Hospitality venues are absorbing rising costs, but champagne prices have increased dramatically.
With a little bit of sunlight filtering into the economy, will the champagne pop in New Zealand this summer and buck overseas downward sales trends?
Last month Reuters reported that France’s champagne producers called for a cut in the number of grapes harvested this year,after wine sales fell more than 15% in the first half of the year as customers tightened their belts due to an uncertain economy.
Luxury goods company LVMH, whose brands include Dom Perignon, Krug, Moet Hennessy and Veuve Clicquot, is seeing a drop in revenue for champagne sales in 2024 – and the brand’s chief financial officer Jean-Jacques Guiony thinks it might be because there’s not much joy in the world right now.
“Champagne is quite linked with celebration, happiness, et cetera,” businessinsider.com reported Guiony saying.
“Maybe the current global situation, be it geopolitical or macroeconomic, does not lead people to cheer up and to open bottles of champagne. I don’t really know,” he said.
On this occasion, Moet Hennessy NZ politely declined to comment on the state of champagne drinking in New Zealand in 2024. But despite the dip, LVMH’s champagne volumes remain above pre-pandemic levels.
Still and sparkling wine sales were up 16% in the first half of the year, while total revenue from champagne and wines was down 12%.
Depending on how you like your fizz, there is good news and bad news from hospitality, wholesalers and retailers alike.
New Zealand’s very own Champagne Lady, Anne Batley-Burton – known for her appearance on the Real Housewives of Auckland reality show – has recently returned from the season in France and saw first-hand the reduction in production.
She sells mostly direct to consumers, and says prices have increased significantly.
Anne Batley-Burton says she has noticed the price of champagne in some restaurants and bars has risen “exorbitantly
“My champagnes Jacquart and Montaudon will both be available [this summer], but I am importing less vintage champagne as I feel the market will not accept them,” says Batley-Burton.
Batley-Burton has been policing hospitality venues and says she has noticed the price of champagne in some restaurants and bars has risen “exorbitantly for the better quality brands”.
“I was dining at a popular mid-range restaurant last week and they were charging $38 for a glass of Moet and the same for Ruinart,” Batley says.
“Mind boggling! No wonder sales are down! If the Champagne Lady won’t drink it, who will?”
Some of Auckland’s best restaurants and bars, including Cibo, Soul Bar & Bistro, The French Café and Bellini’s Bar at Hilton, tell the Herald they are doing their best to absorb the rising cost for their customers and not raising their pricing.
Aleksandr Shchepetkin, restaurant manager and sommelier at The French Cafe, says champagne sales are seemingly falling at fine dining institutions.
“Most hospitality businesses are eating the cost of rising product and the rise is dramatic, for example Louis Roederer Cristal has seen a 34% rise across the world,” says Shchepetkin.
Soul Bar general manager Olivia Carter says her establishment is absorbing the rising cost of champagne, rather than passing it on to customers. Photo / Supplied
Soul’s general manager, Olivia Carter, is full of effervescence, despite a slight fall in champagne sales this year and says her establishment has also swallowed the cost of rising prices.
The establishment is famous for its activations with Mumm champagne and ran a very successful month of promotions with the house in May, with more planned in the coming warmer months.
Where champagne might not be Soul’s growth market now, prosecco is, with Carter saying its demand grew four times in the last year.
This is mirrored for supermarkets, with a Foodstuffs spokesperson saying the cost-of-living crisis is seeing customers move to lower-cost alternatives such as prosecco and methode sparkling wines.
As a result, champagne sales are down around 20% year on year.
Moët, Mumm and Veuve Clicquot are Foodstuffs’ most popular brands in New Zealand, but all brands are seeing similar challenges.
Foodstuffs added that given champagne is generally aged for a period of time, any short-term production issues won’t be realised for the next few years.
“For a moment of celebration, we know some customers will only ever choose a chilled bottle of champagne to deliver the sense of occasion, but for customers on a tighter budget, prosecco is a great option,” the spokesperson said.
“It’s bright, refreshing and the bubbles make it very versatile.”
Brendon Lawry, CEO of Liquorland, says Kiwis are switching from champagne to more affordable methode and prosecco. Photo / Jason Oxenham.
Brendon Lawry, CEO of Liquorland, says champagne prices have increased over the past couple of summers.
“There is no doubt that we are seeing consumers act with more caution when it comes to higher priced champagne and we are seeing an increase in methodé and prosecco, but nothing quite matches up to a good French champagne,” says Lawry.
“Over the last couple of years Mumm has become the No 1 champagne for us and continues to go from strength to strength, and we are expecting to see Kiwis celebrate summer with friends and family once again this year.”
Kevin Mapson, commercial managing director, Pernod Ricard Pacific, says they have seen a dip in their champagnes G.H.Mumm and Perrier-Jouët due to the economic environment.
“With broadening champagne occasions beyond traditional celebrations, and evolving consumer tastes for refreshing drinks, we expect this to return when the economic climate improves,” says Mapson.
Pernod Ricard has seen good performance in the premium sparkling wine category, Mapson says, which includes brands like Mumm Marlborough and Mumm Central Otago.
Will Kiwis be buying champagne this summer, or opting for prosecco instead?
Hancocks’ Jedda Jakicevich is the fourth generation of a family of wine merchants and says champagne consumption is not immune to the wider economic climate.
“Our multi-generation family relationships with Pol Roger and Drappier and several decades with Piper-Heidsieck and Charles Heidsieck are about long-term values, not short-term value,” says Jakicevich.
Hancocks has seen increases in sparkling wines like DOCG Prosecco (the highest standard), Spanish Cava and various appellations of Crémant, most notably those from Burgundy, which are now gaining deserved attention as they offer value for everyday occasions, Jakicevich says.
Newmarket’s Maison Vauron has a unique cellar, stocking the best quality wine collection from the greatest domains throughout France.
Maison Vauron director, Scott Gray, points out Covid played havoc with the stock levels held in the cellars in the historical province of Champagne.
“It takes three to five years from harvest to market,” says Gray.
Gray explains post-Covid sales jumped dramatically to more than 325 million bottles in 2022. He says that as champagne production was down dramatically in 2020 and 2021, a 35-year low, this put pressure on reserves. The result was much lower stocks than normal in the cellars.
“This pushed the price for grapes on the market up by as much as 30% with resulting price rises,” he says.
2022 was an OK vintage by volume and last year was prolific, Gray explains, but as yet this has not seen downwards pressure on base price, even though worldwide sales are down by 15% in the first half of 2024. With unfavourable weather conditions this year, the resultant 2024 volume limit has been set lower.
“Because going forward the champagnes going to market will generally be based on the 2020, 2021 and 2022 vintages, prices won’t come down unless some of the large players find themselves in an overstock situation,” he says.
