Slump bursts champagne sales bubble

Champagne is a celebration drink, experts say ... and too many buyers can't afford to celebrate. Photo / Getty Images

Sales of champagne have slumped for the second year in succession. The continuing economic crisis in Europe and competition from other fizzy wines, especially Italian prosecco, have deflated champagne sales for the past 12 months.

Just over 300,000,000 bottles were sold, a 4.2 per cent reduction on last year leaving producers with a swelling surplus which is pushing down the prices of cheaper champagne labels in British shops.

If the trend continues into next year, France's Champagne region may regret its decision to allow the planting, or replanting, of vineyards in 40 new villages in the northeast of the country from 2015.

The decision was made in 2008 when sales were popping.

In 2007, sales set a record of 338,700,000 bottles.

There were fears that future production would not be able to satisfy the growth in worldwide demand, especially in emerging countries like China, India and Brazil.

That was just before the financial crash of 2008 which has cut demand for the world's favourite celebratory drink by more than 10 per cent.

"As soon as you reduce purchasing power, you reduce champagne sales, says the president of the champagne wine producers union, Pascal Frat.

Champagne is not something you can give away. When people are down in the dumps, they don't feel like drinking it.

But that might not be the whole story. There has been a growing trend in Europe, even in France and especially in Britain, away from champagne and towards other sparkling white wines.

Britain is still the largest single export market for champagne, consuming more than 6.5 million litres a year.

But this year, it was overtaken in the UK for the first time by prosecco, whose sales have risen by nearly 40 per cent in the year to October.

At the same time champagne sales have been falling.

Britain drank 900 million ($1.8 billion) worth in 2008, but only 599 million last year.

The two drinks are not entirely in the same market. Prosecco sells at around 10 a bottle, almost half the retail cost of the cheapest champagne.

Wine traders say that it has come to be regarded as an everyday drink while champagne remains associated with success, celebration and special events.

A champagne expert at the Neoma business school in Reims, Professor David Menival, says the French bubbly is stuck in a period of what he calls non-celebratory consumption.

Just over 36,000,000 bottles were shipped from the region in October, 5.2 per cent down on the same month last year, which was also a poor year.

Sales in France were 4.2 per cent down and in the European Union were 10.1 per cent down. Exports to the rest of the world grew 0.7 per cent, boosted by a continuing rise in demand in China and the United States.

Menival said champagne's reliance on European markets remained a reality, even if shipments towards more distant countries were developing. The European economy was still weak, affecting non-essential products such as champagne.

The fall in sales means that champagne houses are carrying the equivalent of almost four years consumption in stock, compared to the normal three years. This, in turn, encouraged some traders to sell bottles at reduced prices for Christmas.

This may be good news for revellers but producers are worried that if champagne starts competing on price with other sparkling white wines, its exclusive image and capacity to command a higher price will be permanently damaged.

- Independent