Cheap Christmas cheer as champagne bubble bursts
Thursday 05 November 2009
French families will be toasting the holidays with cheap champagne this year thanks to big supermarket chains that are offering "discount bubbly," much to the annoyance of producers.
For key industry players, champagne rhymes with luxury and should not be sold on the cheap, even during these times of economic hardship.
But France's biggest retailer, Carrefour, is setting the trend for "discount bubbly" just as the industry is struggling with a drop in export sales after several boom years.
"We are going to offer champagne for fewer than 10 euros (15 dollars) a bottle for the holiday season," said Christophe Blaise, Carrefour manager in Reims, the Champagne region's capital.
"It's going to be a loss leader though, and will not target serious Champagne lovers," he said.
Champagne sales dropped 19 percent in the first six months of the year and producers are saddled with more than 1.2 billion bottles in excess stock.
Paul-Francois Vranken, chairman of Vranken Pommery and a member of the top half of France's Fortune 500 club, said the global economic slump had hit sales hard, with many foreign buyers drastically reducing their orders.
"I deplore this practice of price cutting because the prices do not reflect the value of champagne," he said.
"It's terrible to devalue the product in this way," he said, but added: "Given the financial difficulties it's understandable."
Vranken said the slump in Champagne sales was temporary and linked to a problem with excess stock instead of falling consumption.
Over the past decade soaring stock markets and property prices have been matched by record sales of sparkling French wine, driven by its success among the new wealthy class in Russia and China.
But last year's financial crisis brought the boom to an end and 2009 appears set to fare no better.
The head of Nicolas Feuillatte, the biggest champagne cooperative in the region, said industry problems should not be allowed to tarnish the image of France's top-selling wine product.
"There are people in the industry who are deep in debt and so the temptation to cut prices is strong," Dominique Pierre said.
"But to sell below cost would be foolhardy because it would affect the symbolic value of champagne."
Patrick Le Brun, head of the CGV trade body of Champagne producers, suggested it would be best to weather the storm instead of trying to sell at discount prices.
"Every bottle sold at a discount price is one less for sale when the market picks up," said Le Brun.
France's champagne export sales will once again sparkle, according to Pierre-Emmanuel Taittinger, head of the Taittinger Champagne house.
"Our champagne has never been better and during hard times we should not deprive ourselves of a luxury good that is still affordable," he said.
Champagne's prestige and high prices are maintained by strict controls on quality and origin.
Only wines from grapes grown in 33,500 hectares of approved vineyards in 319 communes of the region can be called Champagne, although 40 more communes will soon be added to this "appellation."
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