Surviving the hangover from the economic boom was never going to be easy. On the upside, although Champagne may be off many shopping lists, no one said fizz was. While the number of bottles of Champagne sold worldwide plummeted from a peak of almost 339m worldwide in 2007 to 305m in 2013, demand for France’s other sparkling wines has sprinted forward.
Category innovation
“Sparkling wines are benefitting from increased home consumption as festivities continue despite the crisis, and, in all likelihood, a transfer from Champagne sales,” said Jacquelin Augustin, wine and spirits expert with researchers IRI Worldwide. “On top of that, the sparkling category has seen some innovations, such as flavoured sparkling wines, or sparkling wines that are poured over ice, plus increased demand over the last two years for sparkling- wine-based cocktails.”
On the value side, IRI’s data shows that in the 12 months to August 2014 compared to the same period a year earlier, supermarket sales of French sparkling wine, not including Champagne – a category known technically in France as ‘effervescent hors Champagne’ - rose 5% to €485m ($620m), or 126m bottles. Prior to that, during the same period a year earlier to August 2013, sales already gained almost 3% in value. Happy days.
Of course, one of the most basic components of the strong demand for fizzy wine in France is that it’s the world’s number one producer of the stuff, after Italy and Spain. So why wouldn’t they drink large amounts of it? And, according to FranceAgriMer, France’s national food and fisheries body, although Germany is the leading consumer of fizzy wine, drinking a total of 390m bottles a year compared to France’s 360m in 2011, a conversion to a per capita basis puts France back in first place. Per head in 2011 the French drank 5.5 bottles of fizz per year, while the Germans only managed 4.8 bottles.
And apart from the fact that the French are generally keen on fizz and apparently happy enough to switch from Champagne to cheaper forms of it rather than do without, there’s a number of other positive factors at play. These include increased demand for aperitifs, which can be consumed outside the traditional lunch or dinner slots, as well as the innovations Augustin mentioned. One of these is that, alongside the booming popularity of fruit-flavoured wines, which first appeared on the market about four years ago, there’s a growing demand for fizzy versions of them. They are sweet, cheap and very easy to drink, appealing mainly to the younger generation.
Even more recently, another new style of sparkling has been released in the form of over-ice sparkling wines. Demand for ‘le Ice’ took off over the last 12 months, notably the summer ones, said Jérémy Dagot, marketing manager for one of the biggest producers of French sparkling wines, Les Grands Chais de France (LGCDF).
Although it’s too soon to tell if the over-ice category is a major new trend, IRI’s Augustin said its arrival, with all the new packaging and hoopla involved, should provide another positive driver for French sparkling sales. For his part, Dagot expects a sharp demand for le Ice over the next five years. Asked about technical differences between over-ice sparkling wine and traditional ones, he said they needed to be ‘demi-sec’ rather than ‘sec’ because the extra sugar stops the melting ice from over-diluting them.
Competition for Champagne
Digging a little deeper into the sparkling category, a few more trends become apparent. Broadly speaking, although there are a range of different types, regions and production methods, France’s effervescent wines can be divided into three areas. Firstly, there’s Champagne, which has a 28% market share by volume and 65% by value. Then comes ‘AOP hors Champagne’ with the letters AOP standing for Appellation d’Origine Protégée, the European equivalent of the classic AOC or Appellation d’Origine Contrôlée. AOP wines are made in the same way as Champagne, with the grapes fermented first into still wine, while a secondary fermentation takes place in the bottle. Carbon dioxide from the secondary fermentation is trapped and absorbed into the wine, making it fizzy. The process is called ‘méthode traditionnelle’ or ‘méthode champenoise’. Examples of AOPs hors Champagne include Crémant de Bourgogne, Clairette de Die and the best known, Crémant d’Alsace. As a group, AOPs hors Champagne hold 26% of the market by volume and 18% by value.
Finally, there are the Cuves Close, with 38% of the market by volume and 13% by value. The rules of Cuves Close production, which is often used by larger-volume producers, mean grapes can come from any part of France, and secondary fermentation takes place in large tanks instead of individual bottles.
Starting at the generally pricier end of the market with the AOPs hors Champagne, the number one production area is Alsace. It was designated as a sparkling production area in 1976 and about 80% of production is sold domestically. Crémants can be blends of grapes or single varieties, and the only grapes authorised for Crémant d’Alsace production are Pinot Blanc, Auxerrois, Riesling, Pinot Noir, Pinot Gris and Chardonnay, as well as Pinot Noir for the rosé version.
Over the last 40 years, Crémant d’Alsace sales have grown from 2m bottles in 1982 to 17m in 2002, and, in 2013, to a record 34m. Not bad for what might be considered a poor relation of Champagne – although even the suggestion of it being a poor relation can raise hackles. “We cannot compare the products, like we cannot compare a Burgundy red and a Bordeaux red,” said Olivier Sohler, director of both the Crémant d’Alsace Producers Syndicate and the National Federation of Crémant Producers. “Crémants are the leading sparkling wine in France and each has it’s own appellation and its own special taste and smell,” he added. Sohler additionally points to the growing demand for rosé wines as a supporting factor in boosting sales of pink crémant.
The good crémant news continues with IRI’s Augustin saying they are competing successfully with Champagne at the lower end of the market. “French consumers now prefer to buy a crémant or an imported sparkling than a low-end Champagne,” he said.
The comment points up two other sparking sector tendencies. Firstly, a strong demand for foreign sparkling wines, which in the 12 months to August 2014 rose 13.3% in value to €40.3m, compared to the same period a year earlier. Plus, in the same period a year earlier to August 2103, they’d already risen almost 10%. Of those foreign imports, FranceAgriMer says Spanish fizz accounts for more than half of sales, while Italy comes second. “In reality almost all of those cava sales are Freixenet,” said Augustin. “The consumer likely doesn’t really know they are buying cava. They are buying the unusual black bottle, the luxury style packaging. Plus the company has put a lot of money into promotions in a way that is quite unusual for the effervescent category.”
Secondly, IRI’s data also suggests French customers are moving away from entry-level sparkling wines and spending more on pricier AOP versions, said Augustin. At the same time, prices for AOPs are rising, mainly due to the strict quality levels and limited growing areas which mean production is failing to keep pace with demand.
The Compagnie Française des Grands Vins (CFGV) is not only a leading producer of ‘cuve close’ wines, one of its founders, agricultural engineer Eugène Charmat, invented the process. The company now makes France’s best-selling branded sparkling wine, Charles Volner, which retails for about €4.20 a bottle. Despite the suggestion customers might be moving toward pricier sparkling wines, the company’s CEO, Aymeric de Beauvillé, said domestic volume sales of Charles Volner were up 2% to 3% in 2013 compared to 2012, at about 9m bottles.
Export demand is far more important in his area, however, with overseas markets sucking up about 30m bottles of de Beauvillé’s sparkling wines annually. Although unwilling to discuss export market details, de Beauvillé said China is the most interesting market, now and in the future. LGCDF’s Jérémy Dagot also pointed to China as the next big thing in terms of effervescent sales for his company, describing demand there, and in other new markets, as “exploding”. More precise data was not available here either, but the domestic/export sales split is similar to CFGV with exports accounting for about 75% of LGCDF’s annual effervescent production of almost 28m bottles.
Export outlook
Total export figures from FranceAgriMer support their claims. In 2013, compared to the three year average, exports of sparkling wines, not including Champagne, rose almost 17% in value, to €220m, and by 8% in volume.
For Crémant d’Alsace, that translates into an export growth of 10% in volume, to 7m bottles in 2013, and an increase of 12% in value terms to almost €27 million compared to 2012. The top three export buyers were Belgium, Germany and Sweden, Sohler said.
Positive as exports look however, they are facing the same problem as domestic sales when it comes to foreign competition from Spain and Italy. The UK is one of the key buyers of French sparkling wines and Simon Field at Berry Bros. and Rudd has been importing them for the last 10 years. What he’s seen is firstly a move away from big name Champagnes to grower ones. “We now have 25 grower Champagnes on our list and they are all earning their keep.” Secondly, there’s the rise of Italian sparkling, particularly Prosecco. Thirdly, there’s the slow but sure development of the English category. “We now have Hambledon and eight to 10 others on our list. They are all quite expensive, because it’s expensive to produce, but they have quite a following.”
And finally Field mentioned those Spanish cavas. “For the first time in our 300-year history we have added cavas to our list,” he said. So there is a lot of diversification, but he admitted the focus on French sparkling wines outside Champagne might have suffered due to popularity of those from Italy and Spain. That’s not to say they’re off the BBR list either. “We do have a few, and the bestseller is a Berry’s Crémant de Limoux at about 3,000 cases a year. One of the reasons it sells so well is it’s a Berry’s own -abel and another is that it’s the cheapest sparkling wine on our list at £11.95 ($19.22). The next one up is a prosecco at £12.95,” he said.
