While Champagne's authorities have been puffing up the region's wines, sales are continuing to fall.
The Champenois rang in 2023 with a bang – the 2022 sales were the second highest on record and the yearly turnover peaked at EUR 6.5bn. Where did it all go wrong?
Back then, according to the appellation's two co-presidents David Chatillon and Maxime Toubart, Champagne had conquered the Covid impasse and the consumer's appetite for champagne remained insatiable. Both issued statements at the time claiming that 325 million bottles would be the new sales benchmark.
That confidence grew last summer, with Champagne setting its second highest yield in a decade at 11,400 kilograms per hectare, converting roughly to 323 million bottles. The 2023 harvest also saw an increase of the individual Reserve (RI) – Champagne's buffer system, allowing growers to pick more in abundant years, to be used in years lacking in quantity and (at least in theory) quality – going from 8000 kg/ha to 10,000 kg/h, a change deemed necessary for the appellation to meet the growing market demand in today’s uncertain weather conditions.
However, at that time, sales had already started to wane significantly, and Chatillon had amended the 2023 forecast from 325 to 314mn bottles, adding that the appellation was confident that 315mn bottles would be the demand in years to come. Nevertheless, as the months ticked by, sales continued to fall, with Champagne ending the year selling a mere 299mn bottles, 27m bottles fewer than in 2023, amounting to a 8.2 percent year on year sales drop.
Ups and downs
Since then, the Comité Champagne (CIVC) and its two co-presidents, have changed tack in their communication, describing the sales drop as "expected" and a "return to the pre-Covid normal", seemingly amnesiac about the whatever they may have said about the increased consumer demand for Champagne in the past two to three years, or even to the fact that there have been only four occasions in the last two decades the sales figures fell below 300mn bottles (293mn in 2009, 297mn in 2019, 244mn at the peak of the Covid crisis in 2020, and 299mn in 2023).
Moreover, the start of 2024 has not been promising, resulting in a further sales decrease. At 292.9mn bottles, the moving annual totals (MATs) at the end of February are the lowest in the past two decades, excluding the 2020 Covid dip. So far there have been no comments on the continuing declining sales by the appellation's two co-presidents, but they held a press conference at Wine Paris, where they reiterated reasons why Champagne's future remains bright. Needless to say, no sales figures where mentioned at the time.
Still, despite the sales volumes' downward spiral, there is a silver lining as the sales value was largely maintained. The final figure has not been officially announced yet but, according to Chatillon, it is around EUR 6.2bn, the second highest sales value ever, exceeding the sales value of 2021 by EUR 500mn, even if there is a 21mn bottle difference between the two years. This solid turnover number can be attributed to an increased market share of export sales and a further diversification in the types of cuvées sold. For instance, in 2021, export sales made up 56 percent of the total sales (with 179.6mn bottles) while, in 2023, the export market share had increased slightly to 57.4 percent equating to 171.7mn bottles. From the maintained value it is safe to deduce that the share of prestige cuvées, vintages and rosé wines continued to expand, to the detriment of entry-level non-vintage cuvées.
Major markets
France remains Champagne's largest volume market at 127.3mn bottles, down from 138.4mn bottles last year, a drop of 8 percent. The US remains the largest export market, both in volume and value. In volume, sales fell by 20 percent from 33.7mn bottles to 26.9mn bottles, for a value of EUR 810mn, down 14.5 percent from EUR 947mn. In volume, sales fell for a second consecutive year, but they remained above 2019's level of 25.7 million bottles.
The UK remains the second largest export market both in volume and value, with 25.5mn bottles sold in 2023 (down 8 percent from 2022) for a record value of EUR 550mn (up by 1.1 percent), . However, compared to 2019, sales volumes fell by 6.2 percent (in 2019 the UK was the biggest export market by volume), even if the sales value has increased over the same period.
Japan and Germany keep their third and fourth export market positions. Japanese volume sales dropped by 7.8 percent, from 16.6 million bottles in 2022 to 15.3 million bottles in 2023, while the sales value increased by 3.5 percent to EUR 457.7mn. Japan's 2023 volume sales also exceed their pre-Covid level by 6.5 percent. Compared to 2019, Germany's volume sales are on par with 11.7mn bottles sold, but they have dropped by 4.9 percent compared to 2022's 12.3mn bottles. Once again, the overall value has increased coming in at EUR 268mn, up 8.5 percent compared to 2022 and up by a whopping 24.1 percent compared to 2019.
Italy solidifies its position of fifth export market, with value sales increasing by 6.3 percent year-on-year, while volume sales dropped by 6.4 percent from 10.6mn bottles sold in 2022 to 9.9mn bottles sold in 2023. Switzerland, in eighth position, follows a similar trend with sales values increasing by 12 percent while volumes fell by 4.7 percent.
Champagne sales in Australia (sixth position), Belgium (seventh) and Sweden (10th) have fallen both in volume (15.2, 22.3, and 18.4 percent respectively) and in value (7, 8.5 and 14.3 percent respectively) compared to 2022. The only anomaly in the top 10 is Spain, in ninth position, which increased both its volume (up 2 percent) and value (up 14.6 percent) sales in 2023 compared to 2022, and its volume sales increased by 12 percent compared to 2019.
Losing ground
Taking a more critical analysis of these figures, what stands out is that, in markets where traditionally a lot of non-vintage Champagne has been consumed (France, Belgium, Germany, the Netherlands), volume sales decrease or level off. Moreover, when one cross references this data with other sparkling wine sales data in these markets, one notices that even if overall sparkling wine sales have slightly fallen, sales of Prosecco, Cava, Crémant and Sekt have fared a lot better than the Champagne sales.
The most common reasons served-up for this phenomenon are the inflation and the price difference between other sparkling wine and Champagne. However, a reason rarely cited is that most non-vintage Champagne simply lacks value for money. The bottle price has increased, because the grape price and dry good prices have increased, but not because grape-growers or houses have invested in quality, in stark contrast with other sparkling wine appellations that have had to up their game. Hence, many non-vintage Champagnes provide a very lackluster or average drinking experience, which does not match their price tag.
To conclude, at the end of February, Champagne sales were as low as they have ever been in the last two decades, excluding the 2020 Covid slump. Volume sales have fallen (often by double digits) for 12 consecutive months, and the MAT comes in 10.6 percent lower year-on-year. Sales are lagging both in France and in export markets and for the first two months of 2024, export sales have been 18.6 percent lower than they were last year. The sales loss is mainly carried by the houses which show a 17.9 percent drop in their January and February sales compared to the same period last year. Meanwhile, stock levels have increased by 6.2 percent between 2022 and 2023, which roughly equates to four years of stock.
In face of the above, the CIVC's co-presidents have been keeping very quiet and when they have spoken, they have tried to normalize the situation or give reasons why Champagne's future remains bright. Nevertheless, if they will want to preserve the precarious balance between the region's stakeholders, they will have to come up with a creative solution to boost Champagne's desirability in the eyes of the consumer – and thus rekindle the sales process.
Source: Wine-Searcher