Champagne Prices

Champagne drinkers have more to worry about than just the Greenhouse Effect, for the planet’s temperature is not the only thing that’s going up. Three years ago you could buy a selection of French champagne in Australia for around fifteen dollars a bottle. These days you are doing well to find one for less than thirty. If present worldwide trends continue, Australians could find their champagne vastly more expensive – and on ration to boot.

Global champagne consumption is increasing by more than ten percent per annum, at which rate it doubles every five years. Francois Henry, Director of Remy Martin’s Champagne Division, claims this could enforce the adoption of a global quota system for all champagne in around five years’ time. Already several premium brands, whose demand far exceeds limited supply, like Krug, Bollinger RD Vintage and Louis Roederer Cristal, are carefully allocated around the globe.

The past five years have seen the discrepancy between the supply of grapes to the major champagne Houses, or ‘grandes marques’, and their actual sales widen dramatically, affecting the likes of Moet et Chandon, Veuve Clicquot, Louis Roederer, Mumm, Lanson, Perrier-Jouet et al. Today the difference has widened to nearly 35, translating to a deficit of nearly 110 million bottles since 1984 – approximately eight months’ sales. Fortunately the major Houses have held enough stocks in their cellars to date to contain the shortage within reason.

Switzerland is the highest per-capita market, and Australia has fallen from nearly top in 1987. With the price rises here, our champagne consumption dropped almost overnight by 50.

The major challenge facing Francois Henry and those in equivalent positions in other Houses, is to find a way to develop Charles Heidsieck’s business within the highly-regulated framework of Champagne, controlled stringently by the Commite Interprofessionel du Vin de Champagne CIVC. The CIVC determines the exact allocation of grapes to the major champagne Houses, which every year is based on the actual sales achieved by each House.

The only way for a House to acquire a larger allocation is either to sell more champagne or to buy another House and amalgamate their allocations, as Moet et Chandon and Remy Martin have done with their various brands. The recent success of the new Charles Heidsieck Brut Reserve has increased that company’s share of the cake, and may in itself provide an incentive for other grandes marques to follow Charles Heidsieck’s aggressive move to develop a new, improved and contemporary champagne.

The actual proportion of the overall Champagne crop available to the CIVC and the major brands is itself limited by contracts with the representatives of the growers’ cooperatives in the many villages of champagne, whose role it is to find the best pricing deal for their members.

Like the other major Houses, Charles Heidsieck has a six-year contract with its growers. As things stand, the growers sell 47 of their produce to the major Houses, and a new contract is shortly to be negotiated to commence with the 1990 vintage. Francois Henry believes there is a possibility the growers will demand a larger share of their own grapes, but doubts that a contract will be signed which decreases the grandes marques’ allocations.

It would be naive for the growers’ cooperatives to make life too difficult for the major brands. Already they are in an advantageous position, for they do little, if anything, to promote the growth of the champagne market, able to leave it all to the larger firms. “They are only successful because of the image promoted by the grandes marques”, says Mr Henry. “In France a grand marque champagne sells for 100F, and a grower’s only 30-40F. Many customers would buy the grand marque, but growers’ is clearly cheaper.” Mr Henry believes the approach of the growers is shortsighted, saying that if the grandes marques were to disappear, the growers would lose their market. “They want us to stay and provide their marketing for them”, he says.

A champagne House cannot increase its profit by cropping beyond its normal maximum level, which has to be adhered to. It is also virtually impossible for a House to expand its existing plantings within the area strictly defined as the Champagne district. Of the total of 33,000 ha in Champagne, a maximum of 30,000 ha could be planted, allowing room for villages, roads and churches. Over the past five years the area under vine has increased by a mere 6 from 24,639 ha to 26,171 ha, giving a potential future expansion of the area under vine of less than 4,000 hectares, around only ten percent of the present area.

In this highly-regulated and finite environment, in which expansion is possible only at the expense of a close neighbour, how does Francois Henry intend to expand Remy Martin’s sparkling wine business, given that his desire is to increase its scale? “We have to go outside the Champagne area for future growth – for we can’t be looking at no growth at all”, says Francois Henry.

Today Remy Martin owns Piper Sonoma, a major and prestigious Californian sparkling wine operation, originally developed by Piper-Heidsieck, which Remy Martin now owns; ‘Gancia’, an Argentine equivalent; Chateau Remy in the Pyrenees Ranges, Victoria; and Pol Cheneau, a Spanish sparkling wine or Cava production house. It is currently looking to buy a German sparkling wine or sekt production facility and will establish a premium methode champenoise centre in Spain, along the lines of Piper Sonoma, possibly to be called Piper Spain. Mr Henry suggests there is eventually a possibility that all these wines may be tied with a corporate name, possibly linked with Piper-Heidsieck.

“Each of these centres will produce premium wine to cater only for its local market’, says Francois Henry. “All will be authentic, original to the soils and culture of the regions, and aimed at the top of the markets in terms of quality and price. We will continue to sell our French champagnes alongside the local wines in the same markets, giving them the opportunity to help each other through cross-fertilisation.”

Most of the growers and makers of Champagne are happy to let life go on as normal. The predicted future scarcity will bring a financial bonanza to the smaller growers and their cooperatives while the prices stay high. But if prices then fall, as world markets turn to their locally-made premium sparkling wines such as those made and planned by Remy Martin, the growers will be back to square one, facing the inevitable reality that if they want to seriously compete with the major Houses then their quality and consistency will have to be comparable and they will need to promote as heavily.

Both these phenomena are highly unlikely, a few exceptions aside. As prices rise and fall in Champagne the only changes will be the continual amalgamation of the grandes marques and the development of their overseas offshoots, like Domaine Chandon in Victoria’s Yarra Valley. As a drinker of champagne I just hope for two things – that the prices stay realistic and that the champagne Houses are able to retain their own individuality and integrity. Please login to post comment