Champagne sales have suffered a “huge decrease” since the coronavirus lockdowns began, but it’s also believed that this great marker of celebratory times could resume “normal business at the end of the year”.
With almost all gatherings over the next two months across large parts of Europe cancelled or postponed, and bars and restaurants closed, it should come as little surprise that Champagne sales would be seriously affected, especially as the nations worst-hit by the pandemic are some of Champagne’s biggest markets: Italy and Spain, as well as its largest of all – France.
But while some sectors of the drinks trade, especially entry-level to mid-range wines, along with fortified wines such as Port, are seeing a spike in demand through retailers, be they supermarkets or online drinks specialists, Champagne is not one of them.
A sparkling wine that is not only tied to toasting wonderful moments, but also positioned primarily at the top end the market, was always going to suffer with the spread of a global health crisis, and the hit has been severe.
Indeed, speaking to the drinks business this morning, co-president of the Comité Champagne, Jean-Marie Barillère, said there had been “a huge decrease” in sales of the great and famous fizz.
Commenting specifically about the French market, which represents almost 50% of Champagne sales by volume, he recorded “no activity in restaurants, bars and hotels”, which are closed during the lockdown in his home nation, and represent around one-third of the market for Champagne.
While he couldn’t comment on the effect of Covid-19 on a further third of the Champagne market in France – “direct sales” – he did share figures with db to show the huge hit to the final third of the market, which is the retail sector.
“We have a 70% decrease in sales [of Champagne] in supermarkets and hypermarkets in the last two weeks in France, so there has been a huge decrease,” he said.
Commenting more generally, he stressed that the pandemic would negatively effect Champagne more than any other drink.
“We are the drink that will be the most affected by the crisis, because we are the drink of celebration, and we are a luxury drink at the same time,” he said.
“When you are in a crisis, and we are in a crisis, this is a war against a virus, you are not drinking Champagne… so we know this will be serious [for Champagne], although how serious depends on the length of the crisis.”
On the subject of the amount of time that the Champagne business may be impacted, Barillère said that the it would be related to the speed at which a solution is found to Covid-19 in terms of an effective vaccine.
However, he also said:
“We hope to have a normal business at the end of the year.”
Crisis of 2008
When asked if he could compare the impact of the coronavirus on the market for Champagne to the global financial crisis from late 2008 onwards, he said that it was “difficult” to find similarities.
Nevertheless, he said that the impact of Covid-19 “is much more serious in terms of the drop of activity”.
Although Barillère did not want to give any predictions on how much the Champagne market might shrink, this comment suggests that the impact will be great, as the global financial crisis saw total shipments of Champagne fall from a peak in 2007 of almost 340 million bottles to 293m by the end of 2009 – a decline of almost 50m over just 2 years.
Should a similar decrease be seen for Champagne due to Covid-19, considering shipments for 2019 totalled 297.6m bottles, we could be looking at a worldwide market of 250m or smaller.
But Barillère does believe that the current “serious” situation for Champagne will be short-lived.
“It is much more serious in terms of the drop in activity [for Champagne, compared to the GFC], but the reaction of governments from around the world is much quicker, for example, with their help for cash positions,” he said.
“So I think that the drop will be bigger but I hope it will be shorter and I hope there will be a quicker return to where we were, but I don’t know when [this return will begin], so it’s frightening, but it’s frightening not just for Champagne, but all sectors.”
The sudden drop in demand for Champagne due to Covid-19 is particularly marked because it comes on the back of a record-breaking year for the French fizz.
2019 saw Champagne reach its highest ever turnover, breaking the €5 billion mark for the first time in its history, while the start of this year was also very strong in terms of sales of the sparkling wine.
“The beginning of 2020 was good in terms of consumption and moral – and now it’s another world,” Barillère summed up.
Should the situation not improve in Europe by the end of the summer, Champagne, along with all agricultural sectors, will face another problem – a lack of workers to harvest the produce.
With grape picking in Champagne performed entirely by hand, and primarily done by temporary migrant workers from Eastern Europe, should travel bans continue, the sparkling wine region won’t be able to bring in its harvest.
Should “sanitary measures” remain in place in France in late August and early September, Barillère admitted that “we don’t know how to handle the grape picking in Champagne… but it’s the same for all agriculture”.
While he said that the region was just starting to discuss a contingency plan, he was also hopeful that by harvest time, the situation in France and across Europe will have dramatically improved.
Commenting that the Covid-19 infection rates in his home nation were falling, he said that “we continue to cross our fingers, and if it disappears by summer, then that will be fantastic news for everyone.”
And, once the lockdowns are over, and plans for a vaccine are in place, there is one thing people will want to do, and that is celebrate – with Champagne of course.
Source: The Drinks Business