Time for another seasonal post. Marketplace reports that there is a fairly serious champagne glut (Champagne’s bubble bursts, Dec 29) leading to some curious inventory management:
I invited wine writer and blogger Alice Feiring down to a Manhattan restaurant called Balthazar. We started by talking about the way things used to be. The year was 2007. The stock market was up. Unemployment was down. And there were a lot of corks-a-popping.
ALICE FEIRING: The Champagne industry finally had arrived. They were complaining there wasn’t enough Champagne for the world.
Then, as you can you can probably guess, the bottom fell out of the Champagne market. These days, Feiring says, some Champagne is going back to France, where it came from.
Hobson: They actually had to send some back?
Feiring: Send some back because they were taking up too much room in the warehouses.
The Times (of London, not New York) adds a little more detail (Has champagne lost its sparkle? Dec 17):
Most analysts agree that grand old champagne houses brought this disaster on themselves. They cashed in on the supposed champagne drought of 2007, raising prices outrageously while quality slipped. Shipments to the biggest overseas markets showed double-digit drops in 2008, but the winemakers shilly-shallied over reducing volumes: the houses had arrogantly decided, as one eminent vigneron told the wine writer Michael Edwards, that champagne was “recession-proof”. The result is an historic glut: reportedly there are now 1.2 billion bottles, equivalent to four years of sales, languishing in French caves and warehouses
A point made in both articles is that one of the problems facing French producers is that maybe champagne just ain’t so special. There are many quality sparkling wines produced around the world and in tough market the premier champagne producers are caught between a rock and a hard place. If they cut price, they risk long term damage to their brand and cannot be sure that higher prices will return with a stronger economy. On the other hand, if they don’t cut price, they are essentially inviting customers to sample other sparkling wines. They may still be able to command a high price when the market rebounds but they may have lost many customers by then. Something to think about when you raise your glass tonight.
Happy New Years!