Finding the fizz- The Champagne Millennium

As clocks chimned in the new millennium, party revellers drank more Champagne than ever. Giles Fallowfield tells how the Champenois met the demand for this Champagne Millennium.

As anyone walking in the crowds massed each side of the River Thames in the early hours of January 1st, 2000 witnessed, Champagne was the drink to see the new millennium in with. More than 20 tonnes of empty Champagne bottles were cleared off the streets of central London on New Year’s day after this Champagne Millennium. Britain’s major supermarkets alone sold 542,000 bottles of the sparkling wine in the week between Christmas and the New Year.While the majority of these may not have been Cristal, Krug or Dom Pérignon, imports of special cuvées – that’s almost any fizz in fancy packaging sold at a fancy price – rose by 449% to 2,611,821 bottles in 1999. Last year sales of jeroboams, methuselahs, salmanazars, balthazars and even nebuchadnezzars (that’s 20 bottles worth in case you didn’t happen to be around when one of the 209 examples was opened) all more than quadrupled too.

Overall, a record 32 million bottles of Champagne were shipped to the UK in 1999, nearly double the amount imported as recently as 1995, and up over a third on 1998, itself a record-breaking year. While it’s the biggest single market for Champagne outside France in terms of both volume and value, shipments to the UK did not grow in isolation. The 14 other countries where Champagne consumption is highest all increased their imports of fizz, with the sole exception of Germany, where shipments fell by 9.4%, although even this figure doesn’t really represent a general decline in sales but rather a major cutback in the availability of really cheap ‘premier prix’ Champagne sold through discount stores like Aldi.

The USA overtook Germany as the second most important export destination for Champagne, with shipments up 40% to 23.7 million bottles. Exports to Belgium and Italy, respectively fourth and fifth in the export league, also rose by 13.5 and 15.6%. Shipments to Canada, Sweden, Ireland and Singapore soared by 50% or more.

The average growth in all export markets was 20%, with over 23 million extra bottles supplied. Only the French themselves appeared underwhelmed by the Millennium hype, with domestic shipments rising by just 6.46% and sales through the off-trade actually falling by about 6%. This can again be partly explained by the near-complete disappearance of the ‘premier prix’, a deficit the major brands could not make up.On the supply and demand front for the market as a whole, however, for once, the Champenois appear to have got it right. There was no actual shortage, even though the worldwide market grew by over 10%. And annual volume soared into new territory up around the 325-million bottle mark, some 35–40 million more than ever before. The Champenois were greatly helped in planning to meet this increased demand by the fact that Champagne consumption has been on a steady upward path for seven years now. A record level of sales would almost certainly have been realised without the Millennium hype, although this is thought to have added at least 30 million extra bottles.

The big question is what will happen now. If worldwide demand increases by another 10% in the year 2000, this will set alarm bells ringing. The appellation in its present form cannot satisfy annual demand for 360 million bottles. The highest yield permitted of 13,000 kilos per hectare would produce around 330 million bottles, assuming all the vineyards in the Champagne district could realise this level in any given year. Between 1996 and 1999, under a four-year contract between growers and producers, yields were set at a maximum of 10,400 kilos per hectare, which is the equivalent of 275 million bottles. Shipments first exceeded this theoretical production level in 1998, but, since 1995, actual production levels have only reached the maximum permitted yield in 1998 and 1999.

The Champenois have managed the difference between supply and demand partly as a result of steadily building up stocks over and above prevailing demand levels during the mid-1990s. The qualitative reserve or so called blocage has also played an important role. In years when the harvest is abundant and more grapes are available than the permitted maximum yield, some extra wine may be put into reserve if the appellation authorities allow it. Thus, in the 1992, 1993 and 1994 vintages, the equivalent of around 130 million bottles of Champagne were put into the blocage for possible future use at times of shortage.

Wine from the blocage was used to bump up the small harvest in 1997, and further amounts from this reserve have since been used to meet the predicted Millennium peaks and offset any shortfall. The equivalent of 36 million bottles were released in April 1998 (because this wine only gets the official appellation on its release it could not have been sold before August 1999, 15 months after it was put in bottle, having undergone the basic minimum ageing requirement for non-vintage Champagne) and a further 74 million bottles from the blocage were released at the start of 1999.

Even so, the Champenois would be hard pushed to satisfy another large increase in demand in 2000. Fortunately, the predictions are that consumption will fall from the 1999 peak, although sales are expected around the 300-million bottle mark, again ahead of production, unless permitted yields are raised considerably. A new contract between growers and the major houses they supply with grapes is currently being negotiated. Under this agreement, permitted yields are bound to rise, perhaps to a maximum of 11,400 kilos per hectare, the equivalent of some 300 million bottles in production. The price paid for a kilo of grapes (1.2kg of grapes are needed to make one bottle of Champagne) is also sure to rise from the level of FF25.5 set for the 1999 harvest, probably by a least one franc, perhaps more.

Pressure on selling prices will inevitably increase. Two major international brands Lanson and Bollinger have already announced £2-per-bottle increases at retail in the UK, a market which is already paying well over the odds for its Champagne. The Champenois will have to tread very carefully if they want to avoid price eascalation. Memories of plummeting sales in the early 1990s ought to provide incentive enough.