‘Brexit could be good for Champagne Castelnau’ says MD

The managing director of Champagne Castelnau, Pascal Prudhomme, believes Brexit might give his brand a competitive advantage as it heads towards an ambitious sales target for 2020.

Speaking to the drinks business in Champagne last month, Prudhomme said that Champagne Castelnau has hit a new high in sales, adding 100,000 bottles to its 2017 total of 760,000, ensuring the brand is on track to hit a target of 1m bottles by 2020 – a milestone number set by the manager a few years ago following a rebrand.

However, when asked by db whether Brexit might affect Castelnau’s upwards sales trajectory, especially if one considers the brand’s strong sales in the UK, he said that the country’s break with the European Union could actually favour his Champagne, because it has a wholly-owned subsidiary in the market – Castelnau Wine Agencies.

“There is no solution to Brexit other than shipping a bit more stock now to avoid troubles [with supplying the UK market] in the future,” he said.

Continuing, he told db, “And because we have a UK subsidiary, Brexit could be good for Champagne Castelnau.”

Speaking further, he said that the UK’s break with the EU will only seriously affect sales if it means that the cost of Champagne in Britain goes up sharply, either due to increased tariffs, or exchange rates, or, if the financial sector of the UK sees a major decline – consumption of the upmarket French fizz in Britain is closely connected to the performance of The City.

“If the inflation is not so big for Champagne, and if the financial companies don’t leave London, we could have no change regarding Brexit, although my concern is a devaluation of the pound versus the euro,” he said.

“But for now, there are no consequences, and the best thing for me is to go on as before,” he added.

Then, highlighting a bigger issue for his brand and Champagne as a whole, he commented, “The problem for Champagne is that the sales of less expensive sparkling wines are rising every year, and that is a global problem.”

Echoing the views of president of Champagne Deutz, Fabric Rosset – which you can read here – Prudhomme stressed the significant negative impact of mass demonstrations by the gilets jaunes in France from mid-November onwards.

“The French market has been very tough, and the end of last year was not good due to the demonstrations, which were every Saturday for one and a half months, meaning that sales in wine shops and restaurants were down,” he commented.

To further illustrate the impact of the movement, which included acts of vandalism in the key shopping districts of Paris, as well as road blocks across the country, he said that the hospitality sector in France had lost almost half of its customers.

“Bookings in restaurants in December were down 40% and hotels by 35%, mostly in Paris, and there was no mood to drink Champagne,” he said.

Recording that global Champagne shipments for 2018 had dropped by 5m bottles to 302m, he said, “The majority of that decline has come from the French market.”

However, he said that he was forecasting worse. “I was expecting it to be 300m or lower, because the trends in October and November were not so good, and December is such an important month [for sales of Champagne].”

As reported by db last month, initial estimates for the past year show that Champagne has shipped 5.3 million bottles fewer than 2017, driven by falling demand in France and the UK.

Champagne Castelnau is owned by the Coopérative Régionale des Vins de Champagne (CRVC). Prudhomme told db that the growers’ cooperative had also achieved a new sales record, shipping a total of three million bottles in 2018. Profit and turnover also risen for the group, according to Prudhomme. “We increased volumes, and turnover, and margins too; we are now at around €65m in turnover – it was an amazing year for us,” he summed up.