Wine Management - Managing a crisis in Champagne

Résumé du document

Champagne is a very special product that is only manufactured in local and limited areas. This category of wine has no direct competitors abroad and remains a prized product. The sales volumes are decreasing but the global sales value is on the rise. For now, the consequences of the depression are quite weak. Yet, there is an economic uncertainty: in 2008, the sector overcame the economic crisis but the future seems to be uncertain. Winegrowers are quite confident about the quality and the reputation of Champagne. The occurrence of an economic crisis it provokes a crisis in the Champagne sector. The weakening economic situation is affecting the Champagne Region. A similar situation prevailed in 1974, 1979, 1990, and 2000 and in the recent crisis as well. One critical aspect to be kept in mind is that Champagne always undergoes the crisis effects a year after the phenomenon. The effects and consequences on Champagne are the same for all of those crises periods. It manifests itself in a drop in volume of sales but not necessarily by a drop in value because the prices of the products tend to rise so as to compensate for the downfall. There is a shift between the price of grapes and the arrival of a crisis that will have an effect on volumes and prices. Obviously this will affect firms' margins and hence, distributors keep a certain distance by stocking up at the last moment.

Extraits

[...] The bad economic situation is affecting the Champagne Region. It was the case for the crisis of and it is the case for the current one. But what we should know is that Champagne always undergoes the crisis effects a year after the phenomenon. The effects and consequences on Champagne are the same for all of those crises. It manifests itself in a drop in volume of sales but not necessarily by a drop in value because the prices of the products tend to rise so as to compensate. [...]

[...] Winegrowers are quite confident about the quality and the reputation of Champagne. They bet on the luxury and rare aspect of the wine to continue to make profits. Moreover, Champagne consumers are less reached by economic difficulties than other and some markets are booming (China, for example). As a consequence, there are a lot of opportunities as far as Champagne exports are concerned. However, some of them feel threatened by other sparkling wines, for instance Vouvray or Crémants, which are cheaper and could compete with Champagne this year. [...]

[...] With a crisis, this would undoubtedly generate money and allow wine growers to overwhelm the crisis in champagne. The concept is simple: attract people (most of the time tourists) with vineyards visits or cellars ones. The wine grower host people for one or two days: he shows the domain to the clients and proposes them with wine tasting and selling. In addition to this, a & breakfast” activity can be done. The wine grower and his wife takes care of clients in his own domain, answers all the questions and provides them with food and bedrooms. [...]

[...] As we have seen, there are many solutions to fight against a crisis in champagne. Some may be more risky than others but it is interesting to see wine growers or champagne houses are not desperate. Champagne still has a bright future A fourth solution: Increasing the offer that is to say harvesting more to limit crisis France's champagne makers have agreed to harvest more grapes from 2007 and to in future plant new vines to head off possible shortages amid growing demand from outside Europe. [...]

[...] Wine growers with a smaller domain could try too but it would be harder for them. To put it in a nutshell, “quality over quantity” could be a good effort to manage a crisis in champagne but it is more efficient if you are already a powerful wine grower. Third solution: Regulation by the CIVC The third solution is somehow linked with the second one. A crisis in champagne would affect the amount of grapes harvested since there would be less demand. [...]