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Champagne and Problems Bubbling Beneath the Surface: Post-Recession Sales Decline and Growth in Sparkling Wine

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According to Pierre-Emmanuel Taittinger, outspoken president of the eponymous champagne house, "Champagne's stiffest competition comes not from other sparkling wines but from Viagra". If there ever was a sentence encapsulating the category’s inherent contradictions, emotional gravitas and effervescent overconfidence, that would be it.

Reality is unfortunately less lyrical. According to Euromonitor International’s latest research, global champagne volumes declined by more than 1% in 2013 – a relative improvement compared to the moribund performance of 2012 but still nowhere near the heady heights of pre-recessionary exuberance. And while an inverse correlation between Viagra sales and champagne is yet to be established, other sparkling wine’s seemingly unstoppable advance is highlighting the dangers of competition coming from Cava and Prosecco rather than pharmaceutical companies.

A Western European Hangover

Sales figures from key regions and core markets are sobering and provide little reason for celebration. Sales in France, champagne’s historical bastion, actually offer an ominous reflection of the collapse in consumer confidence and discretionary income in the country. Posting a total volume decline of more than 4% for a second year running, champagne reiterated its iconic role as a leading economic indicator throughout boom and bust cycles.

The UK, second in global rankings is another case in point. The most recent surge in optimism in the country and the ongoing –relative- macroeconomic resurgence did translate into a long overdue reversal of the declines witnessed over the last couple of years. And yet, securing a total volume growth of merely 0.3% for 2013, champagne is also a testament to both the muted nature of said recovery and the precarious backdrop against which such green shoots flourish.

On the other hand, there were pockets of optimism. The US, third in the global rankings appears to have embraced the post-recessionary narrative and champagne sales in the country managed to not only reach escape velocity, following a painful high single digit decline in 2012, but actually came roaring back to post more than 3% total volume growth for 2012.

Beyond champagne’s traditional strongholds the dataflow is actually more encouraging and provides a glimpse of the untapped potential proverbially bubbling under the regional and historical surface. Asia Pacific and Middle East and Africa retained their enviable high single digit growth at the same time that Australasia continued striding ahead on the back of a favourable macroeconomic environment driving brazenly aspirational drinking patterns.

And yet, the category’s perennial problem remains. With 3 out of every 4 champagne bottles still sold in terminally depressed Western Europe, the need for diversification is essential and urgent. In the meantime, innovation and a critical reassessment of the category’s elitist positioning and rigid conservatism need to be addressed. In fact they already are, if not necessarily through the category’s mainstream offerings.

Back to the Rituals

Admittedly, as many champagne executives have acknowledged over the years, champagne has become too complacent, too passive and too technical. Initiatives such the introduction of new environmental standards by CIVC limiting the use of pesticides, encouraging biodiversity and cutting waste are certainly welcome but they are not really enough for breaking the mould. Passionate debates on the merits of publishing disgorgement dates sound out of touch when one considers that the vast majority of champagne drinkers are barely aware of the exact mechanics employed in production to start with.

Launches targeting high energy environments, the adoption of white sleeves as a signifier for the radically innovative and increasingly more exciting ‘over ice’ segment, grower champagnes highlighting their indie credentials and diametrical opposition to the homogenous offerings of the big houses, a greater focus on rose offerings and overcoming the taboo of sweeter, more approachable, sec extensions will inform champagne’s future.

It will however be the revisiting of rituals and the embrace of theatrics from the sabrage to special decanters and glassware and from serving over ice or fruit to the introduction of ‘skinny’, low calorie extensions that will underscore champagne’s adaptability and its relevance in the face of competition from other sparkling wines.

According to Euromonitor International, champagne’s global projected total volume CAGR for 2013-2018 is expected to be 1%. Other sparkling wines will see double that. Its time to face the facts bubbling beneath the surface.

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