Champagne producers are currently facing a challenging landscape as sales continue to decline, according to co-presidents David Chaitillon and Maxime Toubart.
The repercussions of the global economic slump have reached even the renowned Champagne region, presenting substantial hurdles for producers as they look to 2024.
Sales Forecast and Trends
Chaitillon, who also leads the Union des Maisons de Champagne (UMC), shared his insights during a discussion at the prestigious Association Viticole Champenoise (AVC).
He revealed that the sales forecast for 2024 predicts a decrease of roughly 10 percent in volume compared to 2023.
Furthermore, he anticipated a five percent dip in overall revenue, translating to a potential loss of around €500,000 to €600,000.
By early December, it is expected that total sales volume will hover around 269 million bottles, with anticipated revenue reaching approximately €5.8 to €5.9 billion.
To put these numbers in perspective, this predicted volume aligns with figures last seen in 1997 and marks the lowest sales figures since 2002, excluding the effects of the COVID-19 pandemic in 2020.
Last year had already recorded an 8.2 percent drop in volume, which means a staggering reduction of nearly one-fifth in the sales of bottles over the past two years—a loss amounting to 56.5 million bottles.
Consumer Behavior and Market Challenges
Chaitillon linked the disappointing sales trends to persistent economic and geopolitical uncertainties, suggesting that without these factors, the situation could have been even more dire.
He pointed out that a large majority—85 percent—of Champagne sales occur within the EU, UK, and the US, with France still holding the title as the largest market, albeit also experiencing a decline.
Notably, there has been a concerning reduction of 15 million bottles in France during the first ten months of this year when compared to the same timeframe in 2019.
Shifts in consumer behavior are also evident.
Even though economic indicators in the US, Europe, and France show slight improvements compared to the previous year, these changes are unlikely to lead to an uptick in Champagne sales as the year wraps up.
Chaitillon suggested that further sales declines may be on the horizon, citing provisional November figures as a basis for concern.
The moving annual target (MAT) was noted at 271.2 million bottles—marginally higher than earlier estimates—with projections possibly dropping to around 255 million bottles due to excess inventory apparent from a forecast of 10,000 kg/ha.
One pressing issue Chaitillon raised is the necessity for future yield reductions if sales continue to slide.
Such cuts are vital to avoid stock imbalances that could lead to devaluation in the Champagne market.
Oversupply may trigger price reductions, while an insufficient supply could have the opposite effect, pushing prices higher and nudging consumers toward alternatives.
This was echoed in Toubart’s remarks about the price increases seen in the post-COVID era.
Quality Standards and Consumer Expectations
Another key point Chaitillon mentioned is that consumers might have reached a tipping point regarding Champagne pricing.
The mounting production costs have not seen a corresponding increase in profit margins.
Nevertheless, Chaitillon reaffirmed that Champagne producers are dedicated to exploring new markets, even though this requires significant resources and investment to elevate Champagne’s image.
On a brighter note, Chaitillon expressed optimism about Champagne’s longstanding allure.
He emphasized its robust position in comparison to other sparkling wines.
Nevertheless, the region has struggled to tap into the broader growth of the sparkling wine market.
IWSR data reveals ongoing sales declines for Champagne in both the US and UK markets, with forecasts for the holiday season appearing bleak as consumers shift towards Prosecco.
In the UK, there’s a growing trend toward local sparkling wines, while French consumers are increasingly opting for foreign alternatives, as indicated by data from France Agrimer.
Factors influencing these choices encompass not just pricing but also evolving tastes for new sparkling experiences.
Younger consumers are particularly vocal about their discontent regarding Champagne’s environmental commitments and prior social controversies that have damaged its reputation.
Additionally, many feel that the quality of certain Champagne selections does not justify their price points.
These observations underline a significant disconnect in current marketing strategies and consumer expectations.
As the luxury market faces intensified scrutiny over its environmental and social impact, higher quality standards have become the norm.
While Champagne houses have made progress in improving worker conditions, ongoing quality and environmental concerns remain prevalent.
In a separate address, Toubart urged political leaders to reconsider certain ecological regulations in favor of more proactive and practical measures.
Chaitillon and Toubart chose not to delve into specific solutions for enhancing Champagne quality, instead emphasizing the importance of a unified front for the appellation, especially amid the current economic challenges.
They cautioned against airing public grievances that might tarnish the Champagne brand, particularly given the influence of social media and press narratives.
Although their call for solidarity is a step in the right direction, its success ultimately hinges on yielding genuine, long-term benefits for the Champagne appellation.
Addressing issues concerning herbicide use, quality control, and pricing strategies could significantly enhance Champagne’s market position and consumer appeal.
In conclusion, the declining sales figures reveal a disconnect between Champagne offerings and what consumers seek.
To maintain its prestigious standing in the sparkling wine arena, the appellation must undergo substantial transformations.
However, both co-presidents seem reluctant to confront these pressing challenges head-on.
Source: Wine-searcher
