9 Oct 2008

Bubble bursts for Champagne sales

10:15 pm on 9 October 2008

The once sparkling sales of France's premium export Champagne have begun to drop off, producers said on Thursday, as the world's economic euphoria gives way to a crippling hangover.

Over the past decade soaring stock markets and property prices have been matched by record sales of sparkling French wine, driven by its success among the new wealthy class in emerging economies such as Russia and China.

But this week, as the global party came to a sudden end, Champagne producers forecast three per cent lower sales for this year, after exports to the United States dropped by 22% in the first six months of 2008.

"Champagne drinkers need to feel good about themselves, and the economic climate is decidedly less favourable right now," said Daniel Lorson, spokesman for the Champagne growers' trade association.

The sales drop, although still small thanks to continued strong sales in the East, is a dose of reality for an industry that has become accustomed to growth.

Last year was another record year, with vineyards in the Champagne region around Reims east of Paris shifting 338.7 million bottles of the world's most famous bubbly to the best bars, restaurants and wine merchants.

The only thing holding back further expansion was a finite supply of grapes, which must be grown within a strictly defined region to qualify as true Champagne.

But in the first eight months of 2008, sales to the domestic French market - still more than half the total - were down 4.2%, as the economy cooled amid warning signs of the eventual financial meltdown.

The news was even worse in the second-largest Champagne market, the United States, where the weakness of the dollar - at least until the euro's fall in recent weeks - forced down exports by 22%.

Supermarket special offers may push up Christmas sales, but otherwise producers face a bleaker outlook in their traditional markets, even if they aren't yet facing the same peril as other sectors of the economy.