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Europe drags on Moet Hennessy Champagne sales

New figures show weaker demand for Champagne in Europe has weighed on Moet Hennessy and its owner, LVMH, in the firms' financial year-to-date, but the groups are optimistic for the 2013 harvest.

(Dom Perignon is growing strongly in Japan and the US)

The pace of Champagne sales growth at Moet Hennessy has slowed in 2013, with volumes up by 2% for the nine months to the end of September. Volumes increased by 4% in the same period of 2012.

‘It’s not entirely satisfactory,’ said Jean-Jacques Guiony, chief financial officer of Moet Hennessy’s parent firm, luxury goods group LVMH, on a results conference call.

Its figures offer more evidence of Champagne consumption shifting to newer markets, with Asia ‘growing very fast’ off low volumes and Veuve Clicquot and Dom Perignon attracting more drinkers in the US.

However, in Europe, the picture for Moet’s Champagne business remains less rosy, against a backdrop of austerity politics. ‘In Europe, we’re still negative in volume terms [versus 2012],’ said Guiony.

But, he said the third quarter was more encouraging. ‘We’ve seen a bit of an improvement in the third quarter versus the rest of the year.’

In total, Moet Hennessy’s wine and spirits sales rose by 3% for the first nine months of 2013, to EUR2.84m. Cognac sales were constrained by ongoing subdued demand in China.

In wine, Guiony was optimistic on the 2013 Champagne harvest. It is still early days, but the group expects to achieve yields of 11,000kg per hectare, versus an average of 8,800kg in 2012.

Champagne’s ruling body, the CIVC, has set a maximum yield of 10,000kg for 2013, but houses and producers can put extra supplies into their reserves.

Yields have been under pressure in some areas, due to poor weather during flowering and hailstorms in the Cote des Blancs.

But, Guiony’s confidence was echoed by family Champagne house Cattier. ‘We have had beautiful quality this year, and we expect 2013 will become a vintage year for us,’ said Philippe Bienvenu, Cattier’s commercial director.

A CIVC spokesperson said it is too early to call the harvest. But, ‘there is a general feeling that we have been luckier than some other [French] regions, which have been more heavily damaged by hail’, he said.

Written by Chris Mercer

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