Abstract
This industry note includes data covering the French Champagne industry, as well as major global competitors, consumers, and some artisanal Champagne producers. This note is suitable for exposing students to the French Champagne industry, comparing and contrasting the Champagne brand with sparkling wines from other countries and wine-growing regions, and introducing the concepts of industry attractiveness, competitive force analysis, and industry dynamics.
Highlights
Prior to the onset of the novel coronavirus pandemic in February 2020, David Menival, directeur de la Filière Champagne chez Crédit Agricole du Nord Est, a major lender to both growers and producers in the Champagne region in France, was worried about the future of the industry in his region: The growers, many of whom make their living by selling the majority of their grapes to the houses, but including a significant number of higher profile producers elaborating, marketing, and selling their own distinctive styles of Champagne to wide critical acclaim, are expecting the same or similar yield to that of 2019, but climate change is reducing yields
The négociant houses have been hit by short-term cash flow problems due to lack of sales, and the growers see their overall assessment of the future market as unduly pessimistic
According to Menival and several small independent producers, the French Champagne industry in 2020 was characterized by different positions of the two main factions in Champagne, the growers who own 90 percent of the nearly 34,000 hectares of productive vineyard, and the négociant houses who account for the vast majority of sales, especially the more profitable business outside France, but only own a tenth of the vines
Summary
This industry note includes data covering the French Champagne industry, as well as major global competitors, consumers, and some artisanal Champagne producers. According to Menival and several small independent producers, the French Champagne industry in 2020 was characterized by different positions of the two main factions in Champagne, the growers who own 90 percent of the nearly 34,000 hectares of productive vineyard, and the négociant houses who account for the vast majority of sales, especially the more profitable business outside France, but only own a tenth of the vines. As a means of adding value to Champagne as a region beyond just the sale of wines, industry observers at both the Burgundy and NEOMA business schools believed that, as in other wine regions of the world, coordinated tourism strategies there could well be beneficial to improve Champagne’s market share, image, and cash flows by targeting both domestic and foreign tourists. Industry analysts viewed the decline in Champagne consumption over 2016–2017 as a result of a weak consumer outlook and intense export competition from other sparkling wines, such as Italy’s prosecco.. In 2018–2019, owing to political instability and economic woes, France no longer retained its title as the major market for Champagne sales by volume and value, as shown in Exhibit 1.7
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