of buying vineyards in Champagne? This bulletin will definitely be of interest to you.

  • Wondering which markets are showing the greatest potential for champagne right now? Read on to find out more.

  • Creating your own champagne brand. Time spent at the outset in clarifying your objectives will save time and expense later.

Vineyards

Vineyards in Champagne

Every client who contacts me about creating a champagne brand has a different vision and each one has a different time scale in mind to complete the project. I usually tell them that the project will take about a year. For some people that’s too long, but other people take a very different view and want to go right back to basics by buying vineyards.

If that’s you, I have some good news and some not-so-good news for you.

Taking the bad news first:  the cost of vineyards in Champagne is amongst the highest in the world; so high, in fact, that for a newcomer to the industry, making a return on your investment is likely to take a (prohibitively?) long time.

On the positive side, prices are coming down, but before you get your cheque book out, let’s take a closer look at those prices.

Champagne covers several separate administrative areas or départements and 3 of these are distinguished in the latest report on vineyard prices*.

 Departements

At the least expensive end of the scale is the area called the Aisne which lies to the north-west of Reims. The vineyards here are not ranked amongst the cream of the crop but they can nevertheless produce good quality grapes. The average price per hectare in the Aisne region in 2021 was 814,000 euros. (down 4% versus 2020)

Slightly more expensive was the average price in the Aube region which is some 100 kilometres south of Reims and is centered close to the town of Troyes

The Aube plays a significant role in Champagne. It’s a large area that is particularly suited for Pinot Noir grapes which are increasingly sought after by the major brands, partly because the price of the grapes is less than in the more prestigious areas nearer to Reims and Epernay

On average, a hectare of vineyards in the Aube in 2021 would have set you back 888,000 euros (down 5% versus 2020)

The third area covered by the report is the Marne which includes most of the vineyards around the twin centres of Champagne: Reims and Epernay.

Here the average price per hectare in 2021 was 1.128 million euros which is (6% down versus 2022)

Be aware though, that the fall in the average price per hectare hides the fact that the prices in the best Premier and Grand Cru villages have hardy moved at all and in La Côte des Blancs, the best plots actually increased in price.

Generally speaking, buying vineyards in Champagne with a view to creating a new brand is a costly and lengthy affair and is not something that I usually recommend. There are other ways to create a new brand and if you’d like to know more about that, don’t hesitate to contact me

*Source SAFER (Société d’aménagement foncier et d’établissement rural)

Annual report gives details about last year’s unexpected demand for champagne

The latest report on the state of the Champagne market (*2) in 2021 shows strong increases almost everywhere particularly in terms of value. In the current circumstances of strong demand on the back of tight supply following two small harvests, adding value is definitely the name of the game.

It probably won’t surprise you that the USA is the largest market in terms of volume as well as value (34 million bottles for a total value of 793 million euros)

The next 4 or 5 largest markets are shown in  chart A below and it’s interesting to note, if you do a very rough calculation (divide the value by the number of bottles), how much higher the price per bottle is in the USA and Japan than in the other markets.

Top 5 markets 2021

Despite the different value per bottle generated from market to market, the overall trend is very much towards higher prices

In chart B below change in volume is shown in the block bars and change in value in the hatched bars and as you can see, even in markets where volume fell, the value still increased.

Change in value and volume

Apart from the leading markets shown in chart 1, there has been a surge in demand in many other countries

Norway + 58% versus 2021

Denmark + 37%

Sweden + 11%

and further afield

South Korea + 54%

and

New Zealand + 47%

Both of which imported over 1 million bottles in 2021, a target also surpassed by South Africa which is the biggest champagne market in Africa

It’s worth noting as well that shipments to the United Arab Emirates jumped 71% in value in 2021 versus 2020 to reach a total of 31 million euros, putting the UAE in 19th position in the world for value.

In other market news, outside France, Brut non-vintage accounted for 77% of volume but only 64% of value, whilst in contrast, Rosé champagne took 11% of volume and 13% of value and Prestige Cuvée accounted for just 5% of volume but 16% of value.

Volume and Value by Quality

*2 All data from the Comité Champagne

Setting clear objectives for a new brand

As mentioned above, the talk in Champagne at the moment is all about how to add value. Even the smaller brands are changing their attitude. Whereas in the past they may have chased volume, these days more and more producers recognise that adding value and raising prices is the way to go.

Consequently, there are fewer opportunities for launching new brands at the low end of the market and correspondingly more at higher price points provided that the strategy has been well thought-out.

The producers who are willing to create brands for third party customers increasingly want to know more about the buyer to ensure that their champagne is in good hands

For this reason, time spent in the early stages of a new brand project to gain clarity on the objectives in terms of volume and value, style of champagne, target market and distribution is time well spent because it helps to avoid costly mistakes and changes of direction later.

To discuss these issues and others related to creating a private brand, email me at This email address is being protected from spambots. You need JavaScript enabled to view it.

The champagne market is particularly dynamic at the moment with growing demand chasing limited supply. All thoughts now are turning to this year’s harvest. If it’s of good quality and above all, abundant, there will be sighs of relief because stocks can gradually be built back up to what is considered to be normal levels at around 3 times annual sales.

 On the other hand, another small harvest would make a tight situation even more difficult. The next couple of months will be crucial and you will be able to follow developments in the next few Champagne Bulletins.

Until next month…

JH

 

 

 

CHAMPAGNE BULLETIN APRIL 2022

CHAMPAGNE BULLETIN APRIL 2022

 

This month the CIVC published the official shipment and market figures for 2021 and there is plenty of interesting material to read with the US consolidating its No. 1 position for champagne in terms of bottles shipped and total value, ahead of the U.K. with many other markets showing very strong growth.

In addition, since many readers are interested in launching their own brand of champagne, we take a look at a success story for a relatively new brand in the USA and ask what lessons there are to learn for future new entrants.

USA champagne market on a roll

It’s a few years since the USA surpassed the UK as the biggest export market for champagne and in 2021 it consolidated the No.1 position with sales volume increasing to 34.1 million bottles and sales value growing to 938.7 million US dollars.

The rebound in both volume and value versus 2020 was to be expected since there was so much disruption in that year, but the 2021 figures show big increases versus 2019 as well. What’s more, the trend is the same in many other markets with the UK, Spain, Italy and Holland returning very strong growth figures too.

However, because many of the readers of this bulletin are based in the USA, as are the majority of people who contact me about creating their own brand of champagne, let’s stay focused on the USA .

All the figures in the table below are expressed in thousands of 9-litre cases (a 9-litre case holds 12 x 75cl bottles)

Leading champagne brands in the USAYou’ll see that the Moet Hennessy group which owns Veuve Clicquot, Moet & Chandon, dominates the market and if you add in Dom Perignon which is also part of the MH stable, the group’s market share is +/- 46%

it is undeniable that the US market, like most others, is dominated by big, established brands, but the good news for challenger brands is that over 50% of the market is potentially available for other brands and that thought leads us nicely on to the second topic of this month’s bulletin

 

Beau Joie – Brand profile

Beau Joie story

Just missing out on the table of best-selling brands shown above is a relative newcomer by the name of Champagne Beau Joie ( http://www.beaujoiechampagne.com/) which according to Impact Data Bank – one of the definitive sources of information about the drinks business – enjoyed growth of 65% in 2021 and sales of 20,000 x 9 litre cases – that’s 240,000 bottles - to break into the top 20 best-selling champagnes in the USA.

Let’s take a closer look at this brand and hazard a few educated guesses about some of the secrets of its success.

The brand was created back in 2011 Jon and Brandis Deitelbaum of Toast Spirits in Las Vegas.

Although that’s not long ago at all compared with most of the famous champagne houses that count their history in centuries, not decades, it’s still 10 long years of effort and investment, but building a brand is not usually a short, get-rich-quick project.

The champagne is made by Champagne Bertrand Senecourt based in Epernay, which was itself only founded in 1972 by Champagne Charles Ellner. These are respectable houses, but nothing more;   they don’t have the same caché of a small boutique winery (which couldn’t produce the necessary volumes anyway) nor the glamorous history of the more famous names.

If you look on some of the wine review web sites, you probably won’t find remarkably high scores for Beau Joie, so the success must be due to other factors, so what have they done right? Here are some suggestions:

Plenty of investment: According to Crunchbase.com , the brand has raised some 19 million in investments over the years. Of course, it is possible to start with more modest funds, but the bigger your ambitions for the brand, the greater the investment needed, particularly if your goal is to grow it to a quarter of a million bottles and beyond (and that’s just in the USA).

Unique positioning: the brand story is woven around the days of knights in armour and of chivalry.

For many people that will not appeal at all, but it’s a niche that Beau Joie has successfully taken over as its very own. It’s recognisable and distinct.

Clear targeting: Interestingly enough, there is almost no mention at all on the Beau Joie web site of the contents of the bottle, nor of the vineyards and history of the brand (there is none, in fact, since it was only founded in 2011).

Equally there is no mention of medals, awards and high scores in wine competitions. This implies to me that Beau Joie knows exactly who its target consumers are and recognises that they are not wine experts who want to know the finer details of the wine itself. This is not a problem because this type of consumer represents the huge majority of the market.

Innovative packaging: taking about being distinctive, all Beau Joie bottles are wrapped in a copper cage evoking a suit of armour. Like it or not, this creates a striking visual impact and instant brand recognition.

Brut non-vintage

Beau Joie Brut

Rosé

Beau Joie Rose

Brand Endorsement: Beau Joie has an association with the Golden Knights ice hockey team in Las Vegas and has attracted investment from well-known figures in the music industry.

Distribution: No matter how good a wine may be, if it is not available in all the right places in all the right cities, sales will never grow to any significant extent. Beau Joie is distributed by some of the most powerful distribution companies in the USA. They may have been impressed by the strong brand identity and unique positioning strategy developed by Beau Joie.

A quick search on the internet reveals that Beau Joie is available in a whole host of locations throughout the USA and elsewhere including some of the biggest retail outlets.

Pricing: The non-vintage offering which is always the mainstay of any range, is priced at $99 USD and the rosé at $129; both prices considerably above the mid-range of the market where the most famous brands and the fiercest competition can be found.

This prestige positioning offers larger profit margins to fund investment and positions the brand as a cut above the average.

JH: apparently a lower priced addition to the range at $49 is under consideration. In my opinion, this poses quite a risk to the current premium positioning which is already successful (if it ain’t broke, don’t fix it) and in addition, you have to sell a lot of bottles at $49 to generate a profit, but if the distribution network is powerful enough, perhaps those large sales volumes are attainable.

But that’s just my opinion. What do you think? Let me know by email.

That concludes this month’s Champagne Bulletin.

See you again in a month’s time and meanwhile, you can contact me at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

CHAMPAGNE BULLETIN MARCH 2022

CHAMPAGNE BULLETIN MARCH 2022

After a longer than normal bulletin in February, this month’s bulletin will be relatively short due to the lack of major news from Champagne this month.

Feast or Famine? It depends on your point of view

Cellars

The annual review of business for 2021 is due to be published very soon but is not available at the time of writing this bulletin. Nevertheless, the shipment figures for the first two months of 2022 have been released and confirm the very strong upward movement that characterised the last half of 2021.

The increase versus 2020 (not a very representation year) was +23.6% and against 2019 (the last ‘normal’ year) the increase was still a very significant +6.7%

All three categories of champagne producer (cooperatives, champagne houses and independent vignerons) enjoyed strong growth and it is the export markets that are leading the growth.

The moving annual total (MAT) for March 2021 to February 2022, which is a better indicator of longer-term trends, reached a total of 327.3 million bottles. (+7.6% vs. 2019)

This level of shipments would have been unthinkable 12 months ago when the prevailing sentiment was one of gloom and crisis and whilst the rebound in shipments is clearly good news, it does come with a whole new set of problems, a shortage of available stock being the main cause of concern.

As we have touched on in previous bulletins, two small harvests in 2020 and 2021, meant that stocks in the cellars were somewhat depleted and the unexpected and dramatic surge of demand means that many champagne makers are struggling to keep up.

Champagne holds No.1 spot for value amongst French wine exports

Champagne No 1 in value

As if to underline the strength of champagne exports, figures published by FEVS (Féderation des Exportateurs des Vins & Spiritueux de France) show that in terms of value Champagne occupied the leading position amongst all French wines in 2021

The total value of French wines and spirits exports was 15.5 billon euros. Of that, wine accounted for 10.6 billion euros and Champagne exports represented 33% of that total

Le Printemps des Champagnes

Le Printemps des Champagnes 

It’s good to see the return of this event after two years’ absence

In fact, Le Printemps des Champagne is a week-long series of tasting events held in April by several groups of (mainly small-scale) independent champagne makers. The events run from 9th -13th April at venues in and around Reims.

They are trade-only events, and you need to register to attend. In addition, this year, places are more limited than in the past. Nevertheless, as a means of making plenty of contacts and tasting some amazing champagnes and still wines Le Printemps des Champagnes is not to be missed

http://www.printemps-des-champagnes.com/

That’s all for this month’s bulletin. Please check in again next month when the full year report for 2021 should be available

CHAMPAGNE BULLLETIN FEBRUARY 2022

Champagne Bulletin February 2022

A fundamental shift in strategy for Champagne?

There have been a lot of superlatives coming out of Champagne in the past few weeks which is welcome news for champagne producers. However, there’s always more to learn than meets the eye, so in this month’s Champagne Bulletin let’s look at some of the possible implications behind the headlines.

It’s quite a long and intricate story but if you read to the end, I think it will give you a very valuable insight into the champagne industry and what to expect in the years ahead.

---

An unexpected rebound in sales

By any measure, the recovery in sales of champagne after the most severe of the health restrictions were dropped, has been spectacular. Not only did the number of bottles shipped in 2021 jump back up to 322 million bottles from just 245 million in 2020 – that’s an increase of over 30% - it was up 8% over 2019 which was the last comparable year.

Total shipments

Even more remarkable was the fact that the value of champagne shipped in 2021 hit an all-time high of 5.7 billion euros

To make things even better, at least from the point of view of champagne makers, the average price per bottle also increased and did so by far more than one would expect simply as a result of the expected annual increases.

So, what’s going on and does this trend mark a fundamental shift in outlook on the part of the champagne industry as at least one commentator* has suggested?

To get a clearer view of the situation let’s first look at the relevant figures in more detail.

*Martin Cubertafond – consultant in food and wine distribution strategy at Sciences Po

Leading markets

The bulk of the increase was accounted for by shipments to export markets and in fact the results for the French market were just about static compared to 2019

The USA is now biggest market in volume after overtaking the UK in 2021. The USA had already taken the No. 1 spot for value a few years ago.

US Market

Having said this, the UK - former number 1 market for both volume and value- also saw a huge rebound and higher average prices in 2021

The upward trend continued in many other export markets, and it is obvious that the world still loves champagne despite the plethora of good sparkling wines available from elsewhere.

Other markets

At first sight, one might think that this resurgence in the number of bottles shipped would be the cause of unmitigated celebration all round, but that’s true only up to a point because it’s giving rise to a discussion that could shape the strategy of the champagne trade for many years to come.

It’s all to do with managing supply and demand and to understand this, we need to consider the background.

Supply and demand

Champagne is made in a limited geographical area which has the potential to produce somewhere in the region of 340 million bottles at maximum capacity. Here have been many discussions in the past about increasing the size of the appellation – the designated area in which Champagne can be produced and/or increasing the maximum allowed yield per hectare – but this is fraught with difficulties related to

Environment a) maintaining the high quality of the wine, on which the whole image of Champagne is founded, if new plantings on potentially inferior soils were permitted and

b) environmental concerns which tend to suggest that focusing on increased production might be detrimental to responsible management of the land.

One of the strengths of Champagne over many decades has been the systems that are in place to ensure that supply is kept in line with demand.

In good times, the authorised yield per hectare for each year’s harvest can be increased to boost production to satisfy growing consumer demand.

 Conversely, in periods of falling sales the authorised yield per hectare can be reduced to avoid excess stock building up in the cellars which, in turn, could lead to price discounting as stocks are sold off to provide cash flow.

Furthermore, behind the scenes in Champagne is the system of reserves which is the envy of other wine making regions. These reserves comprise stocks of still wine which are held in abeyance by each champagne maker only to be used, if authorised by the governing body, to make into champagne and thus overcome any temporary problems in the event of a particularly poor harvest.

Mistakes or just bad luck?

For many, many years these systems have worked extremely well to stabilise the champagne market, but the decisions (some would say, mistakes) made in 2020 and 2021 may yet bring about a major shift in the way champagne makers set their strategy. When I say ‘champagne makers’ I mean the big houses because, at least as regards sales, they set the tone and direction for everyone else to follow.

In early 2020 when the impact of the pandemic was beginning to be felt, many feared a catastrophic fall in champagne sales – down to just 200 million bottles according to the worst estimates - and the decision was taken to severely reduce the size of the authorised yield – the amount of grapes that could be harvested per hectare.

As it turned out the quality of the 2020 harvest was superb which left many champagne makers lamenting the fact that they weren’t allowed to pick all the grapes they would have wished and even the release of some of the famous ‘Reserve’ didn’t compensate adequately for this shortfall.

Sure enough, sales did decline, but not by as much as first feared, so stocks in the cellars remained at reasonable levels.

In the following year, 2021, the decision about the permitted size of the harvest was a difficult one for two reasons:

By mid-year there were very few signs of the rebound in sales that was to come in the second half of the year and in particularly in the last three months. Nevertheless, a decision about the size of the harvest had to be taken in late summer and taken without much visibility about how sales would recover.

Poor harvestIn hindsight, the limit was fixed too low, but in many areas of Champagne, this didn’t really matter because the weather in 2021 was so bad that the size of the harvest was pitiful.

The result was that stocks for many producers were left very low indeed at the end of 2021 and with sales going through the roof a new way had to be found to manage the situation.

This brings us back to the fact, noted above, that the average price per bottle of champagne went up significant in 2021

What next for prices and availability?

The conclusion that many people have come to is that the average price per bottle has increased because consumers are willing to pay a little more to get what they want, because they have gravitated towards slightly more expensive bottles and also because the limited supply at the end of 2021 meant that there were fewer discounted offers available – why discount a product if it’s in short supply?

This convergence of several factors is leading many players to shift from a strategy that focused on the demand for champagne and then tried to manage production in order to match the demand and consider instead a strategy of living with a stable supply and optimising the quality and price of that supply in such a way that demand falls in line with what the champagne house has to offer. Even if that demand is smaller or remains stable, the profitability of every bottle sold will be enhanced.

What’s the smart money doing?

If this plays out in the way outlined above, it’s likely that ex-cellar prices will increase at a faster rate than would otherwise be expected simply from annual inflation and this will inevitably feed through to consumer prices.

By the same token, this is likely to mean higher profits for established brands and for any emerging brand that can find its niche and a loyal following willing to pay the asking price for the brand they want.

What evidence is there that more and more champagne makers are adopting a more premium strategy?

Plenty if you look at some if the investments flowing into Champagne over the past couple of years:

  • In 2020 the Campari group acquired a majority share in Champagne Lallier with the stated aim of moving the brand up-market
  • In 2021 Rémy-Cointreau acquired a majority holding in Champagne J de Telmont

Both of these champagne houses were previously positioned as mid-range brands producing approximately 1 million bottles per year and both represented an opportunity for the buyer to gain a foothold in the champagne market. Neither purchaser would have made the acquisition if they did not see the chance to add value to the brand and increase profitability.

  • Since then, LVMH has taken a 50% share in Champagne Armand de Brignac

Brad PittMore recently other well-known names from both within and outside the world of wine, appear to be betting on the future of premium champagne

  • Leonardo di Caprio has also become an investor in Champagne de Telmont
  • Artémis Domaines, a company owned by the Pinaud family that also owns Château Latour in Bordeaux and Clos du Tart in Bourgogne to name just a few of their premium winery holdings, has just announced an investment in Champagne Jacquesson
  • Whilst Brad Pitt is a major shareholder in a project with Champagne Pierre Peters

This regular stream of high-profile investments in Champagne would suggest that the purchasers see opportunities to generate more profit and that generally means increased prices.

 In summary then, Champagne seems to be at a pivotal point that signals a change in direction and an even greater focus on premiumisation and a willingness to forego sales volume in favour of sales value.

What this will mean for consumers and for the thousands of smaller and less well-resourced champagne producers that have nevertheless  influenced the character of the land over many generations, remains to be seen with some of the consequences being predictable whilst others will be unexpected.

We’ll be looking at those in future Champagne Bulletins.

JH

February 28th 2022

CHAMPAGNE BULLETIN JANUARY 2022

CHAMPAGNE BULLETIN JANUARY 2022

In this bulletin

  • Innovations in packaging and marketing
  • Crisis. What crisis?
  • The future of Champagne

Welcome to the first Champagne Bulletin of 2022 a year that will undoubtedly have its challenges, but one that will also present plenty of exciting opportunities.

This is a longer bulletin than normal. As we look back on the past year and look forward to 2022, this is a chance to consider the ever-relevant issues of supply, demand and prices that will characterise 2023 as indeed they do every other year.

However, before we do that, let’s get started by looking at a few of the innovations happening at the moment.

NFTs

Blockchain technology has been around for some time now, so depending on how familiar you are with it you will either think that these latest marketing moves are well overdue or ahead of the curve.

Hennessy 8Whatever your view, NFTs, or non-fungible tokens, are making their first appearance in the world of wines & spirits.

Hennessy, the world’s largest brand of cognac, is amongst the first brands to venture into this new area of technology when it launched Hennessy 8 in association with BlockBar, the world’s first direct-to-consumer NFT platform for wine and spirits.

Hennessy 8 is an ultra-premium cognac of which only 250 carafes has been produced

According to The Drinks Business:

The price of purchase will be 58 ETH, a digital currency, or about US$226,450. The transaction is being handled by BlockBar, and details of purchase can be found at BlockBar.com. Potential buyers can access a digital lobby at 9:30 a.m. EST on Wednesday, January 12, providing they have 1 ETH in their wallet and have it connected to the site. At 10 a.m., all users in the lobby will be shuffled into random order, and then BlockBar will proceed through the queue until a buyer is confirmed.

Upon purchase, the cryptographic version will be held for the buyer by BlockBar with a record of authenticity held on the blockchain as a digital certificate of ownership. The buyer may claim the physical part of the transaction and have it delivered from BlockBar’s secure storage facility or trade its NFT version within the BlockBar.com marketplace. 

A few days later, on January 18th, another product launch took place: a collaboration between Blockbar and Penfolds of Australia.

You can find out more about these offers and about Blockbar on this link

https://blockbar.com/

I don’t yet know of a champagne house that has launched an offer involving NFTs but I suspect it won’t be long in coming. Meanwhile, other innovations are taking place in Champagne

LABELS - Simple is sometimes best

Lombard labelsSometimes, the best ideas are ones that have been staring you in the face for a long time and which are extremely simple to put into practice. Take the question of back labels and the problem that, all too often, mandatory texts take up so much room that there is no space left to tell consumers about your product.

Champagne Lombard has solved the problem by the simple expedient of a back label incorporating a mini brochure. The label peels back to reveal an extra two or three pages on which much more information can be provided about the wine, the Champagne region, or any other marketing message.

Effective though that may be, the idea of a printed back label is still very much a part of traditional technology. However, one house that has gone much further in adopting new technology is La Maison Penet, a family-owned producer of premium champagnes based in the village of Verzy.

Augmented reality

Very CoolLa Maison Penet is no stranger to innovation because, several years ago, it was the first wine company anywhere in the world to use QR codes on its labels. Now they have gone one step further by introducing augmented reality into the labels.

By downloading a free app called Smartbottle on to your mobile phone you can scan the label to bring to life a series of virtual images and sounds that tell you more about the champagne and La Maison Penet itself.

Here's a link to a short video that will show you more.

https://youtu.be/Sj7kfiLyTxo

Golden Oldies

Another marketing idea that is far from new and which was made particularly famous by Roald Dahl in his book Willy Wonka and The Chocolate Factory' is that of a Golden Ticket.

Budweisser Gold CanBudweiser is reviving something similar in its most recent promotion.

A few golden cans have been included in cases of regular cans and a customer who finds one of the  golden cans is eligible to win a $1 million prize as part of its “Live Like a King” sweepstake.

There may be many people who feel that this particular promotional device may not be suitable for prestige champagne, but there are a few variations on this theme that could be. Email me if you’d like to chat about this.

But back to Champagne and what the coming year has in store…

THE FUTURE OF THE CHAMPAGNE INDUSTRY

An article in the Economic Observatory (link below) on this very topic comes to the following conclusion:

Analysis of data on the ups and downs of this iconic French industry over more than a century suggests that its future is likely to be brighter than was feared in the early months of Covid-19.

Well, I hate to say ‘ I told you so’ and of course there will certainly be many obstacles in future, but Champagne has known nothing but highs and lows throughout its history and sales have always rebounded after a crisis. In fact, I wrote a series of short articles about this a few years ago. You can still find them on my web site on this link 

https://www.mymaninchampagne.com/jiles-blog/325-crises-and-opportunities-the-history-of-champagne-1900-2014

But, back to 2022 and the Economic Observatory analysis.

Google trendsOverall, I don’t think it offers much that is really new, although it does introduce a new way to track global interest in champagne which is the number of searches for the word ‘champagne’ in Google. This mirrors very closely (or perhaps influences) sales of champagne.

https://www.economicsobservatory.com/what-future-for-the-champagne-industry-after-the-pandemic

More significant than this analysis is what is actually happening in Champagne right now.

A record year.

Champagne toastThe latest estimates indicate that when the figure for total champagne shipments in 2021 is confirmed soon, it will show that champagne significantly outperformed even the most optimistic expectations for the rebound after the last two years. In fact, total shipments (this figure includes exports and shipments to the domestic market in France) look as if they will end up at 320 million bottles, or even slightly more.

That could be the second best year on record (second only to the 338 million bottles shipped in 2007) and what’s more the total value of shipments last year looks likely to reach 5.8 billion euros – which would certainly be a new record.

So, to summarise it would seem that:

  • Champagne lost none of it appeal during the pandemic
  • People had a pent-up desire to celebrate. Some people continued drinking champagne at home because they had fewer opportunities to do so in bars and restaurants.
  • When the on-trade started opening up again people enthusiastically seized the chance to enjoy themselves again and champagne figured largely in those moments.
  • Established brands, especially prestige cuvees, benefited because in times of uncertainty consumers tend to gravitate towards brands that offer ‘sure value’ (at least as they perceive it).
  • Those people whose incomes had held up during the pandemic had fewer opportunities to spend it on things such as eating out and travel, so they had more disposable money to spend on luxury champagnes and took the opportunity to trade up.

Consequently, as we start a new year there is a widespread, but cautious, optimism in Champagne, although, in my experience, it is highly unlikely that the champenois would ever give way to unbridled enthusiasm, however rosy the future seemed.

Nevertheless, there are still some clouds on the horizon. I’ll touch on two in particular, one concerns champagne as a whole, the other concerns private brands more closely and we can address both these issues by reference to recent comments by the president of Union Champagne, one of the largest and most highly regarded of the cooperatives in Champagne.  

The president’s speech every January is seen by some as setting out the key issues for the industry in the coming year and this year he spoke about 1) the supply of grapes and 2) the objective of adding value to the cooperative’s own brand.

SUPPLY, DEMAND AND PRICES

Harvesting above VerzenayLast year, against the background of collapsing sales, when the time came last year to fix the amount of grapes to be picked at harvest time, the limit of 8,000 kg per hectare was set, or put another way, enough to make just 230 million bottles of champagne, well below the benchmark of 300 million which is about what would be needed for a normal, healthy market.

The figure of 8,000 kg per hectare was subsequently revised upwards, but the underlying sentiment was one of caution and of the need to prevent over production in a falling market which would lead to excess stocks and consequently, falling prices.

In the event and as we have seen above, sales were hugely in excess of 230 million bottles, so it’s safe to say that the concern about over production did not materialise, in fact the opposite may now be the concern. Hence the call from the president of Union Champagne for a minimum of 11,000 kg to be set as the allowance for this year’s harvest. That’s approximately enough to produce 315-320 million bottles.

A crucial balancing act

The balance between the supply of grapes and the sale of bottles is a crucial one in Champagne. This issue is a hard enough task to manage in any industry, but because of the ageing time required in the production of champagne, it’s even harder: you’re faced with an irreversible decision about supply in year 1 when the demand will not be known until year 3 or 4.

If supply and demand are kept in rough balance, prices will be stable. If there’s more supply than demand prices will probably fall, and the opposite is true if demand exceeds supply.

Having emerged from 18 months of depressed sales with a spectacular and unexpected rebound in 2021, it seems likely that prices will be firming up in 2022.

Adding value

Union ChampagneThere was another comment in the speech at the AGM of Union Champagne that warrants closer attention, especially from those of my readers who have already embarked on the creation of a private brand or may be considering doing so, not least because this comment gives us an insight into how many other champagne makers will be thinking in 2022 and beyond.

Union Champagne is a large cooperative producing about 10 million bottles each year. Amongst their customers they count Tesco, the U.K.s largest supermarket chain, to whom Union Champagne probably supply several hundred thousand bottles, all under Tesco’s own brand name.

However, their ‘Jewel in the Crown’ is their own brand, Champagne de Saint Gall and it is on this brand that Union Champagne wants to focus, by increasing sales in export markets and by increasing the average selling price per bottle. To achieve these objectives Union Champagne stated that they will continue to reduce the proportion of sales to private labels, to increase prices and give precedence to their best customers.

What does that mean for the private brand business?

The larger champagne producers and particularly those who already have a reputation for the quality of their champagnes, will be very selective about who they work with on private brand projects, if they will agree to do so at all.

To achieve agreement with this category of supplier it will be important to have good pitch that shows solid reasons why the project will succeed such as past experience, existing and relevant skills, access to market and other resources.

Private brand projects that target a premium retail price positioning will be more favourably regarded than entry level projects.

There will still be opportunities for projects that target a mid-range retail price for which the quality of the champagne needs to be good but perhaps not outstanding. There are a multitude of lesser-known champagne makers that offer sound quality and sufficient production capacity to satisfy most sales ambitions.

Prices will be firm and, with associated costs for transport and for the raw materials needed for packaging all still on the increase, it will be all the more important do the financial groundwork at the start of any new project.

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That’s all for this month’s champagne bulletin but if you’d like to discuss in more detail any of the topics raised, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it. and I’ll respond as soon as possible.

All the best from Champagne