Top 10 Champagne trends for 2012

A look at our predictions for Champagne in 2012.

What next for Champagne? As our Brands Report showed in the summer, the biggest names have stemmed the sales losses of 2008/2009 and all were showing signs of renewed growth in a marketplace that remains uncertain.

The future for Champagne looks positive though, and exciting too. Rosé is an established category and is showing signs of shedding its seasonal sales pattern. Exploration into terroir through single vineyard and growers’ Champagnes continues to diversify the category, as does the greater attention paid to styles such as blanc de blancs and noirs and brut zero, both vintage and non-vintage.

New markets are developing, opening opportunities for growth and old markets want new styles and are showing greater curiosity towards the category as a whole. So among the key trends for the new year are the usual topics such as the future of rosé and white Champagnes, alongside the expanding world of green initiatives, the potential for experimentation with Pinot Meunier and why the big houses are excited about library releases.

1. Asia and Russia to be the next big markets

The BRIC nations are set to play an ever more important role in Champagne’s future. It has been a slow build but Pierre-Emmanuel Taittinger said recently that three years ago: “Half of the world were not Champagne consumers before, and 90% of Champagne was drunk in Europe and the US, but now China, Japan, Russia and South America are becoming a vast market.”

China is the hot ticket of the wine world at present but with its predilection for red wines it is worth wondering whether it is perhaps better for the Champenois to concentrate on markets such as Brazil and Russia first. However, as mentioned in the lead feature on wine trends, a growing interest among women for white wine coupled with the Chinese market’s more general expansion away from just Bordeaux – which is happening perhaps a little faster than anyone first thought possible – can only lead to more interest in Champagne, particularly as it is one of the greatest and most famous of wine regions. Moreover, the Asian market continues to develop at an encouraging rate. Although it is growing from a small base, Champagne shipments between 2009 and 2010 rose 89% from 581,221 bottles to 1,103,763.

Brazil and Russia are also emerging as important new markets, albeit both with different mores and with Russia slightly more advanced, certainly in terms of volume and value and also, it appears, in knowledge and interest.

Brazil’s Champagne shipments increased by 63% from 2009 to 2010 from 600,334 bottles to 979,678 bottles, with 97% of the wines coming from grandes marques. Russia is very different: its shipments show a greater spread of interest in the category and, behind China, it is the most important BRIC market. Shipments rose 87.6% between 2009 and 2010, from 574,829 bottles to 1,078,214 bottles. The breakdown shows that although the big houses still account for nearly 92% of the market, growers have nearly 5% and cooperatives 1%. What is more, as regards Russia, prestige cuvées represent 4.7% of the market but 16% of the total value.

This contrast supports the president of Champagne Philipponnat, Charles Philipponnat’s, assertion that: “For now we foresee more growth in Eastern Europe and Asia. South America is still dominated by bigger names while in Asia they are already looking for sophisticated alternatives.”

In a small aside the UK must not be forgotten as a market that will continue to grow and show greater diversity into next year. As can be seen from the various shipment statistics, all the main categories are growing again and as Lanson International’s managing director Paul Beavis notes: “The UK is still number one for export. Other markets are exciting but are growing from a small base so the percentage growth looks very nice. They will continue to grow but we don’t know that they will continue to grow at the same rate so Champagne should never ignore the UK; it’s so important and very mature and consumers are looking for more engagement.”

2. Prices will have to increase

Pricing has been an issue for Champagne in the last couple of years, as value went to the wall in favour of volume in some quarters, though the producers claimed this was not of their doing.

Sadly, as Simon Field MW, buying director at Berry Bros & Rudd, fears, if anyone thought that 2010’s festive reductions were bad, 2011’s may be worse.

Certainly the reports of Taittinger being sold for less than £17 a bottle when bought as part of a case raised eyebrows in many quarters – both sceptically in trade circles and with delight by customers as they calculated how much Champagne they could afford at once in the event of being snowed in again.

However, the serious side of these reductions is that, realistically, prices are going to have to go up. Base costs on raw materials and storage are increasing, as are grape prices.

Philipponnat notes that grape prices have been increasing with every vintage since the mid 1990s and that these costs can no longer be absorbed in profit margins. The other fact worth bearing in mind is that these rising costs have been absorbed into future price appraisals but are often yet to be felt in the actual marketplace.

As Philipponnat explains: “Since 1994 there has been an increase in price every vintage. If you take our NV, we hold more or less four years of stock, which equals four price increases in store. We will have to increase our prices come what may. It is impossible for us to absorb these increases in our margins. I estimate rises of 3-4% each year for the next three to four years. Champagne may lose volume in the process but there is no escaping from that reality.”

3. Cellar masters will lay down more library stock

For a discerning market such as the UK, the addition of recently disgorged (RD) wines is very interesting and potentially very profitable. Being vintage wines and therefore a small part of an already limited production, RD wines are not volume drivers in the way NV always is; however, they are part and parcel of the all-important diversification theme.

An article in October’s issue of the drinks business found that across the grandes marques there was a growing desire to release limited editions of past vintages. Louis Roederer and Lanson both plan to release collections over the next few years in competition with the likes of Veuve Clicquot and Krug. The fact that these aged Champagnes have near-guaranteed perfect provenance also adds tremendous value.

For example, Dom Pérignon’s 1996 vintage was launched in 2003 at £110 a bottle; when its Oenothèque version came out last year it instantly had nearly doubled in price to £200 a bottle.

Dominique Demarville, cellar master for Veuve Clicquot, states, unreservedly, that “we will release a new range of Cave Privée in 2013”, which will complement that released in 2010.

Meanwhile, following the recent release of the 1911 vintage, Moët & Chandon’s cellar master Benôit Gouez states: “I am lucky that my predecessors have left me with one of the Champagne region’s most prestigious and valuable collections of vintage wines dating back to 1892. My duty is to replace every single bottle I take from the cellars, and yes I am reserving more and more stocks of grand vintage, including rosé, for extra-maturation in our Grand Vintage Reserve.”

Lanson too is pushing its house style at the moment and is keen to show that ageing “lends itself perfectly to non-malo”, says Beavis.

Niche they may remain but RD wines are likely to be a major talking point for the grandes marques in the future.

4. Champagne will continue to “go green” but along sustainable rather than organic or biodynamic lines

Beavis believes that all too often, “people don’t realise what the region has done to enhance its green credentials”.

The Champagne industry has identified four main issues in its mission to “go green”: pollution control; the preservation of terroir and enhancement of biodiversity; accountable management of water, by-products and waste; and confronting energy and climate challenges.

The present results of Champagne’s initiatives over the past decade show a 35% drop in the use of pesticides, with 50% of those used being certified organic; the spreading of “urban compost” has been banned; 92% of viticultural liquid effluent is now treated; 75% of industrial waste from Champagne production is now processed and an assessment of the region’s carbon footprint is underway with a 25% reduction in carbon emissions slated for 2020, which the CIVC believes is “perfectly feasible”.

Felix Bocquet, director of sustainability at Veuve Clicquot, describes the practices at the house: “We recycle as much as we can in terms of glass, cartons and plastics during production. Water is a precious resource, and we use specific equipment wherever possible to minimise wastage. We have a water recycling system fitted to our bottle washers, and all water used in the winery is collected and reused in irrigation. In the last seven years we have been able to reduce our water consumption by 53.6%.”

The CIVC believes that it is well placed to meet the stated 50% reduction in the use of pesticides by 2018 under the Grenelle de l’Environnement action plan. However, the targets for a 6% increase in organic plantings by 2013 and a 20% increase by 2020 “seems less realistic” although “we do obviously see considerable margin for improvement”, said a report from the Champagne Bureau.

The past decade has seen €40m (£33.5m) spent on de-pollution facilities and by the end of 2012 the region hopes that 100% of its waste by-products will be processed.

The CIVC report also highlights other areas where the region’s producers could add to the overall increase in Champagne’s green credentials, including: eco-design or refurbishment of buildings; using new energy-saving viticultural and winemaking processes; and packaging reduction. Tesco recently announced it was cutting the bottle weight of its own-brand de Vallois Champagne by 7.2%, from 900g to 830g.

5. Pinot Meunier will receive greater attention

It is the variety that dominates Champagne’s growing area but not its cuvées. Pinot Noir and Chardonnay have been granted their chance to shine by themselves but Pinot Meunier is yet to be given the Cinderella treatment.

However, the increase in grower Champagnes and single vineyard wines suggests a degree of experimentation and demonstrates a sense of ownership taking place in the region which could work in Pinot Meunier’s favour.

As Field asserts, the broad consensus is still that “it’s soft and only suitable for non-vintage”.

But could the coming year, or years, be a chance for Pinot Meunier to be given some proper attention? Is it full of untapped potential? “Unless research proves otherwise,” thinks Field, “then no.” On the other hand, as he points out: “Krug, famously, are big fans of Pinot Meunier and though it is unproven so far, it can have attractive fruit and brioche characteristics. Given the number of single cru for Pinot Noir and Chardonnay coming through at the moment, it’s only a matter of time before someone tries it with Pinot Meunier.”

Sure enough, a recent release from Champagne importer French Bubbles was advertising a new Champagne from the grower Lacroix, Cuvée Anthony – a 100% Pinot Meunier wine from the Marne and Aisne valleys.

6. Lower dosage levels & blanc de blancs/noirs will gain greater prominence

Diversification is a key word in the broader Champagne category. With rosé’s slight hiccup in recent years, there has apparently been a return to “white” Champagne, according to Philipponnat.

This opens up the possibility of marketing lower dosage Champagnes, blanc de blancs and blanc de noirs. As Garance Thiénot, director of marketing and communications at Champagne Thiénot, explains: “It is important for a Champagne house to have a range of Champagnes to offer its customers.

“Non-vintage will always be the leading product but it is vital to have other styles, if only in small quantities, to give established markets more of a choice.”

The chief argument for the potential growth of low dosage and blanc de blancs/noirs wines as stylistic trends, lies in their respective appeal to current tastes and ease of explanation.

Philipponnat for one sees the NV category splitting into two different dosage levels to cater for those that prefer their brut Champagnes bone dry.

He says: “Brut zero is increasingly popular but it’s not a category, more of a trend towards drinking drier. It may split NV into two different dosage levels. Brut zero will conquer a larger chunk of the market little by little.”

It should be noted that back in March 2011, Moët & Chandon announced that it was dropping the dosage levels in its Brut Impérial from 12 grams per litre to 9 g/l. This news followed an announcement that Dom Pérignon had also lowered its dosage to between 6-7 g/l. Cellar master Richard Geoffroy said at the time that over the last 10 years, “there has been a strategy of lowering the dosage.”

James Simpson MW, sales director at Pol Roger Portfolio, says that the on-trade in particular is a good market for low dosage (although Waitrose and The Wine Society are also good clients) and, “hence volumes are up year on year but off a fairly small base.” He states its usefulness in the “fashionable” accounts of Harvey Nichols and J. Sheekey, the latter in particular as “a) it is great with oysters and b) it has a reputation as a ‘diet Champagne’.”

As for blanc de blancs, Philipponnat says it is an easy style to understand, more so than vintage, which continues to struggle. Simpson reports that Pol Roger has been doubling volumes of its blanc de blancs year on year. And if blanc des blancs is successful then its stands to reason that its opposite, blanc des noirs, will find admirers too. Krug of course decided to complement its pure Chardonnay Clos du Mesnil with a pure Pinot counterpart, Clos d’Ambonnay.

As Françoise Perretti, director of the Champagne Bureau, comments: “People understand when you say ‘one of’ something.”

7. Rosé will continue to grow but more gradually

Consumers still want rosé but the boom is over. There is still room to expand the rosé category thinks Beavis and Philipponnat thinks it has also managed to shed its seasonal image and is “more stable than in the past”, but as a style it is now an accepted member of the establishment – no longer as new and exciting as it once was.

Furthermore, although there is no doubt that rosé is here to stay and it is no longer viewed as a gimmick, Field does question whether rosé has enough points of difference as white Champagne does (see above) to be able to build in the manner it once did.

As can be seen from the box on page 18, rosé blossomed when it mattered experiencing enormous growth between 2003 and 2007, before suffering a 23% decline in volume by 2009 and since then bouncing back by 19%.

The pattern of vintage rosé followed a broadly similar pattern but with a steeper crash during the crisis and slightly weaker growth over 2009/2010.

Although as a category it has posted some of the strongest returns of any other Champagne style, it is telling that even before the going got tough in 2008, the tough had stopped drinking rosé.

If one compares the decline in shipments to the UK between 2007 and 2008 as the crisis glowered on the horizon, it is clear that categories such as white vintage, NV and prestige cuvées saw declines between -0.3% and -8%, whereas NV rosé dropped 9.6% and vintage rosé 23%.

8. Prestige cuvées will return with a vengeance

It is the paradox of financial troubles that spending on luxury products and less frequent but more costly nights out seem to rise while the middle ground suffers. It is true that prestige cuvée Champagnes took the biggest hit between 2007 and 2009, falling 33% from 739,779 to 494,525 bottles, but between 2009 and 2010 this category has also seen one of the strongest returns – 17% to 582,657 bottles.

What’s more, recent releases of the much anticipated 2002 vintage, not to mention 2004 Cristal and, most recently, 2003 Dom Pérignon have done much to boost the category. In fact, merchants appear to have problems supplying the demand.

Although perhaps not strictly a prestige cuvée, Simon Davies, head of marketing at Fine+Rare, notes that when “Krug released its new 2000 vintage, we sold out of our pre-release allocation and had to beg and beg for more stock”.

Berry Bros & Rudd, Fine+Rare and Matthew Clark all report great demand for Cristal and Dom Pérignon, although Simon Jerrome, wine purchasing director at Matthew Clark, notes that other cuvées from the likes of Laurent-Perrier and Perrier-Jouët are not quite in so much demand, which demonstrates the sway held by Louis Roederer and Moët’s brands.

Of course Lee James, wine channel director at Pernod Ricard UK, would beg to differ: “Over the last 12 months we have noticed an increase in the on-trade consumption of prestige cuvées.

“We have seen growth across our prestige cuvée portfolio, but sales of Perrier-Jouët Belle Epoque Rosé 2004 are particularly strong. One of the factors driving this growth is by-the-glass sales made possible by the Perlage Champagne preservation system, which allows the restaurant or bar to open a bottle and serve it by the glass over a long period.”

In an interview last June, Geoffroy said he thought that Dom Pérignon was “hot” at the moment and he is clearly not wrong. Strong returns for the category and a buoyant luxury market gives prestige cuvées good momentum into the new year.

9. Houses will seek to emphasise specific sites and vineyards

December’s issue of the drinks business took a look at the growing number of single vineyard wines that exist today.

There are, of course, established favourites such as Clos de Mesnil and Clos des Goisses, but recent years have seen a rise – if not an outright explosion – in other large houses producing single-site wines. Billecart-Salmon, Taittinger and Mumm are high-profile additions and Lanson is set to join the club in 2012/2013.

One suggestion raised by Davies was that these wines could be used as “calling cards” for houses to showcase special plots and generate some interest for their own terroir, as is being done by the ever more numerous and bellicose growers.

However, supply will be small, constrained by limited availability of suitable sites, small production and continuing preferences for blending.

Single site wines could however add to the already-mentioned trend for blanc de blancs and noirs (remember Krug), with Mumm now sporting a Chardonnay/Pinot ying and yang in the shape of Mumm de Cramant and Mumm de Verzenay.

10. Grower Champagnes will emerge more in the on-trade

Grower Champagnes have already become an important point of difference in the off-trade as independents looked for something to offer their customers that wasn’t a grande marque and couldn’t be found in a supermarket for the half the price.

Now that retailers have their niche Champagne offering, Giles Burke-Gaffney, buyer at Justerini & Brooks, thinks that the on-trade might be interested too.

“The way the grandes marques have dominated the market you will definitely see grower Champagnes become more prominent,” he states. “You only have to look at the London on-trade lists to see how much more interested sommeliers are becoming.”

Field thinks that the growth of the category is down to a “gradual erosion of the hegemony of the grandes marques,” although growers are not about to launch some market share coup d’état.

If however, some of the above trends are proved correct then grower Champagnes will further contribute to the greater diversity in styles and single site wines that are receiving so much attention.