Weak Champagne sales on French economic gloom
France’s ailing economic environment has, for a consecutive year, contributed to a slow down in sales of Champagne despite sales growing in certain emerging markets. Industry estimates gathered by Reuters showed that sales by volume will drop between three and four percent this year after a 4.4 percent fall in 2012, leaving total revenues flat at best.
“Over the past two years the situation has been difficult in Europe, mainly in France, while it remains solid outside Europe,” Etienne Auriau, financial officer of Laurent Perrier, the world’s third largest champagne brand, told Reuters, adding ”Competition exists, it’s not new, and quality is increasing. Champagne producers must be careful and maintain quality at its highest level,”.
Market professionals contacted by Reuters said demand in France, which still accounts for 51 percent of sales volume, was down more than six percent by October with no sign of improvement by the year-end. Official data released on Tuesday underlined the gloom, with French consumer spending largely flat in November and companies seeing profit margins squeezed to their tightest in nearly 30 years. Although overall sales in Europe fell by a less dramatic 2.6 percent, industry players said concerns were growing about Britain, the largest market after France and which accounts for 10 percent of world sales.
Producers hope for good sales in Japan, which became the fourth biggest importer last year, thanks to a rebound in its economy and an increasing number of local connoisseurs. Australia, where sales jumped 11 percent last year, should also continue to grow while African countries such as Nigeria were seen as promising, they said. In China, even though the market doubled last year, sales remained in their infancy and mostly limited to Beijing and Shanghai.