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Discounting rife in difficult UK Champagne market
The figure 40% is dogging the Champagne industry. The CIVC’s latest figures show shipments to the UK fell by 39% in the first four months of this year and Rémy Cointreau announced that in the second quarter (April to June) its Champagne sales fell by 40% globally due to “difficult worldwide trading conditions”.
The Moët group admits that shipments from its cellars fell by 35% in the first three months of the year; in the same period Laurent Perrier’s sales were 25% below the 2008 level.
Global figures do not necessarily reflect what is happening in the UK market, but while shippers and agents of the major houses officially admit the market is “difficult”, off the record they are using terms such as “dire” and “disastrous” to describe the market so far this year. No houses are willing to quote figures but middle market marques do not demur from the idea that their sales in the Champenois’ largest export market are down by 40% so far this year after falling by 7.8% in 2008.
Discounting is said to be rife and there is a fear that those agents offering cheap wine will find it difficult to reimpose higher prices when the market eventually begins to turn up. Majestic, which pointed out that its profits had been hit by weak sales to corporate customers in its latest financial year, is running a 50% off price promotion on purchases of two bottles (including Moët) – effectively buy one and get one free – and there are widespread rumours that one “grande marque” is selling to a prestige customer at just £8 a bottle.
Smaller houses at the elite end of the spectrum say unofficially they have maintained volumes at the same time as avoiding discounting but note that the sales mix has changed in favour of non-vintage wines to the detriment of prestige cuvées. This they attribute to loyal individual customers who may be cutting back on major expenses such as cars and holidays, but who do not regard Champagne as a luxury. Meanwhile, the middle market is being hit heavily by soaring sales of Prosecco and Cava, especially in the take-home market as the trend to home entertaining continues to gather pace.
The picture is not entirely black, however. Sales in the City of London plummeted last year but there are signs of a marginal improvement at the individual rather than corporate level; the livery companies and clubs have been ordering steadily. That said, industry sources suggest that the barrier price for customers in most restaurants up and down the country remains £40 per bottle. Above that they will not buy Champagne and margins are squeezed all round.
Finance on Friday, 24.07.09