CHAMPAGNE

Sales boom despite fixed supply

Wednesday, December 26, 2007

The appellation 'Champagne' is tightly controlled; only an approved region has the right to use that coveted name on its labels. Now, however, 40 undisclosed villages may be invited into the club. FR 24 business expert Douglas Herbert explains.

This holiday season, upwardly mobile revellers from St. Petersburg to Shanghai are popping champagne corks in record numbers.

Imbibers’ thirst for brand-name bubbly – think Moët & Chandon, Taittinger and Veuve Clicquot – is turning into an annual global bonanza worth an estimated €4.3 billion.

An estimated 339 million bottles of champagne will be sold in 2007 – handily beating the turn-of-the-millennium record. Industry watchers predict it’s only a matter of time – and a short time at that – before the 400 million barrier is shattered.

Two factors are underpinning the popularity spurt of sparkling wine.

First, growing demand from China and Russia, where aspiring epicures are acquiring a taste for luxury labels in food and wine.

The second factor has to do with the nature of France’s champagne industry, where maintaining the perception of a “prestige” product is an intrinsic part of the business plan.

Champagne growers talk about “managing scarcity”. This means working within the constraints of a highly regulated industry, where vineyards are allotted according to a decades-old classification system. Those vineyards deemed to be the worthiest of the worthy are granted the coveted Appellation d’Origine Côntrolée label, or AOC.

It’s more than just semantic nit-picking.

Lots of countries make white sparkling wine that may be virtually indistinguishable from the real thing to the casual quaffer. Spain has Cava, Italians make Spumante, and the Germans serve up a homegrown bubbly, called Sekt.

But, should any of them dare to slap the “Champagne” sobriquet on any of their concoctions, they risk ending up in court.

Under European law only 319 villages have the right to call their sparkling wines “Champagne” and they are all in the northeastern French region of the same name. They cover around 87,000 acres. Now, given that a single acre of champagne grapes can command prices of as much as €850,000, it’s clear that some serious money is at stake.

With champagne prices rising by an average of two dollars a year since 1989, and demand growing in tandem, vineyard owners are feeling the pinch for more land.

To this end, the French government recently drew up a list of 40 communities – all in Champagne – that are candidates for AOC status. A final decision is expected next year.

But any land crunch must be put in perspective.

France’s well-stocked Champagne cellars are brimming with over a billion bottles – enough to meet the immediate demands of celebrants the world over. Unless, that is, one billion Chinese decide, overnight, to pop the corks all at once.

A bottle of Dom Perignon to toast the Beijing Olympic Games, anyone?




  

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