TOASTING THE MILLENNIUM

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You want an interesting scenario? Try this one on: In 1997, some 12.7 million cases of sparkling wine were sold in the U.S. By at least one projection, that figure will balloon to more about 17 million cases next year.

How about this statistical projection: Retail revenues for all sparkling wine and champagne in the U.S. last year was about $1.0 billion. In 1999, that figure could rise, conservatively, to nearly $1.7 billion.

These are projections, and where these numbers come from is less important than why someone would be willing to project them. It is all in the planning for the millennium parties, and this includes not only what Americans will do, but also people from all over the world.

The projections above come from David Brown, vice president for marketing at Gloria Ferrer Champagne Caves in Sonoma County, and the man who also markets Freixenet of Spain, the largest-selling imported sparkling wine in the U.S. with 750,000 cases sold here in 1997.

Brown’s assessment of the “millennium crush,” an impact that already has made an appearance in the U.S. wholesale market, seems to be quite conservative. Of course, no one can foretell the future and what the consumer actually will do, but his thinking clearly is sound. (See sidebar)

Meanwhile, despite a few “stock market corrections,” the success of the U.S. economy, especially over the last two years, already has created many celebratory moments throughout the U.S., and 1997 statistics prove the point:

Almost as much French champagne was sold in the U.S. last year as in the all-time record year of 1987. With French champagne being the clear worldwide standard for such products — and not generally an inexpensive wine — it’s a clear indication we are continuing to celebrate.

According to statistics from the Champagne Wine Information Bureau in New York, some 1.28 million cases of French bubbly were sold in the U.S. last year, compared with 1.1 million cases the year before. The all-time record for French champagne sales in the U.S. was in 1987, when 1.32 million cases were sold here. Overall imported sparkling wine sales posted a 1.5% sales increase nationally in 1997.

At the same time, California sparkling wine sales con tinued to rise, jumping 2.5% in 1997 over 1996, according to the authoritative Adams Wine Handbook 1998 — and almost all of the growth has come from upscale brands that sell for $10 or more.

HOW CHAMPAGNES ARE MADE

How does bubbly get bubbly? French Champagne bottlers are proud of the méthode champenoise, a system of carbonating wines perfected 300 years ago. This same method is used by many producers in California, Spain and elsewhere, although elsewhere it is often referred to by different names.

Here are descriptions of the méthode champenoise and other commonly used methods:

Méthode champenoise: Grape vines are planted, pruned and trained in ways that keep vines low for maximum sun exposure. Grapes are picked by hand, then pressed. In cellars, the juice is put into vats or casks, where it ferments for a few weeks until it turns into wine. Different wines are then carefully combined. Cane sugar and yeast are added to the wines, which are then bottled, corked and stacked on their sides in dark, cool, chalky cellars. The sugar and yeast together cause a second fermentation in the sealed bottles, thus the sparkle. The bottles then remain in the cellars for several years to age. During this time, dead yeast cells form sediments, which are removed by a process of riddling and disgorging. A small amount of wine and sugar (the dosage) is added to each bottle according to the desired type: brut (very dry), extra-dry (slightly sweet), sec (medium sweet) or demi-sec (sweet). Finally, the bottles are labeled and re-corked.

Transfer: As in the méthode champenoise, the wine ferments for the second time in the bottle, but instead of riddling and disgorging, this method involves transferring the wine to a tank and letting the sediment sink to the bottom there. It is then given a dosage and filtered, all while under pressure.

Cuve close, charmat, bulk or tank: These processes begin like the méthode champenoise, but the second fermentation takes place in a stainless steel pressure tank instead of in bottles.

Carbonated or injection: With this method, still wine is chilled in an enclosed tank, then carbon dioxide is pumped in, and the result is bottled under pressure. Soft drinks are made the same way.

Sparkling wines are also made by a number of other less common processes, including the original method of champagne production, the méthode rurale, in which the wine is left in the cask, and contact with yeasty sediment, together with warm weather, causes bubbles.

Leading merchants say that a small part of the demand in 1998, but one that is increasingly on the minds of wine lovers, is planning for the “millennium parties” scheduled for December 31, 1999.

It’s true that the real millennium isn’t until a year later, but already there is an indication that bubbly is on the minds of many — not the least of them retailers who are stocking shelves in anticipation of a 1999 rush to lay in quantities of sparkling wine and champagne so as not to get shut out for the New Year.

One major Southern California retail chain called Brown at Gloria Ferrer and asked if he could guarantee about 65% more of his Gloria Ferrer sparkling wine in 1999. Brown said it was not an order for the product, just a request that the product be available if needed.

“No one wants to make a one-shot product,” said Brown, adding that it takes at least 18 months to make fine quality sparkling wine, and that when he got the request for so many additional cases, it was already less than 18 months from the time that the wine would be needed.

All bubbly typically sells predictably slowly for 11 months of the year and then leaps into the stratosphere as people ready themselves for the onslaught of partying that accompanies the changing of calendars. About half of all champagne and sparkling wine sales occur in the last quarter of the year. Will this pattern change in 1999? No one knows.

By this past summer, however, there already was a level of excitement at wholesale for all bubbly. There was a great deal of nervousness — as if people were asking, “Will bubbly sales this year forecast what will happen a year from now?” The coming months offer optimism for the major — and even minor — champagne houses.

Jean-Louis Carbonniere, head of the Champagne Wine Information Bureau, notes that U.S. sales of French champagne were flat or down from 1987 through 1992, and have slowly but very steadily been on the rise since then.

An interesting point, Carbonniere said, is that since 1982 champagne sales in the U.S. have more than doubled, and that in 1996 champagne sales increased more than 6%. That was followed by the 1997 increase of 14%, and that figure is expected to rise significantly in 1999.

Moreover, the demand for prestige bubbly, the so-called Grand Marque Prestige Cuvees, continued to rise even faster, on a percentage basis, than for the relatively lower-priced brands.

“The economy is doing well and the confidence we saw among consumers last year has continued,” said Carbonniere. He added that the depressed nature of the French franc has allowed prices for non-vintage Brut to remain below $25 a bottle in most cases, with some of the better-known houses keeping prices below $20.

Illustrating the success of higher-end brands, Moet & Chandon registered an 8.8.% increase in sales in 1997, hitting 680,000 cases, and Veuve Clicquot sold 170,000 cases, up a whopping 25.9% from the 135,000 sold here in 1996. And that’s on top of a 24% gain the prior year. G.H. Mumm and Perrier-Jouet, both imported by Seagram Chateau & Estates, also saw a sales increase, up 5.3% and 5.9% respectively.

The two leading brands of Asti Spumante, Martini & Rossi and Tosti, also showed sales increases in 1997, rising 1.6% and 6.0% respectively, to 620,000 and 300,000 cases.

The only major losers among the top 10 were both Spanish brands, Freixenet and Codorniu.

Among the domestic brands. E&J Gallo’s value-priced Andre remained top dog at 2 million cases, but sales were off 2.4%. And Gallo’s other three sparklers, the Asti-like Ballatore (650,000 cases), Tott’s (275,000) and Eden Roc (235,000) were all marginally off from 1996 totals.

On the other hand, Cannadaigua’s value-priced sparklers, Cook’s and J. Roget, both upped their sales in 1997. The second-best-selling Cook’s hit 1.63 million 9-liter cases (up 1.9%) and J. Roget (up 1.5%) reached 690,000 cases, making it the fourth-best-selling sparkler in the U.S.

Brown-Forman’s Korbel continued its climb, once again selling more than 1 million cases nationally, for a 2.9% increase.

Another major mover among California sparklers was Domaine Chandon, which went from 432,000 cases to 465,000 cases, a 7.6% leap.

Domaine Ste. Michelle’s sparkling wine, which uses Washington State fruit, has been the surprise winner in the growth game over the last few years. The winery sold an estimated 148,000 cases in 1993, and that ballooned to an estimated 251,000 cases in 1997, growth that works out to nearly 70% over four years, including a nearly 18% leap in 1997 over 1996.

At the retail level, in all price categories, only a small increase had been seen through the summer of 1998. Barry Herbst, wine manager for Vendome Wine and Liquor in Beverly Hills, while optimistic about champagne sales for 1999, said, “It seems to have leveled out for now, especially at the lower price points. There is some growing interest in the prestige cuvee champagnes, and I’ve had pretty good luck moving people into Domaine Carneros’ ‘La Reve’ and Schramsberg’s ‘J. Schram,’ which is doing better than I would have expected, given the price point ($50).

Carbonniere said all champagne makers are hoping that the talk about bubbly for the millennium will carry over into the next century. And to kick-start that interest, the Champagne Wine Information Bureau is staging a contest open to all U.S. residents.

Champagnes France Challenge is a contest about the world’s most famous bubbly. Each participant can fill out a questionnaire to test his or her knowledge of champagne. Entries will be judged by a panel and five regional winners will be flown to New York for the Grand Finale on November 18. The grand prize is an all-expense-paid trip to Champagne for five days.

Naturally, many other sparkling wine suppliers will be promoting their brands throughout 1999, and tying them into the millennium whenever they can. Said Freixenet’s Brown, “I simply cannot recall an event where the entire world wants a single food product like this.”

And, of course, Brown, as well as all suppliers and retailers, hopes the predicted champagne and sparkling wine sales increase awakens consumers to the possibilities and pleasures of bubbly and continues into the new century.


Dan Berger’s wine column is carried by the Los Angeles Times Syndicate, and he also publishes a weekly newsletter on wine, “Vintage Experiences” e-mail: RLLS92A@PRODIGY.COM


Millennium In A Bottle6811CH1

If the importance of the millennium for champagne and sparkling wine sales has not yet sunk in with your customers, Korbel is one of several companies that is taking steps to change that. Indeed, Korbel Champagne Cellars, a sponsor of the “Times Square 2000” celebration, has debuted new millennium packaging on Korbel Brut, Extra Dry, Brut Rosé and Blanc de Noir. The new design features the Times Square logo prominently displayed on the neck label and a medallion on the face label identifying Korbel as “The Official Champagne of the Millennium.”

Korbel has been developing its millennium marketing plans for more than four years, according to Gary Heck, Korbel’s president and chairman, and Korbel will feature millennium promotions throughout 1999. The new design featured on the bottles will be incorporated into all forms of packaging, advertising and promotion throughout the year.


LEADING BRANDS OF IMPORTED CHAMPAGNE & SPARKLING WINE
(Thousands 9-Liter Cases)
Brand Supplier Origin 1996r 1997 % Change
Freixenet Freixenet USA Spain 816 750 -8.1%
Moet & Chandon Schieffelin & Somerset France 625 680 8.8%
Martini & Rossi Asti Bacardi-Martini USA Italy 620 630 1.6%
Tosti Asti Tyfield Importers, Inc. Italy 300 318 6.0%
Veuve Clicquot/La Grande Dame Clicquot, Inc. France 135 170 25.9%
G.H. Mumm Seagram Chateau & Estates France 95 100 5.3%
Perrier-Jouet Seagram Chateau & Estates France 85 90 5.9%
Cordorniu Canandaigua Wine Co. Spain 95 65 -31.6%
Piper Heidsieck Remy Amerique France 62 61 -1.6%
Taittinger Kobrand France 55 56 1.8%
Total Leading Brands 2,888 2,920 1.1%
Others 549 569 3.6%
Total Imported Sparkling 3,437 3,489 1.5%
(r) Revised. Source: Adams Wine Handbook 1998.

Big Upside

David Brown of Gloria Ferrer, one of the nation’s savviest marketing executives, did a thorough (although admittedly seat-of-the-pants) analysis of the potential for champagne and sparkling wine sales in the U.S. for 1999.

“We think all champagne and sparkling wine sales in the U.S. will be up 35% in 1999,” said Brown, who has published part of this thesis in a brochure called “Millennium Planning Guide for Retailers and Restaurateurs.”

Brown added, “We feel that most of the producers who make a methode champenoise product will run out before the end of the year.”

I asked Brown if Gloria Ferrer had plans to increase production this year for next year’s demand. He said it was too late. This year’s grapes are now fermenting a second time to develop bubbles and complexity, and sales of this wine cannot begin until mid-2000.

And even if the winery had wanted to do something in 1997, “We don’t have the capacity; we’re already swimming as fast as we can swim,” he said.

His analysis is based on the fact that the millennium parties are “a once-in-a-lifetime celebration, which will be getting year-long media attention. Cruise ships, Las Vegas [hotels] and major New York hotels have sold out. And keep in mind that December 31, 1999, falls on a Friday and people in the entertainment business say that they do 20% more business if a New Year’s falls on a Friday or Saturday night.”

Here is Brown’s analysis:

“There are 270 million Americans, and an adult population of 182 million. There are 43 million adults who bought at least one bottle of sparkling wine last year, which leaves a remaining number of 139 million potential sparkling wine consumers.

“Now, let’s assume that 50% of these new potential sparkling wine consumers have only one glass of champagne or other fine bubbly pressed into their hand during the course of the year. That’s 69.5 million glasses of bubbly.

“If there are 72 glasses of sparkling wine in a case, that’s 965,000 additional cases of wine that we’ll need in 1999.

“OK, now let’s go back to champagne drinkers who had at least a bottle last year. Let’s assume they increase their consumption by one bottle. That adds another 3,583,000 cases to the number.”

By adding the 3.6 million cases that today’s drinkers will add to their shopping list to the nearly 700,000 cases that will be sold to those who didn’t drink sparkling wine last year, we can see that sales of all bubbly will rise to a conservative estimate of 4.4 million cases more than the 12.7 million that were sold in the U.S. in 1997, a 35% increase — for a total of more than 17 million cases.

Also, there is the price increase that Brown projects.

The ACNielsen wine survey estimates that the average price of a bottle of bubbly in the U.S. last year sold for $6.89. That’s about $83 per case times 12.7 million cases, or just over $1 billion.

Brown suggests that the strong U.S. economy will prompt consumers to trade up to an $8 per bottle average. “We predict, then, that with 17 million cases sold, revenues will rise by some 65%, to about $1,650,000,000.”

LEADING BRANDS OF DOMESTIC SPARKLING WINE
(Thousands 9-Liter Cases)
Brand Supplier 1996r 1997 % Change
Andre E & J Gallo Winery 2,050 2,000 -2.4%
Cook’s Canandaigua Wine 1,600 1,630 1.9%
Korbel Brown-Forman Beverages 1,040 1,070 2.9%
J. Roget Canandaigua Wine 680 690 1.5%
Ballatore E & J Gallo Winery 655 650 -0.8%
Domaine Chandon Schieffelin & Somerset 432 465 7.6%
Tott’s E & J Gallo Winery 276 275 -0.4%
Domaine Ste. Michelle Stimson Lane Vineyards 213 251 17.8%
Eden Roc E & J Gallo Winery 238 235 -1.3%
Chateau Napoleon Weibel Vineyards 125 129 3.2%
Total Leading Brands 7,309 7,395 1.2%
Others 1,566 1,705 8.9%
Total Domestic Sparkling 8,875 9,100 2.5%
(r) Revised. Source: Adams Wine Handbook 1998.

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