The news is not good for those of us who love bubbly, and especially the French version – real, live Champagne. The business is in a freefall, as the recession, high prices and the weak dollar combine to clobber sales.
So what are Champagne producers doing? Cutting production, so they can keep prices up. The leading Champagne producers have apparently agreed to production cuts of 30 to 40 percent, which in their case means leaving grapes on the vines to rot. Jocelyne Dravigny, chairman of the Federation of Champagne Wine Co-operatives, told the Times of London: “For us, the stabilizing of prices is a priority.”
This is not an indictment of Champagne as wine, which is one of the Wine Curmudgeon’s guilty pleasures. This is, rather, another example of how the wine industry doesn’t respect the consumer and is shocked and amazed when that approach backfires. More, after the jump:
How bad are things for the Champagne business? Perrier Jouet, which isn’t especially overpriced given that ordinary Champagne costs $30 and $40, has seen its U.S. sales drop 18 percent this year. Pernod Ricard boss Pierre Pringuet, whose company owns Jouet, told Wine & Spirits Daily: “The US champagne market is in serious trouble," dropping "in the region of 15-20 percent...unfortunately we've not been able to do any better than that."
There are probably more than 100 million cases of Champagne sitting in wineries and warehouses waiting to be sold – a four-year supply based on estimated sales for 2009. And 2009 is expected to be the worst year for Champagne sales since 2001.
But, as the Times pointed out, the production cuts are nothing less than the OPEC-ization of the Champagne business – and we know how well that has turned out. What’s worse is that the cuts are backed by the power of the French government, which regulates grape production in the country’s wine industry. Producers who violate the production quotas could face legal action.
Still, it’s difficult to feel sorry for the producers, because they brought this on themselves. They have, over the past couple of decades, positioned Champagne as the ultimate luxury. It’s hip, it’s cool, it’s expensive! In addition, they have expanded production by about 20 percent this decade to take advantage of all those people who wanted to throw money at wine that was priced not just on quality, but on marketing.
And now, when consumers care more about value than being hip and cool, the Champagne houses are begging for government help to rescue them from themselves. Doesn’t seem quite fair, does it?