CHAMPAGNE Heay Christmas scounfr é fàftowedbV higher

CHAMPAGNE
Heay Christmas scounfr
é fàftowedbV higher Champag
prices in 2011 as producers implement new strategies driven by
smaller harvests and tighter stock controls, finds
36 iaur. W & SpHt December 32010
www.harpers.co.uk
loodied but unbowed, Champagne has emerged
from the recession with volumes mostlyrebuilt,
but with profit margins still impacted by keen
pricing and unhelpful exchange rates.
As 2010 draws to a close, Christmas trading is once
again likely to be dominated by hefty price discounts
designed to swayfestive shoppers. Champagne's Yuletide
role as a footfall driver will once again be fully apparent.
Victor Lanson, marketing controller for Piper-Heidsieck
and Charles Heidsieck, says one supermarket stands to lose
£700,000 011 a single Champagne offer alone, but points
out that price increases in the new year will be inevitable and not just because of increases in VAT and excise duty.
"We always have to think two or three years back," he
says. "The wines we are selling were harvested two or
three years ago and they were very expensive harvests.
There will be price increases and we have to do that."
In this context, the decision to restrict the size of the
2009 and 2010 harvests has been a wise one, Lanson
argues. "We are much better to harvest less and take a hit
financially. It's not nice, but that's the best investment
we've made."
Anecdotal evidence suggests that, although the offers
will once again be strong, the quantities available will be
smaller than last year as companies' stock positions have
tightened over the past iz months.
James Samson, brand manager for Louis Roederer at
Maisons Marques et Domaines, agrees that price rises
in 2011 are inevitable and adds: "It will be interesting
to see how deep retailers will push the discounting.
Brand owners must hold their nerve and perhaps see the
developments in the Far East as a once-in-a-generation
opportunity to build an image there and divert stock to
new markets.
"That will pinch volumes in existing markets, but will
present a great chance to emphasise the scarcity of top
Champagne and help rebuild prices."
That's a view also echoed by Terence Kenny, export
director at Champagne Pannier. "There comes a time
when those who can no longer afford a product will just
have to stop buying it," he says. "There is no sense for
Champagne houses to realign their price structure to
accommodate duty increases, austerity and currency
devaluations."
B
Rebuilding value
Rebuildingvalue is the key issue for the Champenois next
year. In this battle, discounting could even become the
sector's friend, according to Cohn Cameron, Champagne
commercial manager for Pommery distributor Percy
Fox/Justerini & Brooks. He advises "some promotional
deals, at a 'responsible' level of promotion, on brut NV
but increasingly on rosé and vintage, in order to expand
consumers' repertoire and appreciation of these more
premium styles".
There's a general acceptance that, to stop consumers
simply defaulting to non-vintage, more educational work
is required on premium cuvées - among consumers, but
also among the trade.
"The gatekeepers are focused on staying competitive
to bring consumers into their stores - and this brings
the spotlight on to NV naturally," says Lynn Murray,
www.harpers.co .uk
The festive period is the crucial time for Champagne sales. Last year saw a
last-minute surge in volumes, but accompanied by some eye-watering discounts
and offers. And this year? Place your bets
"My sense is it's going to be competitive this year. I'm sure there will be
competitive discounts just to get shoppers to splash out a bit. Few Champagne
brands will escape being used in this fashion." Paul Beavis, Lanson UK
'There will be big deals again, there is no doubt. That's what happened in the
1990s and we'll have this for the next year or two, maybe three. We don't like
it, but when you've got Bolly at half price, what can you do? Victor Lanson,
Piper-Heidsieck and Charles Heidsieck
"I am afraid the culture of deep discounting, whether it is sanctioned or not
by the brand owner, is with us to stay. It undoes everything we are trying to
achieve and should be resisted as vigorously as possible by the brands that can
afford to do so." James Samson, Louis Roederer
"This year we expect to see similar deep discounting at Christmas to last year,
but probably on more buyers' own brands rather than branded Champagne. BOB
remains a useful mechanic for Champagne houses to stay competitive on price,
shift large volumes and not damage the equity of their house brand." Belinda
Stone, marketing manager, Patriarche Wine Agencies (De Castelnau)
"Gosset and a few others like us can't really afford to get into the heavy
discounting thing, because we don't have the volumes to do it and we're
probably not under the same pressure. I feel for some of the bigger houses
who are geared up production-wise to a rather different market."
Peter McKinley, McKinley Vintners (Gosset)
marketing director of Taittinger distributor Hatch
Mansfield. "There are opportunities, however, to change
the consumer mindset - there are consumers out there
who are genuinely interested in finding out more about
Champagne beyond NV. But sometimes it is about convincing the gatekeepers."
Sticking to a premium focus rather than purely chasing
volume works, according to J0 Spencer, head of marketing for Champagne at Pernod Ricard UK. "We are seeing
that consumers still have an appetite and an ability to pay
for quality marques, and as a result of firmly and consistently sticking to this value policy, both houses (Mumm
and Perrier-Jouët) are now in an excellent position to
capitalise on this and are currently outperforming the
market," she says.
Nonetheless, many believe that houses need to work
harder to convince a cash-strapped and sceptical public
that they really should fork out a few more quid for a better bottle.
"We need to improve consumer competence in products like vintage and prestige cuvée," argues Paul Beavis,
managing director of Lanson UK. "The way we can really
do that is through education. The level of knowledge is
really low - there's very little understanding of vintage
and why it deserves a higher price point. Why should
people trade up?"
There comes a
time when those
who can no
longer afford a
product will have
to stop buying it
Harpers Wine & Spirit 37
CHAMPAGNE
The first Champagne Assembly, hosted by sister
brands Mumm and Perrier-Jouët, held in London
last month, aimed to dissect the category in a series
of workshops, lectures and tastings.
Under the theme of Champagne: Greater Than
the Sum of the Parts, seminars included chefs de
cave Hervé Deschamps and Didier Mariotti showing
the vms clairs and vms de reserve used to make up
Mumm Cordon Rouge and Perrier-Jouët Belle Epoque.
Flavourist Danny Hodrien employed gas
chromatography to deconstruct the flavour
compounds of Mumm's Champagnes, allowing
Urban Caprice executive chef lain Graham to
For Lanson itself, this means talking in a non-preachy way - about the house /
not using malolactic fermentation, and
what that means in practical terms.
"Why are we on a 1999 vintage wher
other houses are on 25?"
00
Beavis asks.
"It's all about taste. Non-malo tastes
different and enables Champagne to
age longer and more gracefully. It's a
different taste experience. Non-malo
isn't consumer-friendly language, but
we're not focusing on the science,
just the effects."
•1
Consumer communication
From top: Cohn Cameron,
Peter Mckinley, David
Hesketh and Paul Beavis
38 Harpers Wine & Spirit
This emphasis on education and
information is all very well, but can
we be sure that consumers want to
listen in the first place? "Sometimes
you've got to get your head out of our
Champagne and sparkling categories and
look elsewhere," says Beavis.
"For sure premiumisation is coming back, "
because people are buying less, but higher-quality
items. That's slowly going to filter into our category."
And anyway, argues Peter McKinley, managing
director of McKinley Vintners,which handles Gosset,
the underlying interest and demand is still there. "I
don't think it's a question of changing the consumer
mindset," he says. "I think we all want to go back to
our treats, and so I don't think we're seeing a permanent collapse in the credibility of Champagne overall.
I think individual brands make their own individual
decisions."
Pressure remains on the on-trade, but observers
such as Alexei Rosin, sales director at Moët Hennessy
UK, report that consumers have returned to Grande
Marque brands "more rapidly than expected", while
the top-end, white tablecloth segment is "performing well".
Nor should the category be overconcerned at the growth and continued success of sparkling alternatives
-
create scientifically suitable food matches.
Champagne's role in the luxury goods market
was analysed by Lucia van der Post, founder of the
Financial Times How to Spend It magazine, aided
by luxury leather goods designer Bill Amberg,
psychology professor Karen Pine, lnterbrand's
Manfred Abraham and Vadim Grigorian, marketing
director of creativity and luxury for Pernod Ricard.
"The sessions showed how important it is
to understand every aspect and dimension of
Champagne - from grape characteristics to global
luxury trends," said Neil Phillips, brand ambassador
for both Mumm and Perrier-Jouët.
like Prosecco and cava, many brand owners
believe, arguing that most sparkling growth
has come at the expense of still wine, ratherthan Champagne.
"A dynamic sparkling wine category
should be considered as an opportunity
rather than a threat to Champagne,"
argues David Hesketh, managing director of Laurent-Perrier UK. "Evidence
from the Future Laboratory Trends
Briefing this November suggests that
while frequency ofpurchase across the
luxury sector maybe down, the value
of purchases is holding up."
The inevitable conclusion is that
Champagne
needs to hold its nerve
J
with the aim that - despite impending
VAT and excise duty hikes —2011 brings
a value recovery to match the rebuilt volumes of the past 12 months.
"Price consistencyis incredibly important
you are adopting a long-term approach to the
J
r'
market," says McKinley. "In the words of lancecorporal Jones from Dad's Army, 'Don't panic'.
"We've just got to continue the steady approach.
Sometimes the costs go up and sometimes they go
down. Knee-jerk price increases or decreases are just
bloody daft."
J
J
• Following the success of the inaugural Champagne
Summit 2010, Harpers Wine & Spirit is delighted
to announce the 2011 event. As before it will be a
bespoke, informative and targeted initiative designed
to educate and showcase the best in Champagne
to the great and the good of the UK's wine trade.
The summit takes place on February 15, 2011, at
the Soho Hotel in London, and is aimed at anyone
involved in the buying, distribution and selling
of Champagne. This year the overall theme of the
summit will be consumer communication, with a
focus on closing the gap between the language
of the trade and the understanding
of the consumer. Contact
rikki.mudie®william-reed.co.uk .
www.harperS.co.uk