The French champagne industry has been faced with an unprecedented economic crisis due to the coronavirus pandemic, with sales likely dropping 30-35% this year, the Comité Champagne Committee said.
In this situation, winemakers still rely on the strategy of producing an elite drink, which is famous all over the world for its quality, and take all measures to prevent a drop in prices.
“The economic situation is very difficult, unprecedented, more serious than in 1974 and in 2000. We expect that the volume of deliveries this year maybe half as much as in 1974 – after the oil crisis when champagne sales fell by 15%. We expect this to be the biggest crisis for the industry, “said Thibault Le Mayoux, director of communications at the Champagne wine committee.
According to him, champagne sales this year may fall by 30% -35% (which is 100 million bottles) compared to last year. Thus, trade may decline by 1.7 billion euros.
The representative of the union cited data according to which, the supply of champagne for the period from January to April 2020 decreased by 25.6% compared with the same period last year. However, he pointed out that half of the volume of champagne is sold in the last four months of the year – from September to December. “Therefore, all expectations are aimed at the sanitary situation that will be in the world at the end of summer. This is the period that will be key for the industry,” says Le Mayu.
“Naturally, this crisis (СOVID-19) hit the industry hard and made it necessary to review the methods that we will be guided by in the production of champagne and the methods that we are committed to in the champagne market,” he continues.
Most of the work in the vineyards is done manually, so first of all it was necessary to restructure the logistics and ensure the safety of people in an epidemic, the representative of the union explains.
In connection with the crisis, champagne producers turned to the state for help, this applies, in particular, to provide loans under state guarantees and exemption from a number of social contributions.
The Champagne Wine Committee also decided that only part of the 2020 harvest will be bottled on January 1, 2021. “Another part of this year’s harvest will be bottled only from January 1, 2022. This is done so that companies can avoid significant financial burden when storing large stocks,” Le Mayou explained.
While manufacturers of other wines in France requested subsidies from the state for processing unsold stocks of beverages into industrial alcohol, in particular for the production of sanitary sanitizers, Champagne winemakers chose a different path. “Champagne producers prefer to increase their stocks and not destroy the wine. Since the process of producing champagne is very expensive,” he said. Le Mayou said that today champagne stocks already amount to 1.35 billion bottles and this volume may increase.
Champagne winemakers also called on the state to strengthen the law on the balance of trade relations in the agricultural and food sector. This was done in order to avoid the sale of champagne at a low price by companies that faced financial difficulties. Big discounts on an elite drink negatively affect its image, Le Mayou notes.
“As a result of the adoption of this law (in 2018), distributors in France do not have the right to set prices for champagne below a certain limit. Previously, you could buy two bottles of champagne and get a third for free. Today, when you buy three bottles of champagne, the fourth can be offered as a gift. Thus, the discount maybe 30%, but not 50%, “he explained.
“We asked to strengthen this law since the too strong promotion of champagne on the market negatively affects its image,” the representative of the Champagne committee believes.
He also emphasized that the economic situation of the industry should not be an excuse to slow down the transition to environmental production, which began 20 years ago. “During the crisis, we noted that consumers in France, in general in Western Europe and other countries of the world are even more committed to responsible environmental production. And the crisis even strengthened this trend,” Le Mayou pointed out.
“As we continue environmental transformations, the production cost will only increase. Because producing grapes according to old methods are much less expensive than environmentally responsible production. And this requires investment in equipment, in staff training,” the agency’s source said.