CHAMPAGNE / PRESTIGE CUVEES: Bling and beyond

With the rich getting richer, the bubble shows no sign of bursting in the prestige cuvée market. Patrick Schmitt identifies two distinct consumer groups

There is little that arouses people’s sense of curiosity more than the chance to nose around someone else’s house. It’s the reason we push open doors when we shouldn’t and why ITV’s Through the Keyhole kept going so long. It’s also why MTV’s Cribs is so compulsive. The programme delves into the extraordinary dwellings of America’s richest and most famous pop stars. The kitchen is always deeply intriguing for anyone interested in food and drink, especially when the camera focuses on the contents of the fridge. Invariably this is enormous and empty apart from one thing: a bottle of Cristal Champagne. Or sometimes several.

Cristal was created for Russia’s richest, initially exclusively for Tsar Alexander II back in 1876, and one could say that MTV’s moneyed celebrities are today’s Tsars. They have equally expensive tastes, though not in the strictly sensory meaning – the wine trade rightly suspects that Cristal’s popularity among the hip-hop community is not because of the Champagne’s complexity, any more than the same cross-section of society has a slavish following for Gucci because of the stitching. It is, of course, because of the image, a result of Cristal’s rarity, price, history and distinctive packaging. Together, these have made Cristal cool.

The Champagne’s powerful position was somewhat shaken by last year’s boycott by rapper Jay-Z after he misinterpreted – possibly deliberately – some comments by Roederer’s Frédéric Rouzaud on this point exactly: whether the Champagne’s most fervent followers appreciate its distinctive taste. However, the upset appears short-lived. Apparently, Jay-Z was recently seen drinking a bottle of Cristal in a club in New York, according to Simon Swa, marketing manager for Louis Roederer at Maisons Marques et Domaines. Presumably Jay-Z has forgiven the iconic Champagne because its image is so entrenched and prestige cuvées, or rather branded prestige cuvées, appear so unshakeably fashionable.

There seems to be two arms to the market for prestige cuvées, each driven by different mechanisms. One involves the famous pours, with Cristal at the top, then Dom Pérignon and, not far behind, Krug. Following these three are a host of other well-known prestige cuvées, still branded, but not as iconic – the likes of Belle Epoque, La Grand Dame, Grand Siècle, and Comtes de Champagne.

Success story
Such names have cachet and, therefore, as Deutz’s marketing manager Christophe Hirondel puts it, can “strongly demonstrate to others personal success”. This is the same reason why large formats of these branded prestige cuvées are growing so well – due to show. And who is consuming these brands? Moneyed celebrities and rich City types. Where? In top-end nightclubs.

The other arm of the market, also rising, is driven by a different process. It also involves high-priced carefully crafted cuvées, but those that are either less well-known top-end blends from established brands or similarly priced cuvées from less famous houses. The growth in these Champagnes is powered by the increased acceptance of Champagne as a wine, and with that a growing consumer interest in all Champagne’s levels, and when to drink them. This arena does require the hand-sell, but the crucial change is an increased willingness on the part of the consumer to trade up.

Without the urge to be ostentatious, however, such drinkers are happy to try less famous prestige cuvées and may even prefer them. This consumer is also looking for older wines and different styles. Furthermore, if magnums are desired it is more likely to be due to the superior ageing ability of this format and not because of the expense implied by the size. Finally, these prestige cuvées are likely to be consumed with food, be it at home or out, and are unlikely to be found in nightclubs but, rather, by the glass in restaurants.

Of course, the boundaries are blurred. The most famous branded prestige cuvées will be desired by both types of drinkers, but for different reasons, and each type of consumer is, of course, a very broad generalisation, if one is to add a further caveat.

These issues aside, there are two further underlying factors behind the growth in the prestige cuvée market, famous brand or not, and applicable to both audiences. One is the simple fact that there are more rich people – and they are getting richer – increasing the demand for better Champagnes which have become relatively more affordable. The second stimulus is the work by the Champenois themselves, who are increasingly pushing prestige cuvées because it makes economic sense. In a region where supply can no longer satisfy demand, it is only sensible to shift the emphasis onto those wines with higher-margin opportunities.

Tapping into the rising number of high-net-worth individuals, especially from places such as Russia and the Far East, is something the Champenois are well placed to do, although in certain cases, for instance a brand such as Cristal which is already on allocation, the trend is putting severe pressure on supply and could risk antagonising customers. For Bill Gunn, UK MD at Pol Roger, “Internationally, Pol Roger’s Cuvée Winston Churchill is on a roll, but the snag is it has aggravated the disparity between supply and demand.” Likewise for Michel Drappier. “New markets such as Russia, the US and the Far East are in demand,” he says, “and like most prestige cuvées, our Grande Sendrée is in short supply.” 

Rising to the top
For many, however, rising disposable incomes are an opportunity they must compete for. The techniques differ according to the nature of the brand and target market. Let’s consider those who are happy to humour the rich and ostentatious, our first typecast audience. For these consumers it is about where the prestige cuvée is seen and what they look like drinking it. Dom Pérignon has it down to a fine art. For a start, there’s the venue. Dom Pérignon can be found in the top nightclubs in the world’s leading capital cities, and the brand’s approach is consistent in all of them. “The people who consume Dom Pérignon in London clubs may be in Paris or St Tropez the following week,” says Mark Harvey, senior brand manager, Dom Pérignon, MHUK. In these places, the packaging and point of sale is vital. A beautiful bottle is core to this, but not enough on its own. Harvey reminds us of various Dom Pérignon approaches, such as a glowing Champagne bucket called Light Source which can fit up to 12 bottles, or the Mark Newson-designed green perspex container for a bottle of DP and crushed ice.

Large formats are also key. Harvey says he has managed to secure more in the UK market this year and points out that the likes of Dom Pérignon magnums, jeroboams and methuselahs “come in a James Bond style silver case”. Apparently, when such Champagnes are ordered in top London clubs music, such as the James Bond or Star Wars theme, is played to attract everyone’s attention. “Visibility and drama are important in the night trade,” says Harvey, adding that Dom Pérignon will be doing another one-off to replace the current special-edition white gold jeroboam of DP, which sells at around £10,000 in clubs. Of all the clubs in London, it is currently Movida, Cuckoo Club and Kabaret’s Prophecy that are best at creating drama around DP, according to Harvey. He also admits, “The three brands battling it out quite healthily [in these places] are Dom Pérignon, Krug and Cristal.” No surprise there.

However, Bibendum’s Willie Lebus argues, “Dom Pérignon was the only prestige cuvée anyone took any notice of in the old days; Krug and Cristal were the preserve of the cognoscenti and wine connoisseurs.” Now, with the increase in listings of prestige cuvées, adds Lebus, “Just having Dom Pérignon at the top is not sufficient or credible.” Of the top three, he says, “Cristal, through no fault of its own, has become very difficult to get hold of and prices are very high – most only find it on the grey market – while Krug is as wonderful as ever and a real contrast to Dom Pérignon.” In other words, all three can happily justify their places on the same list, Cristal at the peak in price, Krug and Dom Pérignon satisfying two different tastes.

As for the increased listings of prestige cuvées, Lebus says, “Demand was, historically, from only two places, clubs and prestige restaurants. Now we are discovering a rise in Champagne expenditure at lower levels than previously seen.” This is helping prestige cuvées other than the three brand leaders, and Lebus reports significant sales increases for the likes of Belle Epoque, Grand Siècle and cuvée Winston Churchill. “Shelling out £100 on a prestige cuvée is not such a leap of faith as it used to be,” he says.

So what’s the opportunity for the lesser-known prestige cuvée? “There is still a reluctance on the consumer’s part without an incentive, a real recommendation,” says Lebus. “They need pull: either endorsements from lifestyle writers or sommeliers.” He is referring to Bruno Paillard, a Bibendum exclusive, but there are many Champagnes for which this is true. For instance, Henriot’s Cuvée des Enchanteleurs, which Bertrand Verduzier, export director, describes as “a sommelier-led brand because it needs hand-selling”.

Understated quality

This brings us on to accessing our second target audience, those who are happy to try the lesser-known Champagnes. In this situation brand owners tend to focus attention on the prestige restaurant sector, and are quick to point out that the night trade is not their desired market. Aside from being highly visible in clubs and bars, it is expensive to be there, with costly listing fees often beyond the budget of the smaller Champagne houses.

George Atkinson-Clark, UK MD for Ruinart, explains how the house has raised the profile of Dom Ruinart, after a “packaging revision” last year, through by-the-glass activity in restaurants such as Claridges, The Waterside Inn, Manoir aux Quat’ Saisons and some Gordon Ramsay outlets. The brand is “doing some promotions at higher end nightclubs, but not by the glass”, he explains, and its “on-trade thrust is top-end restaurants; trialling is key”. Atkinson-Clark says Dom Ruinart drinkers tend to be those “with high disposable incomes who are not brand led”, and he describes them as “free thinkers and slightly understated people who like to think they’ve found something less known than big-name prestige cuvées but of a similar quality”.

What about those wanting to launch a new prestige cuvée? In Mumm’s case, a restaurant-going audience will be the focus for the house’s new prestige Champagne, Cuvée R. Lalou. So much so that Chris Seale, head of Champagnes at brand owner Pernod Ricard, says that Mumm’s yet-to-be-unveiled top cuvée won’t come in magnums initially “because that is more for chasing the nightclub business and we don’t want to go down that route”. The new vintage prestige cuvée, says Seale, will have “an on-trade focus and link with the gastronomic heritage of Mumm”. He also points out that the aim of the new cuvée will be to have a halo effect on the rest of the range and help to re-establish the brand’s wine cues. “It will align price-wise with other prestige cuvées,” he adds.

As noted earlier, there are, of course, prestige cuvées that straddle the divide between target consumers. Dom Pérignon is one, with its feet firmly and deeply entrenched in both camps. It can employ all the show necessary for the nightclub sector, but can also appease the discerning diner with, in particular, the release of back vintages. Under its Oenothèque heading, Dom Pérignon can encourage drinkers to part with up to £1,500 for old Dom Pérignon vintages, allowing the connoisseur to revel in something extremely rare with a developed and, some might say, acquired taste. This is the also case with the Krug Collection, the re-release of older vintage stock (‘85 was released in January) while there is always the single-vineyard Clos du Mesnil.

The next big thing

Similarly, Bollinger has its extended lees-aged RD range, which sits above La Grand Année prestige cuvée, as well as the extremely exclusive Vieilles Vignes Françaises, another single-vineyard Champagne. Jon Stevens, brand manager for Bollinger at UK agent Mentzendorff describes RD as being to Grand Annee what Oenothèque is to Dom Pérignon. And for those who have always considered the Grand Année as simply Bollinger’s vintage, Stevens is quick to point out that it has always been the brand’s prestige cuvée as there were only ever two blends from the house – the non-vintage special cuvée and Grand Année, with RD an off-shoot.

Vieilles Vignes, on the other hand, is not strictly speaking a blend, being, like Krug’s Clos du Mesnil, a single-vineyard Champagne. Meanwhile, in May, Bollinger added a one-off to its range, called 2003 by Bollinger (see new products, page 102). Stevens notes that the famous house “is doing more business in the nightclub sector” with its Grand Année and is “very slowly” bottling more Champagne in large formats to meet the rising demand for magnums and upwards. Perhaps Grand Année will be next to join the hallowed ranks of Cristal, Dom Pérignon and Krug as the most desired labels among the super-rich party goers, although one suspects it needs a name that trips a little more easily off the tongue and a less understated appearance.

Also enticing the style-conscious yet more understated drinker is Pommery’s Cuvée Louise. Launched in 1986, this prestige cuvée is not yet widely known but can be found in Relais Chateaux, British Airways First Class, Pommery’s branded bars and the new and lavish Gilt Bar at London’s Jumeirah Carlton Tower. UK manager of Vranken Pommery,  Sara Hicks says, “There are the top two, Dom Pérignon and Cristal, and Krug at number three. Then there are the rest of us fighting for the next tier.” This involves Cuvée Louise’s participation in an £800 classic Champagne cocktail at the Gilt Bar. Called When Louis Meets Louise, the drink blends Louis XIII Cognac with 1998 Cuvée Louise, not forgetting a sugar cube, a dash of Angostura bitters and a sprinkling of real gold dust.

Of course, there are many more examples of sophisticated marketing techniques by a range of prestige cuvées, engineered either to appeal to the rich and flashy or the moneyed and more moderate. On the other hand, some brands just get adopted. Cristal, for example, has never advertised.

Overall, the market is highly dynamic and most houses are busy bottling more of these top-end cuvées in larger formats to satisfy rising demand and benefit from healthy returns in the process.

Driving this growth is an emerging class of rich from the likes of Russia and the Far East as well as a move in more mature markets towards drinking less but better quality Champagnes. This is coupled with an international appreciation of the quality of Champagne’s top tier, and the fashionable status of its top brands. 

Is the situation sustainable? As Roederer’s Swa says, “We are dealing with a market above the mass affluents, one that is the very tip of the pyramid. They always want the best and they are not getting any poorer.” 

© db June 2007