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Bedazzled
“standfirst”>In the most image-conscious sector of the Champagne market, wine values are less important than glitter. Giles Fallowfield dons his shades
WE HEAR a lot these days about consumers drinking Champagne at any time, not just on special occasions like birthdays, significant anniversaries and to welcome in the New Year. It has, in the words of one leading UK agent, become "democratised".
While it is certainly true that low prices for Champagne in the UK supermarkets have encouraged new consumers to try it for the first time, it’s a moot point, given the quality of the drink they get for under £10, whether they ever buy a second bottle.
For the majority of people in most markets, Champagne is still seen as a luxury product. A more affordable luxury perhaps, but, importantly for the Champenois, it continues to be perceived as the ultimate drink of celebration.
Few people outside the Champagne houses themselves, see the Champagne appellation as offering a range of wines with different styles to match every occasion. The French largely drink it as an apéritif.
Although grouping Champagne in three separate price bands in many French restaurants – one for non-vintage, one for vintage and the third for prestige cuvées – and encouraging restaurateurs to price everything on their list within upper and lower limits for each, helps to guide consumers, few will choose to drink it with their meal, let alone attempt to match it with appropriate dishes.
Even in so-called sophisticated markets like the UK, there aren’t many consumers who understand the basic difference between vintage and nonvintage Champagne.
The majority of Champagne is about brands, whether it’s the mainstream non-vintage fizz at the bottom of the price ladder or the prestige cuvées at the top. Wine values, except in the case of a few singular marques, don’t really come into play. Image is everything.
As it happens, most producers will also claim their particular prestige cuvée makes use of the best selection of grapes from the finest sites in the appellation. They’ll also affirm the wine is produced only from the best vintages, whether it is from just one harvest or a blend of several. For if Champagne generically is the drink of celebration then the prestige cuvée should certainly be its ultimate expression, and sometimes it is.
So what are prestige cuvées exactly? A simple, if slightly cynical, definition might be anything in an oddly shaped bottle with a fancy price tag. This is a viewpoint the Champenois did nothing to discourage by the plethora of one-off cuvées they released in 1999 in time for the millennium celebrations.
The statistics certainly bear this out. Special cuvées represented between 5.1% and 5.8% of total export shipments between 1989 and 1998, varying between a low of 3.89 million bottles in 1993 and a high of 6.12m bottles in 1998. In 1999 they leaped to 17.09m bottles, 12.5% of total export shipments.
Somewhat surprisingly they didn’t collapse in 2000, only falling back to 5.98m bottles or 5.8% of total export shipments. This was largely because shipments to the USA, the biggest market for special cuvées, remained high at 2.13m bottles, over 11% of US total Champagne imports in 2000. It took a while for the Champenois to realise there was an awful lot of wine sloshing around in the three-tier US distribution system.
In 2001 when they did realise, US shipments dropped to 860,157 bottles; the first time they had been under a million since before the mid-eighties.
As a result only 3.77m bottles of prestige cuvées were shipped to all export markets in 2001 (3.8% of total shipments) and this figure only rose to 4.5m bottles in 2002 (4% of total shipments). Although a dribble of one-off millennium cuvées remains in some countries like the UK, this rarefied sector, where all the significant players are priced at well over £50 a bottle, has returned to what passes for normal.
And normally just three brands far outsell all competitors – Dom Pérignon, Louis Roederer Cristal and Krug, although Perrier Jouët Belle Epoque is also a sizeable brand in the important US market.
The largest brand by far, with a market share over 50%, is Dom Pérignon. Louis Roederer sells around 400,000 bottles of Cristal each year, according to Frederic Rouzaud, commercial director at Roederer, while Krug’s total production, including vintage and Clos du Mesnil, is about 500,000 bottles.
Dom Pérignon sells more than three times their combined volume and some put the figure at over 3m bottles. Its sales in the US alone, where around a third of all prestige cuvées are consumed, were put as high as 900,000 bottles back in 1996, and its volume there has grown since.
Dom Pérignon even appears as the 15th biggest brand by value in the total UK off-trade in 2002 and UK brand manager Edward Penny says two-thirds of its sales in Britain go through the on-trade.
The UK is only the fourth most important export market for prestige cuvées. For Dom Pérignon, as for the category, the USA, Japan and Italy in descending order of importance, are the top three. This year, despite the fragilities of its economy and the fear that France’s opposition to the war in Iraq would generate anti-French sentiment in the US, sales of Dom Pérignon generally seem to have held up well, according to international brand manager Olivier-Christopher Guilland. "Japan and Italy continue to perform quite well and we are seeing some growth," he says.
Guilland explains, "In the US we have no details of actual depletions, because of the three-tier distribution system. The US suffered the most in terms of post-millennium over stocking." He sees the anti-French sentiment as exaggerated in the press: "I don’t know if we got hit. Perhaps we are not growing our business as fast as possible. But any reaction was only in the B markets, in ‘middle America’. In the important cities like LA, San Francisco, Chicago and New York there was little evidence of a backlash against French products.
"I don’t believe there’s a prestige cuvée segment, as such, in the USA. It’s a celebration, occasion driven thing. ‘It’s my 50th anniversary, I’ll celebrate with Dom Pérignon’. On other occasions perhaps the same people drink Moët & Chandon. It’s brand-driven more than category. Krug is more for the oenophile, Dom Pérignon is a great icon, while Perrier- Jouët with the flower bottles has a female skew," says Guilland.
Veuve Clicquot’s La Grand Dame doesn’t really feature in the US market, according to Guilland. He also notes Clicquot’s sales, which are dominated by Yellow Label non-vintage, are very onpremise orientated, while Dom Pérignon’s are split roughly 40/60, on- to off-trade.
He claims to have no clue about Cristal, other than it has a very high price point and its associations with hip hop make it important in the Afro-American market. "It’s for show off consumption not wine values; something they [Roederer] are very aware of and trying to change," says Guilland.
This is refuted by Frederic Rouzaud who says that while the US accounts for between 20% and 25% of Cristal’s sales, a third of this volume goes through restaurants and another third through upmarket wine shops.
In the very brand orientated Italian market, "where Dom Pérignon has been doing well for quite a long while, consumption is more about lifestyle, more hedonistic and not linked to celebration like in the USA," says Guilland. Although he is confident about the future he affirms consumption of Dom Pérignon is affected by the world economy and stock market performance. "If you look back over the past 40 years you will find the Dow Jones and sales of Champagne are extremely closely linked," he points out.
Perrier Jouët Belle Époque has similar annual sales to Cristal at around 400,000 bottles, according to Mumm and Perrier-Jouët CEO Jean-Marie Barillère. Although pleased to see a strong recovery in US volumes since Allied-Domecq took the brand over, he is concerned that it is heavily dependent on this market.
"We need to develop sales elsewhere, to be less exposed. Sales in Japan are not very good for us. We need to get the right distributor there and then I think there’s a real opportunity. Sales in Italy are good but they could be better. Switzerland is the second biggest market for Belle Époque. It’s very tourist orientated with good business in nightclubs and elsewhere in the on-trade," says Barillère.
Duty free is also pretty important he says. First class airline business is mostly prestige cuvées and there are a lot of shops in the Asia-Pacific region, although this area has had a nightmare in 2003. Cruise line touring in the USA is another key duty free sector for this segment.
Barillère puts the total prestige cuvée sector, which he defines as brands with a price point of €50 and above, at somewhere between five and six million bottles. He views the estimate that prestige cuvées accounted for between 1.6% and 1.9% of sales in French hyper and supermarkets in 2002 as too high. "This includes wines made by growers and brands like Vranken’s Demoiselle that sells at around €20. Mumm de Cramant is also put in the category but it’s not really a prestige cuvée," he says.
Mumm will be introducing a new prestige cuvée of its own some time in the summer of 2004, Barillère confirms. The brand hasn’t offered one since Grand Cordon was discontinued after the 1990 vintage. He puts the true prestige cuvée segment in France at around 1% of volume and not more than two million bottles.
For the moment Allied-Domecq has only Belle Époque in this sector of the market and in the US the brand, which also has a rosé and blanc de blancs style (the latter only in very limited distribution) is known as Fleur de Champagne. Chris Lynch, senior vice president at Allied Domecq’s base in California’s Napa Valley, reports sales of Fleur de Champagne are "up 31% in the fiscal year (September 1 to April 30, 2003) and up strongly in March to the tune of 85%".
Fleur de Champagne Brut, which accounts for around 95% of Perrier-Jouët’s prestige sales, is priced around US$100 a bottle, a similar positioning to Dom Pérignon, while Cristal is a further 50% higher. "For us the rosé and blanc de blancs styles, priced higher at $150 and $175 respectively, are kept for very select high end restaurants and top end wine shops in New York, LA and San Francisco," says Lynch.
"Sales divide roughly 40/60, on- to off-trade, consumers are not as knowledgeable as those in the UK and there’s a lot of giftgiving, especially at Thanksgiving and Christmas," says Lynch.
"Our top five markets, in declining order of importance, are Miami, New York, Los Angeles, Boston and San Francisco. Miami is a very festive, vibrant market and in South Beach there’s a vibrant café and restaurant scene and it’s a prestige cuvée market. The Belle Epoque flower bottle fits in well with the art deco architecture."
As for an anti-French backlash, Lynch also feels the state of the economy is likely to be more of an influence. "When the economy gets a bit soft there’s less celebration and conspicuous consumption, but we are quite buoyant about Perrier Jouët and Fleur de Champagne. There have been anecdotal stories in the US press but in the upscale French restaurants things have largely returned to normal. We saw no direct impact on our business," he insists.
In the UK market brands like Dom Pérignon, Krug and Cristal focus their attention on the top end of the on-trade and in the offtrade upmarket stores like Harrods, Selfridges and Fortnum & Mason. This is not a sector of the market where the grocers have significant sales. Because pilferage is a problem, dummy bottles are often used and this has had a negative impact, because customers either can’t find or can’t be bothered to wait for staff to fetch the real bottle.
However, some prestige outlets do feature a larger range. Sainsbury’s new Bluebird store in the Kings Road stocks Dom Pérignon Rosé (£179.99), plus less well-known brands of high quality like Lanson’s Noble Cuvée, Dom Ruinart, Laurent Perrier’s Grand Siecle and Veuve Clicquot’s La Grand Dame.
The lists of prestige cuvées at Harrods and Selfridges are a good deal longer. Harrods buyer Alistair Viner says, "We sell a phenomenal amount. Some customers are looking for the big name brands, especially for events or celebrations, but we also stock things like Dampierre Prestige Grand Cru (£72.50), Billecart Salmon Cuvée Elizabeth Salmon Rosé (£60), Lanson Noble Cuvée and Noble Cuvée Blanc de Blancs (both £65) and Laurent Perrier’s Grand Siecle (£52.50). Between 25% and 30% of our sales are prestige cuvées," says Viner.
At Selfridges, senior buyer Andrew Willy says, "Dom Pérignon and Cristal are taking an increasing share of the market. Even though we stock many lines, including wines from small growers like Selosse, people buying for a special occasion come in and ask for those brands by name.
It’s a very brand orientated market and very cult," says Willy. "We ensure staff have tried them so they can talk to customers knowledgeably. We treat it like a wine, but it’s sold as a brand."
Vintage feels the pinch
WHILE THE NEWS from the prestige cuvée market is that things could be a lot worse, considering the predicted downturn in the global economy, it’s an entirely different case for vintage Champagne (writes Chris Orr).
According to the CIVC it does not collate figures split between the sale of nonvintage, vintage and prestige, but the picture painted by those in the business is fairly glum.
Several factors are hitting this sector, not least of which is the movement over the last two to three years of the major supermarket chains into the vintage market. Tesco (which reputedly saw a 50% growth in its vintage Champagne sales last year), Sainsbury’s and Waitrose, for example, all have own brand vintage Champagnes that are selling for less than £20, currently the price of most branded Champagne houses’ non-vintage.
In addition, a once lucrative supporter of vintage Champagne, the Thresher Group has severely curtailed its activities in this sector, all of which has hit hard. Figures quoted by one Champagne house indicated that the market was down 32% between 2001 and 2002 and that trend looks set to continue.
"It is a tough market out there," claims George Atkinson Clark, managing director of Champagne Ruinart in the UK. "Our suspicion is that the consumer is leapfrogging from non-vintage through to prestige cuvée, and actually ignoring the vintage category." Ruinart, claims Clark, has seen double the growth in the prestige market with its Dom Ruinart than it has experienced in the vintage market over the last year. "Although that could partly be the result of our blanc de blancs non-vintage doing so well."
Bill Gunn of Pol Roger UK is similarly pessimistic. "We actually had a very good year last year," he explained. "But, as a whole, the sector is down. In truth it’s allover the shop and fluctuates wildly. We probably find it easier than most because vintage has always been good for us – it represents around 30% of case sales which is high, but it’s sales to a pretty reliable base of customers."
Bollinger’s re-classifaction of it’s Grand Cuvée from the vintage market to the prestige cuvée market is a clear indicator of where the company sees growth – although with it’s non-vintage weighing in at £27.99 and the Grand Cuvée hitting £47.99, it was always borderline.
However, Simon Leschalles of Mentzendorff, UK agents for Bollinger, claims that already the response has been good: "Several restaurants have already moved the Grand Cuvée out of the vintage section and into the prestige cuvée list and we think it will give our sales a significant boost. It never really sat well in the vintage category in truth."
As always, the way forward for vintage Champagne is likely to be significant investment in marketing and promotion of the category. Vincent Gillet, brand manager of Moët & Chandon believes it’s the only way to regenerate interest in a category that was originally created specifically to cater for UK consumer’s tastes back in the late 1800s.
"We’ve put a lot of effort into the marketing of our vintage wines," he explains, "and we are seeing growth. We’re market leader in the category but we’ve still got a lot of work to do to try and make vintage a buzzword for consumers. I think a lot of people in the industry realise that it’s a threatened category and work really needs to be done to put it firmly back in the consumer’s conciousness."
He can’t imagine there will be significant growth, "but it’s important that the category shouldn’t be allowed to slip away." He also believes it’s important to market vintage all year round. "Consumers of vintage Champagne aren’t focused on one time of the year. For those who buy it our inclination is that it’s a year-round purchase."
He puts Krug in a slightly different category to Dom Pérignon and Cristal. "We have the largest selection of Krug anywhere in Europe; everything from Grand Cuvée to the Krug Collection of older vintages. It has a very loyal customer base, but it’s not as big as the other two. And it’s perceived differently. Krug is slightly more about wine values."
Sales at the Selfridges Manchester store have also "increased enormously," according to Willy. "We sell as much Cristal there as we do in London. Cash-rich customers looking for something aspirational buy it, the best a house does. Sales of prestige cuvées in Manchester are less volatile than in London. Overall we are seeing double digit growth in both non-vintage and prestige cuvée Champagne. Champagne is a very large part of our business. It’s the most important wine category in terms of volume and value," he adds.
Although he argues Belle Époque "is well known because of its distinctive bottle", Willy says everyone else is a long way behind in terms of sales. Most of the houses that boast a recognised prestige cuvée sell fewer than 200,000 bottles a year.
For Lanson, Noble Cuvée represents less than 5% of sales, says Peter Ferguson, commercial director at Marne & Champagne’s UK office. "It’s important, however, to demonstrate the heights you can attain and give customers a unique tasting experience that reflects well on the rest of the range," he says. Lanson has logically brought its vintage blanc de blancs under its Noble Cuvée banner, so now it offers two different styles and there are plans for a rosé in the future.
Taittinger is currently putting more emphasis on its luxury cuvée Comtes de Champagne, best known as a blanc de blancs, but also made in a rosé style. Justin Llewellyn, roving ambassador for the brand, believes that in the recent past the presence of the Taittinger Vintage Collection cuvée – straight vintage Champagne in a fancy bottle with a specially commissioned artist-designed label – has taken attention away from the house’s real prestige cuvée, Comtes. There are plans to bring it back into focus however, pushing sales by the glass in selected restaurants and hotels to help re-ignite interest.
For Champagne Ruinart, where Dom Ruinart accounts for between 7% and 8% of the company’s worldwide sales, put at 2.4m bottles by UK MD George Atkinson-Clarke, blanc de blancs is the principal house style from non-vintage right up to L’Exclusive which carries a hefty £750 per magnum price tag. "We see Dom Ruinart as the epitome of what our winemaker is doing," says Atkinson-Clarke. "There’s a ladder of discovery from non-vintage to L’Exclusive, which is our super prestige cuvée made from five of the best vintages for Chardonnay over the last 20 years, ’83, ’85, ’86, ’90 and ’93.
"Because this is a sector dominated by two or three well known brands, other extremely good prestige cuvées need specialists, with perhaps the detailed knowledge of a good sommelier, to sell them. The majority of consumers need to know why they should be spending £65-£70 for a bottle when they could get three bottles of non-vintage for that price. Around 75% of our sales of Dom Ruinart are through the on-trade. We have a ‘by the glass’ programme with the Small Luxury Hotels group that gives the opportunity for talking through with the customer and explaining what’s special about this style," says Atkinson-Clarke.
At Pol Roger they are hoping to cash in on the heightened interest in everything to do with Churchill since he was voted "The Greatest Briton" on TV. Bill Gunn says of Pol’s Sir Winston Churchill Cuvée, "People have to know the brand. Sales are driven much more by wine values rather than glitter values. It’s not a wine for ‘medallion man’ but bought by a more serious, knowledgeable consumer. It’s a considered purchase and the wine has to deliver.
Because it’s made from the best vineyards we pay top whack for the grapes, so £75 on the shelf represents bloody good value." Gunn also makes the point that with Pol Roger sales close to production the only way to increase profitability is to improve the sales mix by selling more vintage and prestige cuvée Champagne.
At a time when grape prices in Champagne are back close to record levels, and in the light of the 2003 harvest shortfall caused by severe frosts in April, improving profitability will be a key issue for most houses in the coming months. You can expect more activity in this small, but for some, highly profitable segment of the market.