Offering Champagne at Cava prices could 'seriously damage' category
Noel Reid, wine and spirits buyer at Frederic Robinson has said positioning Champagne at prices not far above that of Prosecco or Cava could "very seriously damage the reputation of the entire segment".
His comments come on the back of the Harpers' news story on December 19, when Dr Steve Charters MW, professor of Champagne management at Reims Management School claims on the back of the Eurozone crisis the market will not pick up until 2014/2015.
In response from an on-trade perspective Reid said: "I think it is fair that Champagne sales mirror the success or otherwise of our economy at that time." He added there will always be individual brands that buck the trend due to great marketing or brand loyalty, in other words success stories which you find within any consumer sector.
However, Reid said the fear for Christmas 2012 and 2013 is that retailers will simply "buy" market share with huge price reductions that have a significant impact on sales and can lead to a real worry of consumers believing that the prices are sustainable with clearly they are not.
He added: "Huge discounts can initially cheapen the brands and the segments image as a whole. In the medium term it can make fairly priced products look very expensive indeed. The quality of Champagne is what we need to shout about. Rather than consumers trading up to Champagne from these sparkling wines it can almost justify consumers seeing little difference in the qualities due to the price similarities and not returning to full price Champagne when the promotions end."
Reid said he is looking to support its operators, by helping them understand how to sell through product and maintain and even grow their sales and by focussing on by the glass sales. "Familiarity with Champagne and this more accessible ease of purchase by the glass without having to buy a bottle we see as a key driver for 2013 to enhance the final consumers choice and help maintain sales in a very difficult market place."
Yet at the other end of the scale, the luxury on-trade UK Champagne market "has never been so busy" according to Richard Brierley, head of fine wine at Vanquish, London.
Brierley said the grand marques Champagnes such as Dom Perignon, Champagne Krug and Louis Roederer's Cristal are currently "huge" in the on-trade and through private clients.
"People here are recognising the value of vintage and there is definitely no slowing down here," said Brierley.
"It's the same story every year though, those in the middle that get squeezed and the supermarkets get people through the door by offering loss leaders. But the prices are particularly low this year and are not sustainable."
Jamie Avenell, Champagne buyer for Bibendum thinks there is potential for growth in the on-trade for brands who strategise effectively, investing in quality and innovation, and forming the right partnerships, as well as avoiding deep discounting in the off-trade.
While Andrew Shaw, Bibendum's head of buying, said: "In addition, the increase of designated vineyard area coupled with the global economic pressures will result in a classic demand v supply issue - over-supply in a weakening market. Brand ‘Champagne' could (continue to) become a victim of its own success as it trades volume through deep discounting in the international supermarket arena."