A new long-term strategic overhaul for Champagne is setting out to rethink everything from viticulture to the relationships between brand owners and grape growers. The likely result of Champagne 2030 will be a renewed emphasis on prioritising value over volume, in turn elevating Champagne’s image around the world and maintaining its position as the pre-eminent sparkling wine style.
The project was launched in December 2012, with a number of committees or ‘think-tanks’ established to look into various aspects of the industry, most notably: production in terms of viticulture and winemaking; protecting and promoting the Champagne appellation; and improving the relationship between the brand-owning Champagne houses and the grape growers.
According to Jean-Marie Barillère, president of the Union des Maisons de Champagne (UMC) and co-president of the Comité Interprofessionnel du Vin de Champagne (CIVC), the strategic rethink has been prompted by an acknowledgement that the potential for Champagne to grow sales volumes is now “very limited”, simply because the area has reached its maximum permitted vineyard capacity. He insists that it is not a response to market conditions, and in particular to the growth of other sparkling wine segments, such as Prosecco, the success of which has diminished Champagne’s share of the sparkling wine market.
But leading figures in the region admit that they are concerned that there is too small a gap in price terms between the cheapest Champagnes and many sparkling wines in Western European markets. One source in the region told Meininger’s: “Some sparkling wine is sold at relatively high prices compared to its production costs (typically about €8.00 to €12.00), but Champagne priced just above that is perceived as expensive. This is destroying the brand equity of Champagne in the eyes of the consumers.”
Champagne 2030 is a multi-faceted project, but arguably its most important objective is to tighten the rules governing production in order to elevate Champagne’s bottom rung, both in terms of quality and price.
For leading brand owners, the logic is inescapable. Bollinger CEO Jérôme Philipon says simply that the cheapest Champagnes need to “disappear” for the health of the industry. “The average quality of Champagne has really improved over the last 10 or 20 years,” he explains. However, he says that “we can’t just be satisfied with saying that finding a bad bottle of Champagne is rare. To make Champagne at a low price, you have to cut corners, and that’s what’s going to have to disappear.”
Bollinger sells just under 3m bottles of Champagne a year, at prices far above the cheapest grower Champagnes piled high in the French hypermarkets. While Philipon insists that the collective will exist to make the changes necessary in Champagne, there has already been some resistance from volume players who fear that any tightening of production rules will increase their costs and erode the market for cheap ‘premier prix’ Champagnes.
“There’s a consensus to elevate the minimum rules, but reluctance from people wanting to survive,” says Bruno Paillard, president of Lanson-BCC and Champagne Bruno Paillard. “As always, we have people who don’t want to change anything, people who are against everything, but also people who are convinced that we can make progress.”
This resistance is all the greater for the fact that the French market – which still accounts for more than half of all global Champagne sales – is in the doldrums, falling from just over 185m bottles in 2010 to 167.3m bottles in 2013, according to CIVC figures. Cheaper grower and private label Champagnes have been disproportionately affected by this decline.
Nonetheless, the consensus among Champagne’s main players is that the move to reform viticulture and winemaking will prevail. But what measures will be introduced as a result?
The committee charged with drawing up plans to reform Champagne production is headed by Paillard and, representing the growers, Maxime Toubart. At the time of writing, details of possible changes to the regulations were a closely guarded secret, but Meininger’s understands a number of measures are being considered.
These include a restriction or even outright ban on the use of press wine – the taille; increasing the minimum length of maturation from the current level of 15 months; stricter rules on proving where grapes have been grown; and a mandatory period of rest post-disgorgement to allow Champagnes to settle prior to shipment.
Some of these measures are purely about quality, but others are aimed at tackling the thorny issue of “sur lattes” trading – the selling of bottles of undisgorged Champagnes between producers, viewed by many as a dishonest practice. Changes to labelling regulations may increase transparency, while a mandatory post-disgorgement resting period may prevent the opportunistic selling of wines at low prices to boost cash flow.
“Everything is on the table,” says Stanislas Thiénot, general manager at Groupe Thiénot. “Vins sur lattes, second pressing, time of aging… Champagne is a beautiful name and a top, premium wine, and to maintain this position, we have to be at the top. Increase the minimum level [of quality] and it will avoid cheap prices.” But Thiénot is wary of taking this process too far. “We cannot be 100% a luxury product because we have 300m bottles to sell. It’s too big.
We have to play with both [volume and value] without destroying either.”
And attention is not exclusively focused on production. The protection of the Champagne name around the world is an ongoing responsibility of the CIVC and of Paillard, who was recently re-elected to serve as chairman of its Appellation and Communication Commission. In the recent past, the use of the Champagne name for domestic sparkling wine has been outlawed in South Africa, New Zealand, Australia and Canada; there are discussions with Vietnam, and negotiations with Russia are, says Paillard, “on track”, but will take a few more years. The glaring gap is the US, where Paillard feels Champagne was bounced into an unacceptable deal by spirits companies when negotiating the EU-US Wine Accord in 2006, allowing companies such as Korbel, Gallo and Constellation to continue to use Champagne on the labels of established brands, but outlawing its use for new products. Now there is renewed optimism that an outright ban can be agreed as part of the current Transatlantic Trade and Investment Partnership (TTIP) talks between the EU and the US. “We have serious hopes that this will happen, and I am certain that the American sparkling wine industry will not suffer from that,” says Paillard.
At a time when Champagne is considering new measures designed to boost quality and to prioritise value over volume, the association of its name with cheap domestic sparkling wine in its second-biggest export market is an unwanted complication. Eliminating that anomaly in the US may be even more vital to the future prestige of Champagne than any number of changes to production regulations.
Champagne harvest 2014
At the time of writing, Champagne was in the midst of a promising 2014 harvest, with sugar and acidity levels described by the CIVC as “satisfying”. The year has been characterised by a cool summer – the coldest August in 20 years – which has helped to minimise disease problems and keep yields at good levels.
The Champagne houses and growers agreed in July to fix this year’s maximum permitted yield at 10,500kg/ha – the same level as in 2013. However, this figure comprises 10,100kg/ha to be picked in 2014, plus 400kg/ha to be released from Champagne’s reserve stocks in early 2015.
This will only change if Champagne shipments reach 307m bottles in 2014 (which they may well do); in that case, 500kg/ha will be released from stocks, giving a total permitted yield for the year of 10,600kg/ha.
Champagne 2030: how it works
Launched in December 2012, the Champagne 2030 project has three main aims:
- To protect the Champagne appellation and to improve its promotion around the world
- To create, maintain and increase the technical gap between Champagne and other sparkling wines in terms of winemaking and viticulture
- To improve the relationships between Champagne houses and growers
Since the project’s inception, a number of committees have been established involving all branches of the Champagne industry, and particularly the main brand owners, or négociants, and the growers. Their deliberations and conclusions have so far been kept confidential, but an overall action plan is likely to be finalised by the end of 2014, with measures due to be introduced – initially on a voluntary basis – at the end of 2015. Most attention – from the outside world, at least – is likely to be devoted to production issues, amid suggestions that a raft of new measures will be introduced to maintain and increase quality.
The process is entirely separate to the current review of the Champagne appellation, which is likely to lead to an eventual increase in the size of the Champagne vineyards. Currently the INAO, which regulates appellations d’origine in France, is carrying out a detailed, plot-by-plot review of the potential vineyard area, which is likely to take several years. It could be 2025 or beyond before the first Champagnes from any new vineyards are bottled.