Last week marked the 5 year anniversary of the nigh apocalyptic day of the Lehman Brother’s collapse, a singular event that ushered in the tectonic shifts of the Great Recession and with it what came to be known as the New Normal; a thriftier and less ostentatious approach to consumption and drinking habits, a necessity driven departure from materialistic extravagance and an existential questioning of luxury propositions. Austerity, sustainability and affordability captured the zeitgeist and dramatically replaced the vulgarity of bling across reeling western markets even as recovering emerging nations were unashamedly quick to embrace it. Champagne was caught in the crossfire.
Champagne on retreat
It still is. According to Euromonitor International’s latest research and contrary to the industry’s infectiously optimistic claims, global champagne volumes actually declined by 0.4% in 2012, failing to reach escape velocity and potentially providing some warning signs for the true state of the economy. That is, the European and to a lesser extent, the American economy. And this is where champagne’s major problem lies.
While the Champagnois have indeed made some remarkable efforts to shift the region’s traditional focus from their European bastion to Lagos, Johannesburg or Shanghai, such moves are proving to be too little, too late. Western European volumes are still accounting for 170 million litres out of a total of 232 million sold globally in 2012 at the same time that the old continent remains in the tight grip of severe recessionary forces. It was Western Europe’s accelerating decline – going from an already bad 1% total volume decline in 2011 to an even worse 2% total volume decline in 2012 that sealed the category’s lacklustre fortune.
On the face of it, and in relative terms, North America- accounting for 14 million litres- fared better. Yet if one was to adopt a longer term perspective, a regional growth of 1% could only be described as underwhelming. A sobering follow up to 2011’s strong bounce-back of almost 6%, it is this sharp deceleration that highlights the fragile nature of both the category’s and the overall economy’s recovery.
On the other hand, other sparkling wines continue advancing, proving that they are evolutionary, adaptable and hence perfectly positioned to take advantage of the financial carnage. Other sparkling wines posted more than 2% total volume growth in Western Europe in 2012 and more than 6% in North America. Affordable and casual, cavas and proseccos are also not afraid to break away from tradition and are hence reaping the rewards. Recent initiatives to educate drinkers and decisively distance themselves from the low quality associations plaguing the category’s
past are going hand in hand with steps solidifying its democratisation and accessibility. The nascent trend of cava bars providing a wide range of offerings on tap is already proving successful through significantly expanding the once limited range of drinking occasions.
And its not just mature markets. The opening of wineries as far and wide as Ningxia in China and Nashik in India by Moët Hennessy is a move already targeting young, urban and aspirational drinkers, enticing them with locally produced sparkling wines in the hope that they would eventually migrate to champagne while retaining their loyalty to the umbrella brand.
But champagne has not lost the battle, not just yet. A renewed focus on the drinking ritual and the ceremony around the serve, a re-discovery of half forgotten and rather theatrical champagne protocols like the ‘art of sabrage’ that is once more gaining traction, a daring experimentation with sweeter styles or special servings like the proposed addition of citrus zest for Lanson’s White Label are only some of the key initiatives that will inform the category’s future direction.
And then there are markets that do not necessarily appear in mainstream outlets’ radar, even if industry behemoths are seemingly waking up to their true potential. Often side-lined and easily forgotten African markets like Nigeria - highlighted by Euromonitor International years ago- are on their way to becoming a priority target as the European economy’s disposition remains anything but bubbly.
Occasion, prestige and exclusivity will also remain the category’s key attributes but adding a bit of playfulness, experimentation and innovation to the mix will be vital for retaining its relevance. There are still challenges ahead but champagne can navigate them provided it diversifies both its offerings and regional focus. Other sparkling wines are now hot on the category’s heels. It's time to take the (sabrage) knifes out.