French champagne hard sell on mainland

Producers must fight cognac's popularity as global consumption of bubbly drink goes flat

PUBLISHED : Tuesday, 26 February, 2013, 12:00am
UPDATED : Tuesday, 26 February, 2013, 4:54am

As global champagne consumption goes flat, makers of bubbly are turning to China to make up the difference. After all, cognac has become a huge hit there, and the country now accounts for 22 per cent of worldwide shipments, up from 5 per cent in 2000.

"We think China could change the champagne market in the coming years," said Charles-Armand de Belenet, head of marketing for the champagne division of Pernod Ricard. China is the second-biggest export market for Pernod's Mumm brand and No 3 for sister label Perrier Jouet.

However, champagne does not have the staying power of cognac, its fellow French export. It has to be consumed immediately after opening. Cognac, by contrast, can be kept for years and offered to special guests when the occasion warrants, said Paul French, an analyst with researcher Mintel in Shanghai.

Most Chinese sales of cognac come around the Lunar New Year holiday, when give friends and business contacts often give expensive bottles of cognac or baijiu - a white spirit.

These gifts are displayed "on a shelf, like a vase", said French. "There's a massive over-expectation about China" among makers of bubbly, he said. "Champagne is quite a hard product to push."

Global sales of the sparkling wine slid 4.4 per cent last year, according to industry association CIVC. The decline was led by France, the world's largest market with more than half of global consumption. In China, sales have jumped 33 per cent on average in each of the past three years, according to market researcher Euromonitor.

Chinese cognac sales have fuelled profits and buoyed the shares of Pernod and Remy Cointreau, maker of Remy Martin cognac. Pernod has said it is in talks to buy another producer, and Remy in December agreed to buy cognac maker Larsen.

Unlike cognac, which was first exported to China in 1859, champagne has only recently started gaining popularity in the nation' mainland's US$132.1 billion drinks market. While the Chinese are still getting used to its mineral taste and fizziness, there is a strong appetite for the drink's European cachet.

Drinkers in China bought 900,000 litres of champagne in 2011, according to Euromonitor, while cognac hit 25.5 million litres.