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Champagne Makers Seek Valentine’s Day Bonanza Against Slump

February 14, 2013

Champagne Makers Seek Valentine’s Day Bonanza Against Slump

While events like Valentine’s Day are high-mark points for the industry, champagne makers create other events to keep brands alive even though the sales represent a tiny fraction of the market, or a few dozen thousand bottles. Photographer: Graham Barclay/Bloomberg News

In the deepest corner of a cellar built during Roman times in Ay, France, Fabrice Rosset points to bottles glowing with a golden hue that he’s banking on to give champagne sales a much-needed bump on Valentine’s Day.

The bottles of “Amour de Deutz” tucked away 70 meters (230-feet) underground in the winding, 3-kilometer (1.9-mile) long cellar, together with the methuselah, a special six-liter vintage edition with cherubs etched on the bottle that sells for $4,000 in a silver case made by Christofle are just the thing for today’s celebrations, Rosset, the chief executive officer of champagne maker Deutz, said in an interview.

“Christmas, New Year’s Eve and Valentine’s Day are the key days for champagne,” he said.

High-end bubbly makers like Deutz -- which produces two million bottles a year -- have ridden out the economic slump in France and Europe by boosting exports. The champagne industry’s sales overseas, which hit a record last year, helped it hold revenue steady at 4.37 billion euros ($5.9 billion), Comite Interprofessionnel des vins de Champagne, or CIVC, the sector’s federation, said this week.

Revenue was stable even as the number of bottles sold fell 4.4 percent to 308.8 million. France accounted for 55.5 percent of the bottles sold, the lowest level since 1977.

The sparkling wine from grapes grown in France’s Champagne region -- about 100 miles east of Paris -- that was the drink of the international aristocracy in the 19th century is becoming global again, said CIVC spokesman Thibaut Le Mailloux.

European Slump

“Growing sales outside Europe are good for the image of champagne,” he said in an interview. Outside Europe, “people consume more expensive champagne, like vintage and special prestige cuvees,” which is essential to bolstering the industry’s revenue, he said.

Markets outside Europe, which account for 20 percent of champagne sales, took in 61 million bottles, or 3.2 percent more than in 2011. Europe makes up 80 percent of sales.

Major champagne brands -- including Bollinger, Moet, Veuve Clicquot, Dom Perignon and Krug -- that make more than 69 percent of the drink, posted a 4.2 percent drop in France and a 7.2 percent decline in the rest of Europe, according to CIVC.

With euro-area economic data today showing the damage inflicted by the region’s sovereign debt crisis, the fizz may continue to go out of champagne sales in the region.

Momentum Needed

Gross domestic product in the euro area shrank a more-than-forecast 0.6 percent in the fourth quarter, the worst performance in almost four years as its three biggest economies -- Germany, France and Italy -- suffered slumping output.

Concern that Europe’s economic slump may weigh on sales is pushing champagne makers to capitalize on special events.

“We need to create special events, gift boxes, special editions,” said Jean-Baptiste Lecaillon, deputy CEO of high-end champagne maker Louis Roederer. “We need momentum in the market.”

While events like Valentine’s Day are high-mark points for the industry, champagne makers create other events to keep brands alive even though the sales represent a tiny fraction of the market, or a few dozen thousand bottles, he said.

Roederer, which makes the renowned Cristal brand, created a millennium champagne for the year 2000. The giant bottles carried a pre-sale price tag of $2,000 and are now auctioned at $20,000, Lecaillon said.

Czar’s Drink

The champagne house, created in 1776, was the first to produce a special cuvee after Czar Alexander II of Russia asked for a custom-made bubbly.

“The drink of the czar can today be found in top hotels in New York and other world capitals,” he said. “We find it in clubs on the Riviera, we find it in three-star restaurants, we find it in the Hamptons.”

About 83 percent of champagne consumed in the world is non-vintage, with prestige cuvees representing about 4 percent and the rest being pink champagne and other vintages, according to CIVC.

More than half the world’s champagne is consumed in the last four months of the year that lead up to Christmas and New Year’s.

People don’t really consume any in January, so Valentine’s Day is “a way to remind people about champagne and allow us to start the year again,” said CIVC’s Le Mailloux.

To contact the reporter on this story: Caroline Connan in Paris at cconnan@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net


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