Coronavirus pandemic triggers Champagne war
Originally published in Svenska Dagbladet on July 31, 2020 in Swedish as “Unik storkonflikt hotar årets champagneskörd”
Something is bubbling in the state of Champagne: a conflict primed to reverberate in the wine world for years to come, further paralyzing an industry hit hard by the coronavirus pandemic.
On one side, the world’s largest and most famous champagne makers wanting to limit this year’s yield of the champagne grapes. On the other, independent vineyard owners that sell their grapes to the houses, worried their product will rot on the vine.
Champagne houses – Bollinger, Moët et Chandon, and their ilk – and vineyard owners in the most famous and most heavily regulated French wine district of them all are now standing without the required agreement regulating the grape harvest, for the first time since the Second World War.
“Everyone is affected, and everyone is concerned. We have never experienced anything like this,” vineyard owner Jessica Perrion told SvD. Ms. Perrion and her husband Thierry Perrion own a small vineyard in Verzenay in the northeastern part of Champagne and depend on the business from the larger champagne houses. She explained roughly two-thirds of their yearly harvest goes straight to them. The final third is reserved for the Perrion’s own bubbly.
Every aspect of Champagne – and the wine that bears its name – is heavily regulated. The yearly yield of grapes is no different. A select committee is responsible for ensuring the price of the sought-after sparkling wine is not too low. Regulating how many grapes are harvested each year is an important tool in this pursuit. This year, the large champagne houses, which produce around 75 percent of the world’s yearly supply of champagne, wants to limit this yield drastically. Their demands follow the COVID-19 pandemic, which has reduced champagne demand sharply.
Around 300 million bottles of the French bubbly are sold every year during an ordinary year. The Champagne committee is expecting this number to drop with over 100 million. Revenues for the entire industry are expected to be cut from 5.1 billion euros to 1.7 billion euros. To counter this, the larger houses are demanding the harvest to be no larger than 6,000-7,000 kilos per hectare. All the while, vineyards refuse to harvest anything less than 8,500 kilos per hectare. Both significant cuts from 2019, when over 10,000 kilos of grapes per hectare were harvested for champagne. And yet, with harvest season only weeks away, no deal is in sight.
“We talk about it constantly. We are not sure what we will tell our grape pickers. Some have worked with us for almost 15 years,” vineyard owner Ms. Perrion said. If the two parties cannot come to an agreement, the French government will get involved. An outcome neither side wants. The French Ministry of Agriculture will then set the size of the yield, possibly at a level neither houses nor vineyards might be happy with.
Richard Juhlin, independent champagne expert. Photo: Lisa Arfwidsson/SvD
The market for champagne was enjoying a decade-long boom when the pandemic hit. New customer groups – wealthy Asian and young Western consumers – got a taste for the expensive drops. One person making money on this boom was Swedish financier Håkan Guldkula, who told SvD his business “had increased several times over” since he launched his own brand of champagne in 2017. World-renowned champagne expert Richard Juhlin also painted a picture of a champagne market where the only way was up when SvD spoke to him over the phone. The sommelier was isolating himself – and his nose – from the coronavirus pandemic. “Had this not happened, we would have been at all-time highs,” he said.
Mr. Juhlin said he did not think the conflict would be that dramatic, but rather end with the two sides reaching an agreement. “My bet is that they will reach a compromise. The large firms control so many aspects of this, and tend to get their will through,” he said and pointed to the influence of houses such as Moët et Chandon, which is owned by luxury conglomerate LVMH. Mr. Juhlin explained he is in “constant contact” with growers and houses in Champagne. He usually goes down to the region to taste the new crus several times per year. This year, he had to have the bottles shipped to him and conduct champagne tastings over Skype. “The large firms have been completely paralyzed by the complete drop in sales,” he said.
A large harvest would also fill the region’s already crammed warehouses to the brim. The Champagne committee calculates roughly 1.2 billion bottles of champagne are aging in storage right now – around 400 million more than they care to have. Any larger volumes would trigger a fire sale, something the entire region – the committee, growers, and houses – wants to avoid. “We are trying to avoid a price collapse by any means,” vineyard owner Thierry Perrion said, “we have the small vineyards and the large houses: we are all dependent on one another.” Mr. Juhlin, who is currently writing his ninth book about the famous French bubbles, said that even if the region and its inhabitants are taken aback by the pandemic, they will recover. It has done so after previous crises, such as two World Wars: “They are very hardy folk. They are used to handle crises and they always get back on their feet.”
