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Champagne will survive Covid-19

Updated: May 11

Champagne through crises, recession & growth


Words by Antoine Hugot


"Remember, gentlemen, it's not just France we are fighting for, it's Champagne!"1 In the excitement of the Anglo-American offensive of 1917, champagne became a symbol of victory. Soldiers debarking in Nice were given the order of reaching the northeast corner of the hexagon to win back France.


Since the beginning of the 17th century, champagne has continued to build its myth, alternating from periods favorable to its development, - especially from the beginning of the 17th century with royal and imperial courts, and with the bourgeoisie taking advantage of the industrial revolution in the 19th century - to periods of crisis such as wars, pandemics and great financial hardship. Champagne has gone from strength to strength.


To be consistent with our current appellation, I’d like to start in the beginning of the 20th century where the situation was critical for many houses and winegrowers. In these times they were affected by many crises such as four years of poor harvests due to phylloxera, rainfalls, hails and frosts between 1907 and 1910. When the French government announced in 1908 that the exact geographic area of Champagne was to be delimited by decree thereby granting economic advantage and protection to the region's winegrowers, there was a glimmer of hope. This early development of the Appellation d'Origine Contrôlée regulation benefited the Marne and Aisne districts to the significant exclusion of the Aube district which included the town of Troyes - the historic capital of the Champagne region. This caused massive unrest and 10,000 troops were sent from Paris to break up the riots that culminated in 1911.



Then, with WWI Champagne pays the double tribute of its “sons” which are taken from it and of their land which serves as a battlefield : 40% of the total vineyard is devastated.

© AFP/Gianni Dagli Orti | Engraving entitled "Vendanges 1914", vineyard workers picking under a "rain of shells"

After WWI, international crises dominated the horizon: prohibition in the USA and the UK, the birth of the USSR, abject poverty in Europe. But for Champagne, this was a time to concentrate on the reconstruction of vineyards and a general improvement in viticultural methods. It was time to re-plant the vineyards in ‘’rows’’ and adapt to modernised harvesting systems, with horses and straddle tractors. It was also a time to delimit the Appellation d’Origine Controlée by the law of 22 July 1927. Now there was a strictly-designated area for champagne production, and rules for specific pruning practices, grape varieties, harvesting and winemaking. These considerable advances would prove to be of huge value to the industry in the years to come.

As prosperity returned, the vineyards were faced with the declaration of WWII and its obvious deleterious effects on the growers and negociants. People were then discouraged by a number of bad harvests in a row – with the exception of the vintage of 1947 - until the beginning of 1950s. It was believed that there was no future in the vines; parents wanted their children go to university. Nevertheless, after 1954 the champenois benefited from intense economic expansion and a huge improvement in the vines. Greatly increased efficiency was achieved with the straddle tractor, much faster than horses for spraying and pre-pruning, and with bottling, riddling, disgorging, labeling carried out in assembly lines thanks to new technologies.


The fourth fall comes after a new jump, marked by an increase of 53% in three years. The vines were so tired in 1978, 1980 and 1981 that in four years grape growers were only able to yield the equivalent of two and a half harvests. The lack of grapes added to the decrease in bottles caused by the very strong expansion of the previous period and producers are forced to quota their sales to safeguard the quality on the one hand and to increase their prices for compensate for the shortfall on the other. The result was a further decrease of 40 millions bottles in shipments from 1978 to 1982, the second "oil shock" having intervened in the meantime. Thanks to Bacchus, the 1982 and 1983 harvests are splendid, the most important of the century, and they once again open up opportunities for the Champagne economy.

A few years after, Champagne is hit hard by the recession “The crisis is global, overproduction is everywhere” explained Marc Brugnon president of SGV. The Gulf War, opening borders to the East, war in Yugoslavia and Europe. Everything becomes a source of concern, a matter for re-balancing. This results in a 20% decrease in the price of a kilo of grapes in 1992. Which in turn decreases shipments to 214 million bottles compared to 249 million in 1989.

In 1994, things were looking up. By granting a harvest of 9000kg / ha in 1994, Champagne will only produce 225 million bottles for 240 million bottles sold in 1993. This restriction of supply pursues the objective of lowering stocks by around 923 million bottles. Then, beautiful harvests from 1995 and 1996 started once again a new 2 opportunity for champagne to rule the world.




Approaching the new millennium in 1999, it became difficult to find a bottle of champagne in big retail for less than 60 Francs. The prices went up to around 65 Francs to 70 Francs which was remarkable because less than two years before champagne was sold for less than 50 francs. This was similar to the prices found in 1989. The big brands were sitting between 110 and 150 Francs. - First labels : 75 Francs

- Mass-market labels : 80-85 Francs

- National brands: 85-99 Francs (NF, Canard-Duchene, De Castellane, Duval-Leroy)

- International brands: 105-140 Francs (PH, Lanson, Mumm, MC, Taittinger, LP)

1999 becomes a historically significant year for the region because of the “millennium” effect which increased shipments by almost +22%, to a record 327 million bottles, and the harvest this year was unanimously qualified as “excellent” by winegrowers. But “the anticipated boom in consumption did not ultimately take place. Nearly fifty million bottles, mainly first-price champagnes and mass-market labels, therefore found themselves trapped in the trade.”3 The situation was dire, kicking off a new crisis in 2001, caused by very sharp promotions by the big retailers to get stocks off their shelves.

“The Leclerc hypermarkets of Champagne offer from today several bottles around 9€ (less than 60 Francs). Lower prices are also charged on some famous brands. Consumers will rejoice, but probably not the winegrowers.” said l’Union newspaper from the 7th November 2001.




As the 21st century took off, we entered a new era of globalisation, which Champagne must adapt to to continue to make its appellation flourish around the world. From 1999, the Union newspaper said;

“and what if, once the feasts of the turn of the century have been devoured and once the hangovers have passed, sales of champagne continue in their momentum… If the Chinese fall in love with bubbles… (…) then, roughly speaking, the Champagne vineyard as it is configured today will no longer be able to meet demand from 2015 or 2020.” 4

The new generation who sees the appellation planted at more than 96% of its land and the yield per hectare pushed to 12,000kg / ha, starts a new debate. When we know that it takes about 1.2kg of grapes to make a single bottle of champagne, they know that this will not respond to the future increase in demand. There are pros, there are cons. Until the appellation is extended, we must focus on added value. In this regard, Jean-Marie Lefevre, CEO Pommery (LVMH) in 1999, is on the verge of a successful bet: the price has increased by 20% in four years, the wine has been improved, new cuvées have come to flesh out the top of the range and only a few large retailers have the privilege of selling Pommery. The strategy is to enhance the value of all large houses. The results were quick to come: champagne’s turnover increased by +16.6% between 2002 and 2008 from 3.7 to 4.4 billion Euros.


Once again, Champagne was on a roll until 2008 ! But sank into the game of the so-called “subprime” financial crisis and then the economic one, suffing from a sharp drop in sales. In 2009, Champagne shipped 293.3 million bottles, 9.1% less than in 2008. Champagne shipments returned to the level they had reached in 2003. Total turnover of Champagne amounted to 3.7 billion euros, a decrease of 16.6% compared to 4.4 billion euros in 2008. It returns to the level of 2002. The following years will stagnate around 300 million bottles shipped per year, yet turnover will reach peaks of up to 5 billion euros, or + 26% in ten years. This is in particular due to the continuity of this “value-creation policy” introduced by the Champagne region at the dawn of the 21st century.


"Producing 300 million bottles of very high quality is the mission of Champagne".

This mission that Stephen Leroux talks about is also about sustainable viticulture and respect for the environment. This has led to the birth of a new category of winegrowers, led by Anselme Selosse, and other"top-winegrowers" inspired by the Burgundian “climat” approach. This has enabled the people of Champagne to claim the quality of its terroir and significantly increase its selling price.


The region of Champagne will continue to rise and fall, and although today it's not visibly decimated by bombs or trenches, there is an eeriness in the empty streets of Reims, Epernay and Troyes in the COVID-19 era. Unfortunately something else is also empty, and that's the order forms. For a large portion of grower champagnes the majority of their sales are made through trade shows, but with the recent cancellation of Prowein, Vinexpo, and USA Trade Tasting they have limited means to meet with new clients. On top of this, oenotourism which brought in close to 880 million to the region in 2016, is at a complete stand still. For a larger producer who has a year of liquidities, there is light at the end of the tunnel, but if you rely on export, like 55% of champagne does, and only have a couple of months worth of cashflow it becomes a different story.

Bottles that were prepared to be shipped before the lockdown (17 march), may not be shipped until July, and even if there is possibility to send bottles on their way there are shortages of transporters.


in these difficult times, many small producers may decide to sell their grapes to big houses who will bail them out, or they may be forced to sell their vines. Small growers will have to be careful and must join forces to support this crisis. Champagne alliances will be created or strengthened to face COVID-19.


And if solidarity, which we have seen every day in France in the recent weeks, becomes the common thread of the future of our beautiful region, then there will be a place for all producers, big and small.

From all this, we must remember the fragility of the economic balance concerning champagne and the suddenness of trend reversals, but also admire the speed with which the situation generally recovers after the depressions, since for each of them, with surprising consistancy, the set backs were made up for and the expansion resumed in one or two years.

#Stayathome #DrinkChampagne



Sources:


1. Sir Winston Churchill, Prime Minister of Great Britain, (1874 - 1965)

2. “Vendanges : la Champagne reste prudente” l’Union Journal, publié le 7 septembre 1994

3. “l'explosion anticipée de la consommation n'a finalement pas eu lieu. Près de cinquante millions de bouteilles, 3 essentiellement des champagnes premier prix et des marques de distributeurs, se sont donc retrouvées coincées dans le commerce.” “Les maisons de champagne n'éviteront pas la gueule de bois”, Les Echos publié le 29 décembre 2000 4. “et si, une fois digérées les agapes du changement de siècle, une fois la gueule de bois passée, les ventes de 4 champagne continuent leur lancée…Si les Chinois s’éprennent des bulles…(…)alors, grosso modo, le vignoble champenois tel qu’il est configuré aujourd’hui ne parviendra plus a à satisfaire la demande à partir de 2015 ou 2020.” “2015 : avec des “si”, on mettra la Champagne en bouteilles.”, L’Union Journal, publié le 25 février 1999


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