Early reports are of a reduced crop in Champagne in 2012. The changeable and challenging conditions of 2012 (the year that summer forgot) made for significant attacks of mildew, and uneven ripening in the Pinots in particular. Strict selection was essential. Average yields are estimated to be down about 25%. So far, pronouncements on overall quality are circumspect. The attention is on the small crop.
You might wonder whether it matters that much. Surely the world is not clamouring for Champagne at the moment. What about the recession? In fact, Champagne exports are rising again, after steep declines in 2008 and 2009. According to figures from the CIVC (the inter professional body for Champagne) 2011 saw the best export figures since the record breaking year of 2007.
The rapid growth in desire for Champagne in emerging markets grabs the headlines, and imagination. At a recent Acker Merril auction in Hong Kong, 47 World record prices were set for Champagnes, of which 12 were for Krug, eight for Roederer and six for Salon. Martin Lea, the General Manager of BWI’s Hong Kong office, reports “All of the lots sold and there was a real buzz for the older vintages. Since the auction I have been selling younger vintages of these wines to clients who have a long term investment strategy.”
Behind the rapid growth in Hong Kong, China, India and elsewhere in Asia are small volumes, however. The only way is up, sales-wise. Small wonder that the major Champagne Houses are investing so many resources in nurturing this still infant demand.
Elsewhere, more established markets are resurgent as Australia, Japan and especially the US ‘return’ to Champagne. Western Europe still accounts for 80% of Champagne exports, and we are holding steady. Last year the Brits imported over 30 million bottles of Champagne, making us a major customer. It seems consumers – Champagne consumers at least – have adjusted to the new world order and have decided that life must go on. Or perhaps we are just fatigued with austerity.
All this doesn’t necessarily make for a Champagne shortage, however. While Champagne is planted to maximum capacity (uniquely, for any wine region in the world), the Champagne industry has refined over decades a sophisticated structure for manipulating production, prices and demand.
For one thing, Champagne vineyards produce what must be (correct me if I’m wrong) the highest yield of any fine wine region in the world. The limit, set by the CIVC, is 12.5kg/ha. Of course, some vineyards produce much less than this. But the point is that very good Champagne can be, and is, made at yields that would make a Burgundian’s eyes water.
The internal regulation of the Champagne industry is admirably cohesive. Its structures exert gyroscopic control over production quantities, price and demand. The Champenois know this isn’t the Languedoc, and have a structure in place to offset the vagaries of vintage. The CIVC not only set the permitted yield in each year, but also quantity of still wine that must be held back in reserve – and not released to market. In generous years, the permitted yield is raised, but so too is the reserve. The market is not flooded with Champagne (what fun that would be!), and prices and demand are maintained. In mean years, reserve wines are released. For the bread and butter part of Champagne - the ‘standard’ non-vintage wines - 2012’s yields are manageable.
The Champagne industry is not without its tensions. They are part of the system. The majority of Champagne is made by large ‘Houses’ (themselves increasingly part of luxury goods conglomerates), which own relatively few vineyards and buy grapes from independent growers. (Notable exceptions include Bollinger, for example.)
Free market legislation gave more power to the growers in the 1990s, and grape prices have risen ever since. So while the Champagne region has pulled off the feat of increasing volumes and maintaining selling prices, margins have been eroded, especially for the large, glossy Houses whose huge investments in marketing have done so much to build the Champagne brand.
As the balance of power has spun towards grape growers, there has been an increase in the number, aspiration and quality of ‘grower’ Champagnes. Their proliferation, and the subsequent media attention, such as this article in the FT by Jancis Robinson MW, has raised awareness of the different terroirs of Champagne. It has brought attention back, a little, to the origin, rather than the process. Successful producers of grower Champagnes celebrate variability. They have to.
It is not just the independents celebrating terroir. The most famous and revered of all, Champagne Salon, is pure Chardonnay from the single Grand Cru village of Mesnil Sur Oger. Now owned by Laurent Perrier, Salon continues to operate as a small Champagne producer using fruit from its own famous vineyard, and additionally from a number of long-term grape growers. Moet produces single vineyard bottlings, as, famously, does Krug. Alongside this interest in terroir is growing awareness of the stunning longevity (and thereby investment potential) of great vintage Champagnes.
Site-specific Champagne cuvées are part of a bigger picture of differentiation. Salon is unusual in that it produces a sole wine. Most producers offer a range of cuvées and style. This differentiation is the key to enduring success. It is, of course, what all successful, mature brands do to keep alive. Sales of rosé, vintage and ‘non standard’ styles such as Brut Nature have grown in recent years. So far, they are taking market share away from Brut NV. But as those nascent markets mature, it is likely that demand for these different styles will increase. Top notch rosé Champagne, such as that from Krug, is increasingly recognised as a wine for food.
Martin Lea, in Hong Kong, says: “I have sold a lot of 2002 Dom Perignon - the 2002 vintage has been very popular in general due to the great reviews. This demonstrates that it's not only the label that people are interested in, but also the inherent quality of the vintage. Champagne is drunk for celebration, but I can't recall a wine dinner that I have attended here not starting with a bottle of bubbly - it is seen as an integral part of a meal by many.”
Mindful of the burgeoning demand from new markets, growers and producers approved an expansion of the Champagne vineyards in 2008. The research and delimitation is still underway, but it is expected that between 5000 and 10000ha of additional vineyards could be announced in 2015. When the growers voted in favour of this expansion, they looked to some like Turkeys voting for Christmas. But this could also be an example of the astonishing cohesiveness of the Champagne industry. New vineyards will boost quantities of the bread and butter Champagnes. But the very top cuvées are increasingly site specific, and have the power to add most value.
Even the market for grower Champagnes is showing signs of differentiation. At first, their offering was essentially “great value Champagne”. Increasingly, this sector is showing aspiration. Top quality, singular sites are producing hand made Champagnes of great personality and quality. Good grower Champagnes are not offering themselves as merely a lower-priced equivalent to a big-brand NV. Rather, they have the confidence to assert their character and individuality through the highest possible quality, and a premium price. Our very own Arlaux 1er Cru is an example of this type of terroir-driven quality Champagne. There will be room in the market for more, if demand continues to grow in emerging markets. As Martin says: “Arlaux has proved to be a great success with private clients. The repeat business has led to us selling out of our initial stock and I have had to pre-sell the new allocation before it has even reached Hong Kong.”
Even the market for grower Champagnes is showing signs of differentiation. At first, their offering was essentially “great value Champagne”. Increasingly, this sector is showing aspiration. Top quality, singular sites are producing hand made Champagnes of great personality and quality. Good grower Champagnes are not offering themselves as merely a lower-priced equivalent to a big-brand NV. Rather, they have the confidence to assert their character and individuality through the highest possible quality, and a premium price. Our very own Arlaux 1er Cru is an example of this type of terroir-driven quality Champagne. There will be room in the market for more, if demand continues to grow in emerging markets. As Martin says: “Arlaux has proved to be a great success with private clients. The repeat business has led to us selling out of our initial stock and I have had to pre-sell the new allocation before it has even reached Hong Kong.”
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