People looking for signs of economic recovery watch unemployment figures or housings sales or retail figures. In the wine industry, many look to Champagne sales. Demand is increasing for Champagne in the United States. Imports from the region nearly doubled in the first two months of 2010, compared with January and February 2009. The industry is still a long way from the boom times of just a few years ago, but there may be light at the end of the tunnel.
Nonetheless, Champagne producers are proceeding with caution when it comes to the bubbly supply. The Comité Interprofessionnel du Vin de Champagne (CIVC), the industry's regulatory body, set a maximum yield of 10,500 kilograms per hectare (4.7 tons per acre) for this year’s harvest. It’s a compromise between the region’s grapegrowers, some of whom bottle and sell Champagne themselves, and the merchant houses that purchase grapes for the bulk of their production. For growers, more grapes mean more money, while for producers, more grapes mean more wine to sell in an uncertain market when inventories in their cellars are already high.
“The growers wanted more, not only those who sell grapes but also those who produce and sell their own Champagne because they have done well so far and they do not have much reserves,” said Daniel Lorson, the CIVC’s director of communications. “On the contrary, the houses and the [cooperatives] wanted a lower level—below 10,000 kilograms per hectare—so the level that has been set is a compromise." Last year the yields were limited to 9,700 kg/ha (4.33 tons/acre).
Despite the limit, the estimated crop level for the 2010 harvest is 14,000 kg/ha (6.2 tons/acre). That guarantees a complex scenario for the region come harvest time. Each producer is allowed to harvest grapes in excess of maximum yields and set aside the wine for use in future years, but the amount of reserves is currently limited to 8,000 kg/ha. Most big producers already have the maximum allowed stock of reserve wines or are close to the maximum, thanks to slower sales in the past three years.
So what happens to the surplus grapes? “The 10,500 kg/ha limit is based on the needs of the region as a whole," said Sam Heitner, spokesperson for the Champagne Bureau, the representative of the CIVC in the United States. "The CIVC updates this limit every year based on the supply situation. Some years it has been higher and other years it has been lower.”
“As a decision on the amount allowed to go into the reserves will take place at a later date, we cannot provide the total harvest per hectare today. However, it is common practice in years with low harvest limits for the Champenoise to pick the best grapes out of each parcel to go toward the limit and the reserve wines and then leave the remaining grapes in the field to nurture the vines.”
The decision to limit the harvests both last year and now this year has stabilized grape prices. Stéphane Coquillette, a small grower in Chouilly, said he was pleased with this year's increase over 2009 yields but, more important, the stability in the price of grapes.
Louis Roederer’s chef de cave, Jean-Baptiste Lecaillon, echoed Coquillette’s sentiment. “At Roederer, we think 10,500 or 11,000 kg/ha was the right decision, with a stable price for grapes, as our crop estimation in our vineyard is 11,500 kg/ha," he said. "If everything goes well [with the weather], every grower should reach the maximum 8,000 kg/ha reserve qualitative individuelle at the end of harvest 2010.”
Pierre-Emmanuel Taittinger, owner of Champagne Taittinger, said there were still a few details to work out regarding the CIVC’s decisions, but he did not elaborate. Taittinger was, however, pleased with the increase in demand for bubbly. “As far as Taittinger is concerned, shipments for the first six months of the year are very good all over the world,” he said. “I think that the quality of the wines, the identity of the brand and the efficiency of the distribution network are paying. The value of the dollar versus the euro is helping obviously.”
The strength of the dollar against the euro recently has certainly helped sales of Champagne in the U.S. Xavier Barlier, vice president of marketing and communication for Maisons Marques & Domaines, Roederer’s U.S. subsidiary, also cited this as a factor in his Champagne house’s recent success.
The CIVC’s Lorson, though optimistic, remains cautious. “At the moment we are enjoying growth. We do not know if it is a steady recovery,” he said. “The situation is better than a year ago, because the destocking is over in most of our export markets. But the consumers are still trading down, which is not good for those who had based their prosperity on premium and superpremium cuvées.”
There is still a long climb for Champagne to reach 2006’s peak of 23.2 million bottles shipped to the U.S. “Our industry is very much dependent on the global economic situation, today more than ever,” said Lorson.