CHAMPAGNE / VINTAGE: Mid-range crisis?

Non-prestige vintage Champagne provides a useful stepping stone in terms of price and quality between NV and prestige cuvée Champagnes, but it remains a misunderstood category. Fionnuala Synnott reports

Sandwiched between non-vintage and prestige cuvée, vintage Champagne often goes unnoticed by consumers. Commercially, non-prestige vintage Champagne accounts for the same volume of sales as prestige cuvée, approximately 5%, with the lion’s share of the Champagne market taken by NV Champagne. But all Champagne houses, regardless of how well known they are, agree that non-prestige vintage Champagne is important for enhancing the reputation of the house, both from a branding and a winemaking perspective.

Champagne producers feel that vintage Champagne adds interest and excitement to their offering as well as adding to their profit mix. Lynn Murray, marketing director at Hatch Mansfield, which distributes Tattinger Champagne in the UK, says, “Normal vintage Champagne adds interest to the brand. If you want to create excitement in a category, you have to offer different products.”

Meanwhile, Véronique Dausse, commercial, marketing and communications director for Champagne Nicolas Feuillatte, thinks it is important to appeal to a wide range of consumers. “We produce vintage Champagne in order to demonstrate the flexibility of the house but it is also important for us to target a mix of consumers. It would be great if our clientele drank a little of everything but we have customers who always drink NV, while others may only drink vintage or cuvée speciale,” she explains.

But vintage Champagne is still a mystery to the majority of consumers, most of whom buy either on price or brand. Ronald Goudsmit, ACNielsen’s director of European marketing, says, “The average UK consumer is not very sensitive to the subtle differences between the distinct styles of Champagne because, for the most part, they either buy unknown brands on special offer or brands that they already know.”

According to Ed Penny, senior brand manager for Perrier-Jouët at Pernod Ricard, consumer understanding of what the term vintage means is still quite hazy. He says, “People usually buy into the brand first, not the vintage.”
On the whole, vintage Champagne is for the adventurous connoisseur who is looking for something different. Chloe Wenban-Smith, brand manager for Louis Roederer, where rosé, blanc de blancs and vintage Champagne account for 8% of total sales, says, “For those who know about Champagne, vintage is a way of exploring the category further. Vintage Champagne has a strong fan base among those that are in the know.”

But outside this small group, vintage Champagne is still misunderstood and often underrated. The Champagne industry is keen to redress this situation. Both the Comité Interprofessionnel du Vin de Champagne (CIVC) and the Champagne Information Bureau (CIB) are actively promoting the vintage style but it will take a while before this filters through to the market.

Exploration tips
The CIB hopes to raise its profile by organising food and wine pairings. Françoise Peretti, director of the CIB, says, “The depth of flavour and intensity of vintage Champagne lends itself well to food. A more robust wine such as a 1982 rosé can even be paired with game. We feel that giving tips on the characteristics of the different years will help consumers to explore this style of Champagne.”

According to Goudsmit, Champagne producers could do more to educate consumers and get them to engage with the style. Peretti agrees and says, “We have to educate the consumer about how vintage Champagne is made and how it can be enjoyed.” As part of this education programme, Peretti would like to see a distinction made between what she calls the “useful vintages”, which can be consumed rapidly, such as those from 1992, and vintages with ageing potential such as those from 1996.

Even though UK consumers are not as aware of vintage Champagne as they could be, they are definitely consuming more Champagne than before. At a time when other wine categories are using crisis distillation to deal with excessive yields, it seems that British consumers just can’t get enough of Champagne, which is by far the most successful appellation in the beleaguered French market. In fact, the UK is now the biggest export market for Champagne.

Peretti explains, “People in the UK have discovered eating out. This, combined with a healthy economic situation, has led to a boom in Champagne. The restaurant revolution has provided the ideal platform for Champagne, which has become the ultimate celebratory wine. It is also popular in the emerging markets of Russia, India and China. Given the number of affluent Russians and Indians living in London, it is not surprising that the category is doing so well in this country.”

Even though the French market still accounts for E700 million of Champagne sales, compared with E430m in the UK, very little of these sales are driven by vintage Champagne. In fact, according to ACNielsen, the style accounts for only 3.9% of total volume and 4.6% of total value of Champagne sales. Benoît Déhu, winegrower at Champagne Déhu Père et Fils, whose UK distributor is Champagne Partners, agrees and says, “In general, French consumers are more traditional in their approach to Champagne. They tend to buy non-vintage wine and serve it as an aperitif. The English, on the other hand, tend to prefer vintage Champagne as they like something with more character that they can serve with food.”

The UK and Italy are the most important markets for vintage Champagne. In the UK, vintage accounts for only 5% of the total volume of Champagne sales but accounts for 7.3% of the category’s total turnover. Rémi Krug, president of Krug, says, “There are countries where people pay more attention to vintage Champagne and other countries where people don’t care and want to buy into a brand and a style. The UK has a long tradition of paying attention to vintage Champagne. It is also popular in Asia, where consumers appreciate the added prestige of vintage wine.”

But Michel Drappier, managing director of Champagne Drappier, feels the UK market is still polarised between NV and prestige cuvée Champagne. He says, “We have been trying to promote our non-prestige vintage wines in the UK for years but they haven’t really taken off.” He thinks this is partly due to the influence of New World wine. “Before, UK consumers enjoyed drinking oxidised wines with toasted flavours but nowadays they prefer fresher, fruitier wines,” says Drappier. “Consumers have also become used to the flavour profile of NV Champagne.”

Declining sales
Different markets are bound to have a natural preference for one style of Champagne over another but it is possible these numbers are being artificially skewed by the Champenois. According to Jean-Noël Gerard, export director at Champagne Devaux, more Champagne houses are saving their stock for the UK, the US and Asia, where they can sell their Champagne at a premium compared with France. Gerard says, “Sales in France are declining a little because the Champenois are promoting less in order to save their wine for the UK, where margins are higher because of stiff competition.”

According to Stewart Blunt, an alcohol analyst for ACNielsen UK, a bottle of vintage Champagne can retail for 40% more than the same house’s NV in the UK, whereas in France the vintage tends to be only 20% more than the NV.

Champagne houses are also declaring more vintages than before. According to Devaux’s Gerard, this is a risky practice. He explains, “When houses release vintages in unexceptional years, it damages the category’s reputation among consumers. The decision to declare a vintage year should lie with the winemaker and not the marketing department. Vintage Champagne is a rare product and should remain something special.”

Cynics might say this is a commercial response, an attempt to satisfy the seemingly limitless demand for Champagne. However, as with all good debates, there are two sides to this story. Peretti claims that the high number of vintages declared in the 1990s compared with the 1980s is largely due to viticultural advances which have led to an increase in grape quality.

According to Daniel Larson, head of communications at the CIVC, real progress in oenology was made in the 1980s but it is only in the past five to eight years that the same progress has been made in viticulture. He adds, “After 1990, there was a succession of poor harvests so the Champagne houses were probably tempted to declare more vintages towards the end of the decade. But even if more vintage years have been declared, this does not necessarily mean that more vintage wine has been released into the market as Champagne houses might declare as little as 5% of their total production vintage.”

In fact, according to CIVC statistics, the volume of vintage Champagne exports has fallen recently. In 1990, vintage Champagne represented 10% of the category’s total shipments but, by 2005, this figure had decreased to 6.5%. During the same period in the UK total shipments went down from 6.6% to 3.7%. ACNielsen’s Blunt says, “If Champagne producers can release more vintages they will. At the end of the day, it’s always good to have more facings on the shelf, whether it’s an NV, a vintage or a rosé.”

Out of the ordinary
The increasing popularity of Champagne represents a potential growth opportunity for vintage wines. Now that UK consumers are drinking Champagne on a regular basis and not just on special occasions, it is possible that they will seek out vintage Champagne when looking for something a little out of the ordinary. It would be ideal if consumers picked a bottle of vintage Champagne off the shelf of their own accord. But, at 40% more than the average NV price, consumers may take a little persuading.

Unsurprisingly, vintage Champagne tends to sell less well in supermarkets than in specialist stores, where independent retailers can hand-sell the style to consumers and explain why they should spend more on a vintage Champagne instead of buying their usual NV.

Veuve Clicquot, second best selling Champagne brand in the UK, draws attention to its vintage offering using an annual gastronomy programme comprising a number of “vintage workshop” dinners, hosted by the Veuve Clicquot winemaker. But, for those Champagne producers with smaller marketing budgets, the most successful method of getting consumers to trade up is to offer the vintage by the glass through the on-trade. After all, a style bar or luxury hotel is the perfect setting for sampling vintage Champagne and consumers are more likely to trade up when they are drinking Champagne by the glass rather than buying it by the bottle in the off-trade.

Daniel Brennan, head of UK marketing at Laurent-Perrier UK, says, “We have seen an increase in vintage Champagne sales, in keeping with the growth of the category as a whole. Consumers are looking to trade up from NV and like the unique style and cachet of drinking vintage. In bars, restaurants and hotels where we have a pouring deal we encourage by-the-glass offers. This strategy makes vintage Champagne more accessible for the consumer.”

Even though prestige cuvée Champagne outperforms non-prestige vintage in both volume and profit, it is an essential stepping stone for most Champagne houses. Perrier-Jouët’s Penny explains, “Having a credible wine that you can offer at a premium to your NV is useful in the on-trade. Vintage Champagne is also good for building relationships with restaurants that might be looking to list something a little different.”

Despite the fact that consumers are more familiar with the NV and prestige cuvée styles, the chances of them bypassing the non-prestige vintage category are slim due to the huge leap in price point between vintage and prestige cuvée Champagne. “There are several categories of consumers who, when properly informed, will either buy a non-vintage or a vintage according to what they are intending to do with it. But few who are intending to buy a vintage or a non-vintage would go for a prestige cuvée, the gap in price point being quite sizeable,” says Caroline Warner, brand director for Moët & Chandon. Generally speaking, the prestige cuvée segment is a market in itself with its own consumers, who have often bought into the image rather than the Champagne itself.

Contradiction
Since the vintage Champagne market peaked in 1998-99, when millennium fever gripped the world, interest in the style appears to have waned. Déhu, at Déhu Père et Fils, says, “In a sense, vintage Champagne contradicts everything that Champagne is about. This explains why so many people focus on the top-of-the-range prestige Champagnes and non-vintage Champagne.”

In competitive markets such as the UK, where Champagne promotions are an all-year-round fixture, Champagne producers struggle to raise the price of their NV wines. The Champenois are therefore keen to raise awareness of vintage Champagne. Bill Gunn, managing director of Pol Roger, says, “Vintage wines are attracting greater interest from Champagne houses because of the potential for higher margins. At the moment, vintage Champagne is an intermediate category but it could be huge. At Pol Roger, for example, we have hit a ceiling with our Churchill prestige cuvée and are transferring our spare capacity to vintage.”

Daniel Brennan at Laurent-Perrier, adds, “In the long term, we hope that the more mature markets will buy more vintage Champagne and that we will be able to sell NV wines to emerging markets that are new to the Champagne category, such as Russia, China and India.”

No matter how much the Champagne industry tries to educate its consumers, there will always be some who just want to enjoy drinking Champagne and are not interested in learning how to differentiate between different styles. After all, if you like quality chocolate you don’t need to learn about how it is made in order to be able to appreciate its superiority to other chocolate.

It is, therefore, up to Champagne producers to boost the image of vintage Champagne and offer consumers the opportunity to taste the difference, either through off-trade promotions, food and wine matching events or by-the-glass offers in the on-trade.

©n db October 2006