Bubbling champagne sales could lead to shortages

After a two-year slump, because unsold millennium stocks caused a worldwide glut, champagne sales are booming again this year.

After a two-year slump, because unsold millennium stocks caused a worldwide glut, champagne sales are booming again this year.

Enjoy your glass of champagne this New Year's Eve. The renewed demand for the world's favourite celebration drink might mean shortages and higher prices in years soon to come.

Economic slowdown and talk of war usually take the fizz out of champagne sales. Not this festive season. Consumption in France is expected to rise by 7 per cent. Sales to Britain, which is its biggest overseas market, are up by 25 per cent.

Champagne producers expect to sell 285 million bottles worldwide in 2002. Sales in 1999 were higher, but that was because wine traders were stocking up – over-stocking as it turned out – for the millennium.

If the trend continues, demand could outstrip supply within two to three years, according to Yves Bénard, president of the Union des Maisons de Champagne.

The champagne vineyards in north-eastern France are capable of producing a maximum of 300 million bottles a year. Once annual sales reach that figure, the champagne producers will face a difficult choice.

Should they increase the acreage of land that is planted with vines, possibly reducing the quality of some of their wine? Or should they maintain present limits, risking a surge in prices which might help competitors in Australia and Italy?

Other French wine-growing areas are suffering from increased New World competition in export markets, and a slump in consumption of cheaper wines in France. The Champagne region, east of Paris, remains the world leader in sales of its best-known product.

But its success has brought problems of its own. Most high-quality French wines are made by the people who grow the grapes and labelled according to the vineyard or "terroir" – specific region, village or field.

Champagne, however, is different. The prestigious names – Moët et Chandon, Veuve Cliquot – are wine-makers and traders who buy and blend grapes from different parts of the region.

In recent years, the boom in champagne sales has encouraged hundreds of small producers to bottle and market their own wine. This has created even more competition for the grapes harvested from the areas permitted by French law to make the raw material for champagne.

The big champagne producers and traders are already campaigning for a relaxation of the rules to allow new vineyards to be created within the Champagne region.

Most small growers oppose such an extension. Even if they changed their minds, it would be many years before new vines were ready to produce grapes of sufficient quality to make champagne.

Producers point out that the slump in sales in the past two years was not caused by a fall in demand. Because many traders had stocks left over from the new year of 2000, they have not ordered as much wine from the champagne houses in the last two years. This Christmas, traders are re-stocking in a big way. In addition to the boom in Britain, there has been a 30 per cent increase in sales to the US and a 14 per cent increase in France.

Normally, champagne sales are one of the leading indicators of economic recession or upturn. The sluggishness of the world economy, however, has had little effect on the drink's popularity. The only country to follow the normal pattern is Germany, where the taste for champagne remains as flat as the economy.