Japan on track to become bigger Champagne market than UK

Japan is set to overtake the UK as second biggest export market for Champagne by value as official shipment figures show a contrasting picture of global consumption.

Shipments of Champagne to Japan rose by 21% to €306.7m in 2017, while the value of exports to the UK fell by almost 6% to €415.2m

Released at ProWein on Sunday were the official breakdown of Champagne shipments for 2017 by country, showing a marked rise in demand for the fizz in Asian markets – above all Japan – while key European Champagne-consuming countries suffered declines, in particular the UK, Champagne’s largest export market by volume, and second biggest in value behind the US.

Speaking exclusively to the drinks business at the fair, Jean-Marie Barillère, president of the UMC (Union des Maisons de Champagne) highlighted the growth in Champagne shipments to eastern Asia, especially Japan.

“The third biggest market in value is Japan, which has growth by 21% in value and 18% in volume [in 2017], meaning that it is now a bigger market than Germany in value and volume,” he said (Japan overtook Germany last year in value terms by the end of 2016, although the German market remained bigger in volume).

“And if Japan continues like this, then in the next two years it will be a bigger market in value than the UK,” he forecasted.

Indeed, he said to db later on in the discussion, stressing the potential in the emerging Japanese market for Champagne, compared to the mature UK, “Even in Japan, we think we are just at the beginning.”

By the end of 2017, he said that Champagne shipments to Japan had reached 12.9m bottles accounting for €306.7m.

In contrast, the UK saw a drop of 11% in volume and just under 6% in value during the course of 2017, meaning that the market now accounts for 27.8m bottles worth a little over €415m.

A number of reasons have been presented for a decline in sales of Champagne in the UK, although the greatest impact stems from a falling demand for supermarket exclusive labels, primarily sold on discount.

Such products, without a strong image, have lost their appeal as the regularity of price cuts has diminished, along with the depth of such discounts.

Sales of inexpensive, cut-price Champagne in the UK have been further affected by the fall in the value of Sterling relative to the Euro following the Brexit-vote, along with the rising appeal of other sparkling wines, particularly – at this cheaper end of the market – Prosecco.

Indeed, managing director of the Comité Champagne, Vincent Perrin, observed during a discussion with db at ProWein, “Apart from the effect of the depreciation of Sterling, there is a structural change in the UK.”

Nevertheless, as previously commented on by db, declining sales of discount Champagne may not be such a problem for the reputation the product in the longer term.

“The UK [consumer] is buying more branded Champagne and fewer retailer brands, and so, for the value and image of Champagne, it is much better,” said Barillère.

Speaking further to db about growing markets for Champagne, Barillère highlighted the strong performance of Asian markets collectively called ‘Chinese World’ – comprising mainland China, Hong Kong and Taiwan – which enjoyed an almost 22% volume increase, and just shy of 27% growth in value, making it Champagne’s ninth largest market.

He also name-checked South Korea, which he said in 2017 had reached 1m bottles for the first time.

Other nations that saw rises in shipments of Champagne during the course of last year included, significantly, the region’s largest market for Champagne by value, the US, which recorded a 6% volume growth and an 8.5% value increase.

Barillère was upbeat about the market in the past 12 months, as well as the future outlook for Champagne sales in the US.

“Champagne has done very well in the US, with the market now worth over €585m, and there is better growth in price versus volume,” he recorded.

Stressing the potential for further growth, he continued, “And today, per capita consumption of Champagne in the US is four times lower than it is in the UK.”

As previously reported by db, Champagne has set a new record for turnover, hitting a total of €4.9bn, €164m more than 2016’s total of €4.710m, and bypassing its previous high for 2015, when it reached €4.75bn.

This new record for value shipments, which includes France, can be attributed to a currency effect, a small growth in volume of 1.3m bottles (from 306-307.3m), a better product mix – in particular a rise in sales of prestige cuvées – and a growth in higher value markets for Champagne, such as the US and Japan.

Facts concerning 2017 shipments for Champagne:

• Shipments by volume: 307.3m bottles (up from 306m in 2016)

• Shipments by value: €4.9bn (up from €4.71m in 2016)

• Shipments to France by volume: 153.7m bottles (-2.5% volume)

• Total exports by volume: 153.6m bottles (+3.5% volume)

• Export markets outside Europe by volume: 77m bottles

• Export markets within Europe by volume: 76.6m bottles (-1.3% volume)