American consumers are becoming increasingly price-conscious when selecting sparkling wines, a trend highlighted in a recent report by Shanken News Daily (SND).
The report reveals a notable decline in Champagne sales within the US market, contrasted by a significant rise in Prosecco's popularity.
Champagne's Rollercoaster Ride in the US Market
Champagne has historically enjoyed a prestigious position among American consumers, experiencing substantial gains over recent years. Exports to the US surged by 61 percent since 2020, far surpassing the UK, the second-largest export market for Champagne. However, this growth trajectory took a downturn over the past two years, with a notable decline in 2023. According to Impact Databank, total US Champagne sales by volume fell by 12.5 percent to 1.58 million cases, while exports dropped 20 percent in volume to 2.2 million cases and 14.5 percent in value to USD 890 million.
The Inflation Factor
One of the primary reasons behind the declining Champagne sales is the price hike by producers and importers in 2023 amidst high demand. This price increase clashed with growing consumer concerns about inflation, leading many Americans to reconsider their spending on luxury items like Champagne.
Signs of Recovery and Optimism
Despite recent challenges, industry leaders remain optimistic about the future. Michelle DeFeo, president of Laurent-Perrier US, noted that the significant declines caused by inventory drawdown and weak consumer demand in 2023 have begun to ease in 2024. She highlighted strong performance in the high-end market, particularly with the prestige Grand Siècle cuvée.
Premiumisation: The Key Trend in Champagne
The trend of premiumisation dominates the Champagne market, with top brands focusing on high-end offerings. Leading the pack are LVMH’s Veuve Clicquot and Moët & Chandon, which not only top the Champagne sales charts in the US but are also the leading wine brands overall for wines priced at USD 25 or more. Piper-Heidsieck has also emphasized its high-end segment with the launch of its Essentiel line, including a blanc de noirs variant. Irene Habermeier, portfolio brand manager, notes the growing popularity of vintage Champagnes and prestige cuvées.
New Entrants and Market Movements
Despite the overall decline, new players are entering the market with an eye on future growth. Terroirs et Vignerons de Champagne, the owner of Nicolas Feuillatte, acquired the Henriot Champagne brand from Francois Pinault’s Artémis Domaines. Additionally, Californian wine giant Jackson Family Wines began handling Henriot in the US, marking its entry into the Champagne market. Demeine Estates, a Napa Valley-based importer, added the Philipponnat Champagne brand to its portfolio, which is known for its Pinot Noir focus and sells around 10,000 cases annually in the US.
Prosecco: The Rising Star
While the total imported sparkling wine category remained flat at 13.3 million cases in the US last year, Prosecco has emerged as the main growth driver. Italian and Spanish sparkling wine brands are witnessing an upward trajectory, with Prosecco leading the charge. Shipments of Prosecco to the US exceeded 10 million cases last year, up from fewer than 8 million cases pre-pandemic.
Market Leaders and Growing Demand
Gallo’s Prosecco brand stands as the largest player in the US Prosecco market, with more than three times the volume of its closest competitor. Beth Orozco, Gallo’s vice president of marketing, highlighted the double-digit growth in their on-premise business in 2023, a trend that continues into 2024. The popularity of spritz cocktails, which frequently feature sparkling wine, has further boosted Prosecco's appeal.
Freixenet Mionetto USA's Mionetto Prosecco, another significant player, matched La Marca's 7 percent growth rate last year, reaching 960,000 cases. Their portfolio includes various Proseccos and a new non-alcoholic sparkling wine. Henkell Freixenet CEO Dr. Andreas Brokemper confidently asserted that Prosecco will continue to drive growth.
Conclusion
The sparkling wine market in the US is undergoing a significant shift, driven by economic factors and changing consumer preferences. While Champagne faces challenges, the rise of Prosecco demonstrates a shift towards more affordable yet quality sparkling wines. The future of the market looks promising with a balanced mix of luxury and accessibility, catering to a broad spectrum of American consumers.
Source: Vinetur