Champagne Exports Are Seen Driving Demand as France Lags

Photographer: Loic Venance/AFP via Getty Images

Demand for Champagne in Asian markets has grown as collectors sought to diversify away from top Bordeaux estates that drove a bull market through mid-2011, before prices for those wines slumped. Close

Demand for Champagne in Asian markets has grown as collectors sought to diversify away... Read More

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Photographer: Loic Venance/AFP via Getty Images

Demand for Champagne in Asian markets has grown as collectors sought to diversify away from top Bordeaux estates that drove a bull market through mid-2011, before prices for those wines slumped.

Export demand is likely to drive Champagne sales over the coming decade as any consumption growth in France lags behind that in newer markets overseas including Asia, according to the region’s trade association.

While shipments outside France and the European Union climbed 3.2 percent to 63 million bottles last year, global sales fell 1.5 percent to 304 million, according to CIVC data. Exports to the EU declined 3.4 percent to 74 million bottles while sales in France dropped 2.3 percent to 167 million.

Demand for Champagne in Asian markets has grown as collectors sought to diversify away from top Bordeaux estates that drove a bull market through mid-2011, before prices for those wines slumped. At the same time, the global financial crisis since 2008 and downturn in major economies has crimped consumer demand for Champagne over the past five years.

“Clearly the export markets will more and more represent the majority of Champagne wines,” Bruno Paillard, President of the Communication and Appellation Commission for the trade association Comite Interprofessionnel du Vin de Champagne, or CIVC, said in an interview in London this month.

While the export market accounts for slightly less than half of the volume sold currently, he said that “value-wise it represents more than half,” with prices being driven by “sophisticated, demanding consumers outside France.”

Photographer: Chris Ratcliffe/Bloomberg

Bottles of Champagne are seen at a bar in London. While the U.K., U.S. and Germany held their established positions as the top three export markets for Champagne over the years from 2008 to 2012, Japan climbed to fourth from sixth in the table as sales rose 9 percent over the period, according to CIVC. Close

Bottles of Champagne are seen at a bar in London. While the U.K., U.S. and Germany held... Read More

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Photographer: Chris Ratcliffe/Bloomberg

Bottles of Champagne are seen at a bar in London. While the U.K., U.S. and Germany held their established positions as the top three export markets for Champagne over the years from 2008 to 2012, Japan climbed to fourth from sixth in the table as sales rose 9 percent over the period, according to CIVC.

Japanese Growth

While the U.K., U.S. and Germany held their established positions as the top three export markets for Champagne over the years from 2008 to 2012, Japan climbed to fourth from sixth in the table as sales rose 9 percent over the period, according to CIVC.

Sales in the U.K., the biggest export market, slipped to 32.4 million bottles in 2012 from 36 million in 2008, while those in the U.S. rose to 17.7 million from 17.2 million, according to CIVC. Sales in Germany rose to 12.6 million bottles from 11.6 million over the period.

“Champagne follows the economic cycle,” Francoise Peretti, director of Champagne Bureau U.K., the association’s British arm, said in a London interview this month. Referring to the U.K., she said that “over the years, if you look at shipments and sales, they are always on the up except when there is a crisis, and we are recovering from a pretty big one.”

Other markets making up the top 10 export destinations for Champagne in 2012, the latest year for which full data is available, were Belgium in fifth place and Italy in sixth, followed by Australia, Switzerland, Spain and Sweden.

China Outlook

China and Hong Kong, while outside the top 10, are growth areas, with Chinese sales more than doubling to 2 million bottles from 897,000 over the period, while sales in Hong Kong rose to 1.58 million from 1.04 million.

“China will be a market one day,” Paillard said. While sales volumes currently account for less than 1 percent of the global Champagne market, “little by little we think Chinese consumers will come to Champagne.”

Investors and collectors have focused over the past year on releases of vintages such as Louis Roederer Cristal 2004 and Taittinger Comtes de Champagne 2002, helping to drive top Champagne prices higher, according to a Liv-ex blog last month.

Roederer Cristal

Twelve bottles of Louis Roederer Cristal 2004 Champagne sold for a record 1,450 pounds ($2,390) on the Liv-ex wine market in London in December, up from last year’s low of 1,120 in early January as investors sought to diversify from Bordeaux.

The price was 40 percent up from the record low of 1,038 pounds touched in February 2011, according to data on Liv-ex’s Cellar Watch website.

Cristal, whose 2004 vintage is a blend of 55 percent Pinot Noir and 45 percent Chardonnay grapes from Roederer’s top vineyards, spends an average of five years in cellars and rests for eight months after disgorgement of the bottles, according to Champagne Louis Roederer SA’s website.

The Liv-ex Champagne 50 Index rose 4.4 percent in the year to the end of February, compared with a 2.9 percent drop in the broader Liv-Ex 1000 Index, according to data on Liv-ex’s Cellar Watch website.

The Cristal transaction on Liv-ex came after a two-bottle lot of Moet & Chandon Champagne from the 1914 vintage fetched 10,340 pounds at a Sotheby’s wine sale in London in November, exceeding the auction house’s presale estimate.

The historic lot was part of a vintage collection marking the Champagne house’s 270th anniversary. Bottles of Moet spanning the years from 2004 back to the start of World War I, and including 174 magnums and three jeroboams, fetched 147,333 pounds in total, according to Sotheby’s. Moet & Chandon is a brand now owned by LVMH Moet Hennessy Louis Vuitton SA. (MC)

Three two-bottle lots of Moet & Chandon 1921 sold for 8,813 pounds each, while three single bottles of the 1928 vintage fetched 5,405 pounds each, also beating estimates. Two other two-bottle lots of the 1914 vintage fetched 7,285 pounds each.

To contact the reporter on this story: Guy Collins in London at guycollins@bloomberg.net Kim McLaughlin, Robert Valpuesta

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