The Champagne Challenge

What could be a more daunting predicament than the one facing producers of sparkling wines?

Just about every possible bad break has befallen the industry that symbolizes celebration and happiness, and for a beverage that relies on happy times, little is looking very perky at the moment.

Still, there is a silver lining to all this gloom, and optimism reigns in some quarters where flexibility and creative marketing are at play.

First, let’s look back at the drawbacks that have devastated all bubbly makers worldwide.

The Drawbacks

The Faux Millennium Buildup: Early in 1999, advertising and public relations companies went into overdrive to convince the world that with the impending Millennium parties, the world would face a serious shortage of bubbly. No one did a scientific poll of those who would be consuming all this bubbly, but the hype was sincere.

Worldwide, the hype worked best on one class of person: wine merchants. Most didn’t truly believe their sales would skyrocket, but they couldn’t take a chance on being caught short. What if all the hype were accurate? they asked.

So most every wine merchant, from large well-funded discounters to supermarkets, mom-‘n’-pop shops, to delis, and including hotels, country clubs, and cruise ships all laid into larger stocks of bubbly than they would normally have bought in a typical New Year’s situation. It is estimated that retailers in the United States bought some 15% to 20% more bubbly than normal.

At the end of the year, total sparkling wine shipments to market were up 26% over 1998. In the United States, shipments of all bubbly leaped from just under 12 million cases in 1998 to 15 million cases in 1999.

And what happened? People essentially ignored all the high-priced celebrations, stayed home with friends and saved a lot of money. We bought more sparkling wine than ever, perhaps 5% (according to most estimates), but the shipment increase — which amounted to some 3.3 million cases — was still residing in the warehouses of merchants and hospitality firms at the end of the year.

Jon Fredrikson, president of the San Francisco consulting research firm Gomberg, Fredrikson and Assoc., said at the time that numerous businesses ended 2000 with huge stocks of sparkling wines, putting them in a cash crunch. And a lot of that wine carried over into 2001, blunting re-stocking efforts.

“A lot of resorts and nightclubs that were charging outrageous prices ended up with a whole lot of French Champagne and California high-end bubbly that they couldn’t sell,” he said.

Included among the wines in excess supply in 2000 were three of the most famous and expensive champagnes on any shelf — Roederer Cristal, Dom Perignon from Moet, and Krug.

Immediately before the faux Millennium, Krug Champagne was selling for $300 a bottle. When the demand for it fizzled, the price dropped by almost two-thirds. Similarly, Dom Perignon and Roederer Cristal both took sudden drops in price.

The leading California bubbly maker, Sonoma County-based Korbel, said it sold 1,635,000 cases in 1999, up from 1998 when the company did 1.3 million cases. A spokeswoman for the company said sales in 2000 dropped back to 926,000 cases.

The End of Public Relations: As if a huge oversupply to start 2000 weren’t enough of a headache, the leading Champagne news bureau, funded by the Comite Interprofessionel du Vin de Champagne, the Epernay-based, industry-funded agency, closed its U.S. offices in New York. Among the victims was an easy-to-remember toll-free phone number from which people were able to have questions answered.

Lacking a coherent public relations campaign had to have hurt the product.

The Economic Slowdown: Then there was the downturn in the economy, with literally millions of former well-to-do employed Americans suddenly finding themselves out of work. The collapse of a huge segment of the dot-com world, and the negative reverberations on related and ancillary businesses led to talk of a recession.

Weakness in the Stock Market: All of this had a devastating impact on the stock market. Almost overnight people’s investments were impacted. Additionally, interest rates on savings accounts plummeted, and by the spring of 2001 it was clear that there was little to celebrate. Even the Wall Street Journal canceled its popular, regular wine column.

Terrorism: Then came the coup de grace, the terrorist attacks on Washington and New York, followed by anthrax assaults to news and government workers. The launching of attacks on Afghanistan following a declaration of war has had the effect of persuading many people that even leaving one’s home for a night out to dinner was not worth the risk. Restaurants have been fairly empty. And those who stayed at home have had little to cheer about.

Other than the obligatory celebrations associated with June weddings and graduations, bubbly sales though most of 2001 have been in the tank, and little on the horizon indicated it would be returning to former levels very soon.

Answering the Challenge

Startlingly, however, in the 12-month period ending October 1, sales of all Moet et Chandon sales in the U.S. were ahead by 8%, attributed by market analysts to the strong support shown the brand by its marketing and public relations efforts.

Bertrand Steip, vice president and products group director for Moet et Chandon and Dom Perignon, said that even before the terror attacks, the company knew it had to deal with the weakening economy and took measures to support its various Champagne brands with pro-active campaigns.

The Brut Imperial, for example, was given an added target, local restaurants where dining didn’t take the major brunt of the weak economy, and where people still seem to be dining out. Moreover, he said, the company actively supported restaurants willing to pour Dom Perignon by the glass.

“We believe that off-premise sales will survive, but that on-premise sales need a bit more attention,” he said.

The problems in the economy are obvious, however.

By late 2001, two consumer surveys pointed to the fact that Americans were still buying wine, but they were scaling down the amount they spend on it. Moreover, we were buying less of it. In the surveys, few consumers said they had much to celebrate — an indication of the disinterest in all bubblies. BUBBLY2

Retail wine shop operators appeared a bit more optimistic that by early 2002, the public will have recovered from the shocks of the terrorist bombings, and will be prepared to resume life as normal as possible under the sad social conditions. In interviews with various retailers and wholesalers, many indicated that had the terrorist attacks occurred in late November or early December, such a recovery for sparkling wine likely would not have occurred in time for the 2001 holidays.

A spokeswoman for Champagne Veuve Clicquot put it best. Interviewed in mid-October, she said, “I think it’s still too soon to tell [whether champagne will be back for the Christmas holidays]. This situation is still unfolding, but I think people want to be optimistic. I think they’re looking for reasons to celebrate life.”

Todd Hess, wine director for the hugely successful Sam’s Wines and Spirits in Chicago, also was hopeful of a rebound.

“I don’t want to make any gross generalizations, but in the last few weeks [since the terror attacks] people seem to have gone from sparkling wines to other wines,” he said. “People are just not celebrating in the wake of the tragedy. And I’m guessing there may be a bit of a guilt factor — opening a festive wine while they’re still pulling bodies out of the rubble.”

But Hess looked a bit more coldly at the situation. “At some point, I think people will ask themselves, ‘What we are moping about for?’ As long as the economy is reasonably robust, and in most sectors it still is, I think they’ll soon say we have to move on.”

Mark Marcon, an advertising executive with Hargreaves, Charbonneau and Assoc. USA in Detroit, handles the Tosti Asti Spumante account, and since launching a new ad campaign for the brand in May, Tosti has sold 50,000 cases in Michigan alone, half of that in Detroit.

“We view Asti as alternative to French Champagne, but our whole philosophy now is that they are affordable replacements for Champagne,” said Marcon. “We’re concentrating on user-friendliness, as Asti as an everyday beverage, not just for special occasions.” He said the current campaign doesn’t mention Asti as a companion for dessert, but that message may be revived in a future campaign.

“Right now, we want people to think of it as not occasion-related,” he said, adding that the current ad push “has legs, it can be adapted to future messages. Certainly we don’t want to move away from its application at New Year’s parties, but it [the message] can also be blended to address its applicability to dessert.”

Tosti marketed some 340,000 cases in the U.S. last year, second to Martini and Rossi’s 725,000 cases, but slipped only 5% in sales to the latter’s 18% dip.

Domaine Chandon, California’s leading upscale methode champenoise maker, marketed 292,000 cases of all products in 2000, well off its all-time high of 465,000 cases of 1997 and 1998. However, a spokeswoman for the company said the Domaine Chandon brand was being re-positioned. The line was broadened in the last two years to include a larger percentage of upscale products, including the Brut Reserve, the top-of-the-line Etoile in Blanc de Blancs and Blanc de Noirs designations, more rosé wines, and a handful of specialty products.

“We’re looking to move toward a more non-occasion-driven strategy,” she said. “We can’t completely de-seasonalize the brand, but we’re now targeting a more lifestyle choice strategy.”

“Also, having a four-star restaurant here at the winery gives us the opportunity to pair Domaine Chandon with foods with sparkling wine.” Moreover, she said, “We used to sell a lot of wine to the airlines, and that market has been off for a long while now,” since well before the terrorist attacks, accounting for some of the winery’s sales decline.

Hess at Sam’s in Chicago said it took a month following the terror attacks before wine sales began to resume normal patterns, “and I was happy with that, I expected things to be down considerably for longer. But after a month or so, champagne began to rebound. That being said, I don’t see the wide corporate gift-giving this year that we have seen in the past. I think people will still entertain, but I detect that they’ll do it a bit more conservatively.”

He noted that some champagne houses are showing new and dramatic products, and among the ones he likes are Charles Heidsieck, and Nicholas Feuillate, with six new Grand Cru offerings.

Sales of most Spanish sparkling wines seem to be off, but Segura Viudas, Freixenet’s upscale product, is better than ever and sales continued at a steady pace, according to a spokeswomen for the company.

Dan Berger, wine columnist for the Los Angeles Times Syndicate, also publishes a weekly commentary and newsletter on wine, called Vintage Experiences. E-mail him at info@vintageexperiences.com, or call (888) 662-WINE.


Sparkling Wine Made Easy 6811CHAM1

Fermentation Methods

Methode Champenoise: traditional French process, which allows for a second fermentation, in the bottle in which the wine will be sold, creating natural carbonation in the bottle.

Charmat: also called the “bulk” process, in which sparkling wines are fermented in tanks.

Fermented in the Bottle: indicative of the “transfer” process, whereby the wine undergoes its second fermentation in the bottle; however, the wine is then emptied from that bottle, filtered and rebottled.

Levels of Sweetness (Dosage)

Brut Nature: Bone dry (0.0-0.5% sugar)

Sec, Dry: Noticeable sweetness (1.7-3.5% sugar)

Brut: No perceptible sweetness (0.5-1.5% sugar)

Demi-Sec: Very sweet (3.3-5.0% sugar)

Extra Dry: Slight sweetness (1.2-2.0% sugar)

Doux: Extremely sweet (more than 5.0% sugar)

Other Useful Terms

Blanc de Blancs: Wines made primarily from chardonnay or other white grapes.

Blanc de Noirs: A white or slightly tinted wine made from red grapes.

Cava: The Spanish term used for sparkling wines made using the traditional champagne method.

Champagne: Sparkling wine made in the Champagne region of France using the traditional champagne method.

Cuvée: A blend of several still wines designed to become a well-balanced sparkling wine.

Disgorging: The process by which the sediment collected in the neck of the sparkling wine bottle during the riddling process is frozen and expelled prior to final corking..

Dosage: The liqueur (sugar dissolved in reserve wine) added to sparkling wine just before final corking, determining the level of the wine’s sweetness.

Mousse: The ring of foam around the top of a glass of sparkling wine.

Prise de Mousse: French term describing the effervescence created in the sparkling wine bottle during the second fermentation.

Riddling: The art of turning and tilting bottles of sparkling wine in order to ease the sediment into the neck of the bottle.

Sekt: The German designation for sparkling wine.

Spumante: The Italian term for sparkling wine.

Tirage: The process of bottling the cuvée with the addition of active yeast and sugar in order to induce a second fermentation.

Vin Mousseux: French sparkling wines produced outside the Champagne region of France.

Courtesy of Domaine Chandon.

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