Champagne, A Bellwether For The Economy

December 24th, 2009 → 6:45 am @ // No Comments

Recovering from the crisis: How the Champagne market will sparkle again

Dr. Stephen Charters, Reims Management School’s chair of Champagne Management, on how the credit crunch has affected the Champagne industry and why it should not compromise price ahead of the recovery

December 2009. The financial crisis has not done the Champagne industry any favours. Worldwide sales have tumbled in 2009, dropping by over 42% in the first six months of the year. Dr. Stephen Charters, who teaches wine management and marketing electives as part of Reims Management School’s business programmes, offers some insights into an industry that offers some unusual themes, from vertical integration – from grower to table – to issues including luxury branding and the consumption of alcohol.

Champagne as a bellwether for the economy

“The 2009 results reinforce what we have always said: that champagne is a bellwether for economic activity and economic confidence,” said Stephen Charters, head of the unique chair in Champagne Management at RMS in France.

“For the 9 months to September 30, 2009, shipments of Champagne were down 19.8% on the same period in the previous year. The biggest reduction in sales was outside the European Union – the most important of which were in the US and Japan. The main countries in which sales had decreased by less than 19.8% included Australia, Germany, Spain and Switzerland.”

Champagne marketing too focused on price

Explaining the strategy of Champagne houses during the crisis, he said: “To sell more champagne, and to avoid poor cash flow, the houses are reducing their prices substantially. In one supermarket in the UK you can buy Lanson and Bollinger for far less than I can buy it here in France; some champagne in Australia is even cheaper than at the cellar door here – and that is 17,000 kilometres away.”

“Unfortunately, marketing champagne is too often focused on price, which is dangerous as it may send out the wrong signals about Champagne’s quality and reputation. It reduces the exclusive nature of Champagne, and threatens its long term position as an aspirational drink – the best used to provide the best form of celebration.

Rather than selling cheap they need to develop new marketing methods which are based on long term supportive methods for the products and develop their existing image: for example, wine tourism to the Champagne region; long-term niche marketing; targeting lesser-known countries or specific market segments; redoubling the effort to show the quality and authenticity of the product, particularly in the face of challenges from newer styles of sparkling wines.”

“There is no precise forecast for the future sales of Champagne as each house has their own projections. But exports are not going to increase for the moment – it’s likely that we will see a static situation, in my estimate.”

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