Champagne Cuts Yields as Sales Slump

The big houses and growers agree to trim supply; they'll save some wine for future years

  
With the recession hurting sales, Champagne producers have decided to reduce volume during the 2009 harvest to manage future supply. The move may also keep prices from falling.

In a drastic move, the Comité Interprofessionel du Vins de Champagne (CIVC) will limit maximum yields of the upcoming harvest to 4.33 tons per acre. And while the Champagne houses have agreed to purchase that maximum yield from growers, they will only ferment 3.57 tons per acre, with the remaining 0.76 tons per acre vinified 10 months later, according to the U.S. Champagne Bureau, the Washington office of the CIVC.

"In the run up to this decision, there was a bit of public jockeying between the houses and the growers, with the growers suggesting 10,000 [kilograms per hectare, or about 4.46 tons per acre] and the houses generally talking about 7,500 [kilograms]," said Sam Heitner, director of the U.S. Champagne Bureau. "This is a compromise designed to meet the needs of the two sides of the Champagne community that must coexist to succeed together."

And excess grapes will not be left hanging. Growers can harvest an additional 1.92 tons per acre for reserve stocks for future years.

Because it is a blend of multiple vintages, Champagne operates differently than most wine regions. Though yields fluctuate from year to year, Champagne producers keep a portion of the harvest as reserve wines for blending in future years. And while the CIVC sets yield limits, any wine over and above the limit may also be kept as reserve stock to be used in the future. This smoothes out the peaks and valleys of individual harvests and ensures a regular supply of Champagne. Producers consider a regular supply necessary because of blending.

"It is complex," says Ghislain de Montfolfier, president of the Union des Maisons de Champagne. "But it means we want to manage our stock of bottles in the short term without losing the grapes in the long term."

During better economic times, supply was becoming so limited that the CIVC introduced a plan to increase the appellation's zone of vineyards. Increased demand for Champagne since the 1950s has led to more planting, and the appellation's vineyards are at full capacity.

Now Champagne is facing its worst sales crisis since the early 1900s. Figures from the Champagne Bureau show shipments of Champagne to the U.S. are down almost 50 percent for the period of January to May this year, after sales declined last year. Slumping sales worldwide have increased inventory in Champagne to more than the three-year supply the CIVC considers ideal.

Whether this move will keep Champagne prices buoyant remains to be seen. The effect of the reduced harvest won't manifest itself for another three to four years. In the meantime, the houses and small grower/producers must decide on a pricing strategy.