The Champagne category has long lived a double life with its prestigious brand houses co-existing with a lower-priced market comprised of grower brands, supermarket own-labels and tertiary brands. Increasingly, the market is skewing toward the former and value creation is now the name of the game. As ever, this development is led by the Champagne leader, LVMH.
LVMH said in October that Champagne volumes were down slightly in the first nine months of its fiscal year. While all regions grew in the nine-month period, the main contributors were Japan and Europe. Prestige cuvées performed particularly well, including the successful launch of Dom Pérignon Plénitude in 2019. LVMH CFO Jean-Jacques Guiony told analysts that the pattern of the growth was mostly based on price mix and not on volumes.
Moët Hennessy USA Chief Marketing Officer and Executive Vice-President, Vanessa Kay, remarks, “we have always operated on a value-based model. Champagne supply will always be limited and we expect growth to be driven by innovation such as Moët Ice and Veuve Clicquot Rich, and from other emerging qualities such as our rosé Champagnes.”
LVMH is leading the push upmarket through creative marketing initiatives and partnerships. Moët Hennessy UK Managing Director Bertrand Steip adds, “as a business there is a need to follow a value-creation strategy for our brands, and we believe that consumer experience is central to the buying experience.” This Christmas, Veuve Clicquot will be the first Champagne brand to launch a concept store in upmarket department store Selfridges in London.
Steip says it will encompass both personalised gifting and an opportunity to sample products at a bar installation. “At this heightened time of shopping, we are looking to create a memorable experience for consumers beyond just a shopping transaction,” Steip explains.
Champagne does well in the US despite the threat of tariffs
The US excluded Champagne from the recent list when it announced, in October 2019, punitive tariffs of 25% on goods including European wine and single malt Scotch, but it seems likely Champagne could be targeted in the future should there be an escalation, and was cited by the US President as a potential future target.
Despite this existential threat, Champagne is riding high in the US, with widespread consumer trade-up. The good news is that Champagne remains highly aspirational in the US, despite competition from high-quality local sparklers, and is associated with prestige, sophistication and celebration. Champagne has a strong reputation and strong penetration among Americans aged 21 to 34.
Expanding the Champagne occasion
Kay of Moët Hennessy USA explains that the major challenge in the US is making Champagne more of an everyday drink. “There has been a growth in the Champagne category. We see lots of opportunities in increasing Champagne consumption and the breaking down of stereotypes associated with only consuming Champagne on special occasions, such as New Year’s eve.”
“While consumers continue to enjoy our Champagnes during special occasions, they are also increasingly looking for opportunities to enjoy our them through a variety of other moments. We see that it’s gone beyond celebrations and become more multifaceted. Yes, approximately 20% of Champagne occasions are associated with celebration. However, the remaining 80% are paired with food, date night, chilling out, year-round personal celebrations, and catching up.”
“Moët & Chandon, for example, has a unique range of wines that satisfy a wide variety of consumption moments, such as a meaningful brunch with friends, a romantic night out, or a glass of Moët Ice Imperial to celebrate the summer season. Consumer education continues to be very important in order to teach consumers that Champagne is a wine and we have a wine in the portfolio for every occasion. At the same time, we are absolutely seeing consumers choose Veuve Clicquot for both formal and informal occasions.”
Americans are now opting to toast life’s smaller moments with Champagne, even if just a weeknight dinner with friends.
“While Champagne is still very popular in the US for the holidays and milestone moments, Americans are now opting to toast life’s smaller moments with Champagne, even if just a weeknight dinner with friends. Much of this is driven by rosé Champagne, which consumers tend to appreciate year-round because of how well it pairs with meals and brings people together. The Champagne brands within our portfolio are each unique in their own styles as well as positioning in the market. Each marque is appealing for different occasions.”
Maintaining relevance and innovation
The Champagne houses are working hard to ensure that they retain relevance with this millennial cohort by attempting to remain top-of-mind with the mixologist community. Steip says, “cocktails are another area of innovation, from aperitifs during eating-out occasions to personalising and diversifying how Champagne is consumed, and of course providing additional spontaneous consumption opportunities. As a category leader, Moët & Chandon has been leading these innovations with cocktail bartender engagement programmes which have included re-introducing the ‘bartender’s handshake’ and offering consumers an amuse bouche of Champagne as they wait for their cocktail.”
In the UK, Moët & Chandon has been present at the Cocktails in the City pop-up event for the past two years, and this year was the official partner of London Cocktail Week as it celebrated its 10th anniversary. Steip adds, “using Champagne cocktails as a way to tap into cultural events that attract consumers after new drinking experiences has proved very successful in innovating the way Champagne is perceived.”
Kay of Moët Hennessy USA adds, “over the last few years, rosé in general has gained popularity, in the US. It has been a great vehicle for us to recruit new consumers and introduce our rosé Champagnes to a new target market. We continue to innovate with our rosé offerings with Moët Ice Rosé , and Veuve Clicquot Rich Rosé.”
In 2019, LVMH also acquired Château du Galoupet, Cru Classé des Côtes-de-Provence since 1955. Château du Galoupet produces a renowned rosé wine, combining ancestral methods and technical precision, adhering to the strict requirements of Provence.
Collaborations and marketing initiatives drive sustained differentiation
2019 was an important milestone for Moët & Chandon as it marked 150 years since the first release Moët Brut Impérial – today the global Champagne leader. Launch activity has spanned the globe, kickstarted by a launch event in May at Chateau de Saran to what is now the group’s focus for Christmas, a limited-edition anniversary bottle and gift packs with enhanced in-store visibility across all channels.
June also saw the re-opening of the historic Château de Saran after an extensive five-year refurbishment. Acquired by Jean-Remy Moët in 1801, this building began life as a hunting lodge, and the Château de Saran is destined once more to become the site of festive celebrations. The June launch night attracted global celebrities and friends of the brand from Rodger Federer, Moet & Chandon’s long standing ambassador, to actress Natalie Portman and the icon Kate Moss.
There have been marketing initiatives aimed at keeping its very high-end brand equities relevant. Steip explains, “the appointment of Lenny Kravitz as the Creative Director for Dom Perignon has been key in showcasing the creativity of the brand and ensuring stand and cultural relevancy through a strong global campaign featuring creative personalities from different industries and disciplines.”
“Finally, Krug has long cultivated its link between music and Champagne creation. Over the years our Krug Encounters activations have worked with tastemakers from The Clash’s Mick Jones to iconic singer Neneh Cherry: all partnerships to elevate the brand past the purely transactional sphere, into meaningful experiences that differentiate us and drive desirability.”
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