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September 20, 2007

Is Champagne a Victim of its Own Marketing Success?

Posted in: Comment

Those interested in the world of wine have probably heard the bad news by now: the world is running out of Champagne. At least, this is the news coming from the Champagne producers themselves. The president of Moët & Chandon, Frédéric Cumenal, recently told the French financial paper Les Echos, “For thirty years, the industry has always succeeded in coping with demand. Today that’s no longer the case. We’re at maximum yield and we will soon hit a wall.”

There are several causes, most of which are generally good news. Economic growth in developing countries like China, India, Brazil, and Russia has created a rapidly emerging market for a wine commonly associated with “the good life.” China alone has seen a thirty-fold increase in annual sales, from 16,000 to 500,000 bottles last year. Second, many blame France’s strict regulations, which prevent wines produced anywhere else in the country from being called Champagne. Finally, many Champagne growers are holding onto portions of their stock, either as a buffer in case of a bad harvest year, or to sell at a higher price once they retire.

What makes Champagne, the sparkling wine from a particular part of France, so much more popular than the bubbly of New Zealand or California’s Napa Valley? In a word: Image.

As wine writer Hugh Johnson notes in his Wine Companion, “The success of Champagne has always been based on shrewd marketing, ensuring its reputation worldwide as the only suitable wine for any celebration.” This has two components—the positive connotation of the name “Champagne,” and the fact of short supply itself.

The Champagne region of France, where this sparkling wine is produced, is fiercely protective of its name. While sparkling wine is actually made all around the world, other producers, especially in Europe, are prohibited from using the name “Champagne” on any of their wines. The term “Champagne” therefore exudes an air of exclusivity—it is the only sparkling wine in the world grown according to centuries of tradition and to the exacting standards of the French government. “Champagne,” while simply a geographical region, has thus also become a world-renowned brand.

For well over a hundred years, Champagne producers have cultivated their product’s image as an essential component of luxury living. As early as 1866, Moët commissioned the popular English performer George Leybourne to write and sing songs extolling the virtues of Champagne as a reflection of taste, affluence, and the good life. In the late 1800s, Champagne producers successfully marketed their products to the middle class by promoting the wine’s image as both the royal and aristocratic families’ beverage of choice and as a luxury enjoyable by anyone, for any occasion. And today, both Krug and Dom Pérignon, two of the top Champagne brands, are owned by the French luxury goods conglomerate Louis Vuitton Moët Hennessy.

But could Champagne actually be hurt in the long run? Increased global demand for Champagne, met with a limited supply, may lead many people to start shifting their tastes and preferences toward more readily available, and affordable, supplies of sparkling wine from other regions of the world. If people find it to their liking, global demand for Champagne may decline. And yet, this is unlikely: Champagne’s image of quality, tradition, exclusivity, and luxury will almost surely keep the region on top of the sparkling wine market. The region may be at peak production, but as a limited supply meets an ever-increasing global demand, Champagne prices will simply go up. This is good for Champagne, and for all those involved in producing the wine.

Ultimately, it is the consumer who will be most affected by the coming Champagne shortage. For those with the money, and the will to pay it, finding a bottle of Champagne will never be an issue; everyone else may soon have to look elsewhere. And in the end, as prices increase, Champagne’s image as a luxury good will only be strengthened.

Benjamin Newell is a writer living in Washington, DC. He and his girlfriend blog about wine at Undressing the Grape.

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