Even as the U.S. GDP shrinks and major retailers file for bankruptcy due to the effects of Covid-19, American wine drinkers are purchasing more alcohol at retail than ever. After an initial explosion, off-premise wine sales remain strong nearly two months after states began enacting stay-home orders; off-premise sales were up 34.8 percent YOY (year-over-year) for the week ending May 9, according to Nielsen.
But for the region of Champagne, sales are not so sparkling. On-premise sales have effectively disappeared and, according to Nielsen, off-premise Champagne sales were down 1.3 percent YOY for the nine-week period ending May 2. VinePair’s Audience Insights also indicate that overall interest in Champagne was down 38 percent YOY in April.
In April, Champagne sales were a mere quarter of what they were a year before due to diminished off-premise sales and the closure of the hospitality industries in Europe and the U.S.; Jean-Marie Barillère, co-president of the Comité Champagne , expects that May sales will be similarly low. “It’s quite a difficult moment for us,” Barillère says.
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While he notes that other expensive wines are experiencing similar difficulties, Barrilère posits that the effects are greater in Champagne. “Perhaps because the image of Champagne is linked to happiness and celebration, we are the most affected category,” he says.
Mathieu Roland-Billecart, the CEO of Champagne Billecart-Salmon, agrees. “The issue is not so much that people do not like drinking Champagne, but that with lockdown it has been harder to find a moment to enjoy it,” he says.
The economic downturn and an impending recession may not bode well for the region’s recovery, either. While the IWSR predicts that Champagne consumption will likely be impacted by the negative economic climate, based on an analysis of alcohol consumption after the 2008 financial crash, Barrilère doesn’t compare the current crisis to the Great Recession. “The drop in sales is much bigger this time,” he says. “In 2009, Champagne sales were pretty stable. This time, it’s much more difficult.”
But despite the overall association of sparkling wine with celebratory moments, other sparkling wine regions have not been hit as hard as Champagne. While all wine sales have been impacted by on-premise closures, overall off-premise sparkling wine sales are up 22.3 percent YOY for the nine-week period ending May 2. Prosecco in particular seems to be experiencing a boost; off-premise sales are up 39 percent YOY for that same period, and Wine.com reported a 503 percent increase in sales for Prosecco DOC wines and a 524 percent increase for Conegliano Valdobbiadene Prosecco DOCG sales for the 45 days ending April 26.
“We are a denomination that has less trouble right now,” says Luca Giavi, director of the Prosecco DOC, noting that this might be true because more Prosecco is sold in the off-premise sector and it offers the luxury associated with sparkling wine at a more affordable price point.
“Prosecco fans remain loyal because it’s no longer a celebratory wine but rather an everyday pleasure in life,” echoes Enore Ceola, the CEO and managing director of Freixenet Mionetto USA. “There is a strong possibility Prosecco will retain its popularity, or maybe even grow.” For the Prosecco brand Mionetto, U.S. sales have increased; about 65 percent of the brand’s business is off-premise.
Consumer familiarity with Prosecco might also be contributing to increased sales over other value-oriented sparkling wines; while Cava sales on Wine.com are up 278 percent, overall wine sales are still outpacing the category’s growth. Ceola, who also oversees Segura Viudas Cava under the Freixenet Mionetto USA portfolio, notes that while consumers have started to appreciate Cava in the past two years, for many years it was outshined by Prosecco. “Prosecco is one of America’s darlings,” says Brian Larky, founder of Dalla Terra Winery Direct, which imports Prosecco producer Adami. “It’s approachable, it’s familiar, it’s nothing we have to introduce people to.”
Still, Cava benefits from the fact that 70 percent of its business in the U.S. is off-premise, according to Javier Pages, president of the Cava DO. Looking ahead, value-driven sparkling wines like Prosecco and Cava may be poised for continued success during an economic downturn. “In all honesty, even if we’re not impacted by the economic downturn or recession, it doesn’t feel right to splurge,” says Ceola.
“Cava is a quality sparkling wine that represents great value,” adds Pages. “So yes, I think there will be some transfer from Champagne to Cava.”
While Prosecco and Cava producers are also eagerly awaiting the return of the on-premise sector, they are focused on sustaining and increasing their success in the off-premise and ecommerce channels, looking to find new retail placements and create new ways to connect with consumers. Some Champagne producers are doing the same, like Champagne Billecart-Salmon and Champagne Bollinger, both of which are publishing educational videos on social media.
“It’s a way to interact with the consumer from a distance,” says Anthony Cohen, a brand manager for VINTUS in New York, which imports Bollinger. He also sees this period as an opportunity to reeducate consumers on Champagne itself. “There has to be a shift in thinking that we can appreciate it at home, and appreciate it with a meal,” he adds.
But until the Covid-19 crisis passes, Champagne producers may have to just weather the storm. “We are really dependent upon when the [hospitality industry] will completely reopen and the attitude of the population in the second half of the year,” notes Roland-Billecart. Adds Clotilde Chauvet, winemaker for Champagne Marc Chauvet, “It is very hard to know how long [the impact will last], as there are so many unknown factors at the moment.”
The significant drop in demand means that the Comité Champagne is working on solutions for both the short and long terms, together with representatives from the grower-producers and Champagne houses. That includes helping companies avoid bankruptcy and, perhaps counterintuitively, limiting the amount of Champagne that producers will be allowed to make in 2020 to balance supply and demand. “We need to continue a long-term vision to protect the image and the price point of Champagne,” says Barrilère. “If you put too much on the market, it will depress the price and the value.”
But there are possible signs of a turnaround for Champagne. In one recent week, Nielsen showed that off-premise Champagne sales were up 22 percent YOY (for the week ending May 2), a boost that could either be a fluke or a sign of more positive sales to come. Producers are still hopeful for a strong holiday season and a return to celebrating special occasions with Champagne as consumers get used to a new normal. “If people are living and want to celebrate life,” says Barrilère, “drink Champagne.”