The Champagne Bubble

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Champagne has always been prone to cycles of boom and bust. It takes many long years for production to be established, but demand fluctuates with the vagaries of the economy.

Earlier this decade the Champagne industry saw three straight years of record sales, mostly due to exports to the booming economies of China, Russia, and India. Demand was so strong that France’s appellation system approved an historic expansion of nearly forty new growing areas to be added to the Champagne region.

Then the economy stalled. The customer for entry-level luxury wines evaporated. Conspicuous consumption– the bling that had fueled high-end Champagne sales– fell out of fashion. As the euro rose against the currencies of France’s trading partners, demand fell further. It was like a perfect storm for Champagne.

Ironically, it’s been a very good growing year for Champagne grapes. Sunshine and rain arrived at the appropriate times. There was little grape-borne disease. By all accounts, the 2009 harvest was looking like a bumper crop of high quality grapes.

Then, in the first half of the year, Champagne exports dropped 45%. France’s leading Champagne houses enforced yield caps on grape growers in hopes of propping up prices, forcing them to leave nearly half of this year’s harvest to rot in the vineyards.
The wineries are putting on a brave face for the holidays, a time when they usually see a majority of their sales for the year.

Of course all of this is good news for consumers.

Prices are already the lowest in recent memory, and there is plenty more wine still coming to market. Pricing compares so favorably with other varietals that this might be the year that Champagne breaks free of its holidays-only designation. Look for prices to continue to fall into 2010 when the surplus is expected to grow as retailers become reluctant to restock their shelves with pricey bottles in the midst of a recession.

You can read reviews and compare Champagne prices online before you buy at Consumer Search.

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2 Responses to The Champagne Bubble

  1. This is one of my favorite blogs. Amazing job moderating. And well written articles. Rarely does a blog keep me coming back. I hope everyone has an amazing holiday season.

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