For champagne industry, a bubbly niche emerges

PARIS: When the slump in the financial markets began to worsen in September, Francis Egly, who makes Champagne from his own grapes in Ambonnay, France, started getting calls from his customers. They wanted to know if the bad news might mean he had a few extra bottles to sell.

He didn't. About 80 percent of the roughly 100,000 bottles he will sell this year was reserved and paid for a year in advance, and he has no doubt that he will sell next year's vintage just as easily. "This crisis doesn't affect me at all," Egly said by telephone recently. "I don't have enough wine."

A few kilometers down the road, in Bouzy, Delphine Vesselle, who owns the Jean Vesselle Champagne house, sent letters to her customers in September telling them that not only would she not be accepting new buyers for this year's output, but that orders would only be partially filled, to a degree based on purchases from prior years.

For small producers, like Egly and Vesselle, times are good.

But for the Champagne industry as a whole, the traditional year-end surge in sales is looking anything but festive. Overall shipments by producers started falling in September, and that downward trend accelerated in October.

The major producers like Moët & Chandon or Veuve Clicquot Ponsardin, who sell the bulk of their bottles through retailers, saw shipments drop 21 percent in October from a year earlier, the most recent figures that have been compiled by the Interprofessional Committee of the Wines of Champagne, or CIVC in French, a trade group. And the weak economy has darkened the prospects for the last two months of the year, which represent at least a third of a major producer's annual sales.

For the nearly 5,000 houses that make Champagne exclusively from their own grapes - called vignerons - as opposed to buying from vineyards throughout the region, shipments in October were up 3.3 percent. These producers, like Egly and Vesselle, sell mainly to individuals, and for many years their customers often lived within a tight radius of their vineyards, meaning that people could drive over to pick up orders.

"The vignerons are the ones that mainly sell direct to their clients, and they're the ones that have been increasing their shipments recently," said Daniel Lorson, the spokesman for the committee.

It is a corner of the €4.5 billion, or $6.3 billion, Champagne industry that is proving resilient to the retrenchment of holiday spending in France and elsewhere. Of the 36.2 million bottles shipped in October alone, the major producers shipped 25 million bottles, down about 6.6 million from a year earlier. Vigneron houses shipped nearly 7.5 million bottles.

Egly said a major reason that vignerons were thriving amid the slump was price. "The big houses have raised their prices a lot," Egly said. He increased his prices 5 percent this year, mainly to cope with higher fuel prices.

At Lavinia, the large Paris wine emporium, sales of vigneron Champagne have been brisk in December, even though overall sales of Champagne were "dead" for the first three weeks of the month, said a clerk, who didn't want to be identified because he did not have permission to speak on the record.

"It's much easier to sell a Champagne that costs €20 to €30, and the quality is absolutely comparable" to the major brands, most of which start at €40, the clerk said.

He said the major houses had imposed two price increases this year, an average of 5 percent in April, and another 8 percent during the summer. The least expensive Veuve Clicquot at Lavinia now costs €36.

Prices of vigneron Champagnes at Lavinia start at €23, and only a handful exceed €35. A 1999 vintage made by Pierre Gimonnet, for example, costs €34, but the least expensive vintage Champagne from a top brand is a 2002 Deutz, at €45. For a 1999 vintage from that brand, the Amour de Deutz, the price jumps to €130. "There are not a lot of people who are going to spend that much for a vintage Champagne," the clerk said.

At Legrand Filles & Fils, an institution for fine wine in Paris, bottles of Elgy's Champagne, Elgy-Ouriet, start at €31, and the 2000 vintage costs €69. The store's perennial top seller is a vigneron Champagne made by Jean-Mary Tarlant, at €27. They sell 10,000 bottles of it a year.

But while price may explain the choice of a vigneron Champagne for the holidays this year, that does not appear to be helping the least expensive mass producers. The CIVC groups these companies in the same sector as the well-known houses, and together, their shipments dropped 21 percent in October.

The vast majority of these "entry-level" Champagnes are sold in supermarkets, and mainly at the end of the year. At a Cora hypermarket outside Paris, the least expensive bottle on Christmas Eve was from G.H. Martin, at €15, and no bottle cost more than €30.

Lorson, of the CIVC, said supermarkets were using low-priced Champagne to draw in customers, who were then likely to buy other holiday items as well. "The question is whether this sector is going to increase," but he said it was too early to judge this year's holiday sales. The shipments for November and December will not be known for several weeks.

But beyond the question of price, growing numbers of customers are looking for Champagnes off the tracks that have been beaten by the most famous houses. Export shipments of vigneron bottles to the European Union climbed 17 percent in October, when EU exports of the biggest houses slumped 20 percent.

Despite the fact that very few of these houses advertise extensively, restaurants around the world are giving top billing to vigneron Champagnes on their wine lists, and wine merchants are encouraging clients to search out the particularities of different Champagnes in the same way they look for particular bottles of Bordeaux or Bourgogne.

For Egly, this trend means that many growers like him will have to continue to turn away clients. "People like to know that there's a fellow behind the wine," he said.