Hello Champagne Fans,
As the 2007 holiday season begins, I thought that a quick summary of the goings-on in Champagne might be of interest. Having recently returned from my third trip to Champagne this year about a month ago, I have had time to reflect and can’t resist speculating on a few trends for the future. It is a very exciting time in Champagne, the past twenty years have included more successful harvests than any other twenty year period, producers can sell everything they make and plans are in motion to expand the appellation.
The generation taking over in Champagne now is one of the luckiest in this region’s history. Looking back, starting with the excellent 1988 harvest, the weather has been very kind to them. Following ’88 the ’89, ’90, ’95, ’96 and ’02 vintages will all be considered great, with ’92, ’93, ’97, ’98, ’99, ’00, ’05 and ’06 all widely declared for vintage wine. The ’91, ’94, ’01 and ’07 vintages are good enough for the ongoing improvement of non-vintage blends and even outright successes in some villages. Keeping in mind that the Champagne region is between the Fargo, North Dakota and Winnipeg, Canada latitudes, and is still the coldest and most northerly appellation in France, many producers are openly grateful for global warming, most notably Champagne Louis Roederer, who even went into print with this sentiment.
One big question mark is 2003, which produced some sensational Champagne, but perhaps foreshadows the problems that a warmer Champagne region will have to endure. Hot spring seasons are becoming much more common, and in 2003 beautiful weather in April made for disaster in May. Unseasonably pleasant temperatures caused an early budding of the chardonnay and a hard frost subsequently destroyed three-quarters of the crop in the Côtes de Blancs. That summer, the sweltering heat was interrupted by isolated but brutal hail that was powerful enough to destroy the vine wood in some areas. The relentless heat resumed and a very small harvest that was sometimes too ripe (over 13% potential alcohol is forbidden to carry the name Champagne) was brought in at the earliest dates since 1852. The vintage was so strange that Bollinger will soon release a wine called “2003 by Bollinger” apart from their regular vintage program. We sold a rosé non-vintage that was made by mistake in 2003, the grapes had macerated on the way to the press house! More harvests like this will certainly be in store for the Champenois if current climate trends continue.
Many of France’s classic winegrowing areas are in financial crisis. With domestic demand for inexpensive table wine at an all time low and tough competition from Australia and others at the bottom end of the export market, just having the appellation of “Bordeaux” or “Burgundy” is no longer enough to sell wine. The lake of bulk wine in France is growing, with no foreseeable market for it. On the other hand, the world’s population of rich and well-off wine buyers is growing (mostly in China and Russia), and top-notch properties in these same areas have never been in such high demand. Subsequently the prices are enjoying a rocket-like upward trend.
Champagne has perhaps the best basic quality of any wine region in the world as well as more than its fair share of exceptional quality. The prices for the most basic Champagnes are the highest of any of France’s great regions and, with the exception of Brunnello di Montalcino, perhaps the highest in the world. This is well-justified by the quality, which is controlled more strictly than anywhere in the world. Minimum ageing requirements, strict pruning and training regulations, mandatory distillation of final press fractions and countless other controls, fill a book more than 300 pages long.
These strict rules and a willingness to follow them has created a high entry fee for the very good basic quality Champagne. This basic quality is mostly created at coops and by grower-producers and is designed for domestic consumption. The French are consuming less alcohol and are more willing than ever to spend the extra euros to get Champagne over other, cheaper French wine options. Stricter controls on “driving under the influence” launched when now-president Nicolas Sarkozy became interior minister has added extra momentum to this trend.
The prices on the other end of the Champagne spectrum, however, are more influenced by “price positioning” and marketing costs than by the production costs. The big name houses are the shrewdest luxury marketers in the world, with the largest chunk of the export market owned by LVMH. They own many fashion houses and their skill at divorcing cost from price is unrivaled. Their brand, Krug (purchased in 1998), will be releasing a $2,000- $3,000 bottle called Clos Ambonnay (more on this later) next spring. Mumm has announced that they will soon launch a 1,000 euro bottle (perhaps in time for the holidays?) and we currently offer the Ace of Spades (a new brand, made by Cattier for Armand de Brignac in a special deal with musician Jay Z) at $299 and Krug Clos de Mesnil at $1,099.
I am certain that we will see an upward price trend with big house tête de cuvée’s—in fact, it has already begun. Contributing to this is a very weak dollar. As I write this, on November 12th, we are trading at 1.456 dollars to a euro and the dollar set a record for the worst conversion in the history of the new currency this month. Signs can be found in the other regions of France—Bordeaux first growths are selling en primeur, unbottled and far from ready to drink at over $500 a bottle. Burgundy Grand Cru from quality producers is also becoming very expensive—a quick internet search for 2005 Richebourg yielded results from $289 to over $1,000 per 750ml bottle. Cult Cabernets from Napa trade in the same range. The big houses will not miss this party; most feel that they are under-priced for the moment, especially given the fact that they release a mature product!
To give a few examples of famous Champagnes that are clearly under-priced in the current market I will start with Salon—we are selling the 1996 for $229. It is 11 years old and from one of the greatest vintages of the 20th century. It would be impossible to buy futures on any 2005 first growth Bordeaux for the price of two bottles of this world class Champagne! The 1996 Krug is another example—when we can get it, it sells for $269 and it is the last vintage made before the Krugs sold to LVMH. The 1996 Dom Perignon Rosé, which is made on a tiny scale and fully worthy of its fame, is selling for $369, certainly not cheap, but still less than 1/3 the price of Screaming Eagle. Laurent Perrier’s Grand Siècle, one of my personal favorites of the grand marque tête de cuvées is a blend of 1996, 1995 and 1993 and represents less than 10% of their production and then only in the years that are good enough to make it, and it sells for $79.99 today at K&L. I have been told directly by the U.S. representative of the brand that it will sell for well over $100 wholesale at the beginning of January 2008.
It is very clear to me that the prices on the famous names, especially the ones with the juice in the bottle to match their reputations, will be taking dramatic jumps in the very near future. The more complex and perhaps more interesting question is that of the growers of Champagne. Apart from a few mavericks like Selosse in Avize and Henri Giraud in Ay, the pricing for grower-produced Champagne is relatively level at the cellar door. The prices in the U.S. market vary mainly on how directly they arrive to market. I believe that this uniform pricing has much to do with a traditional reliance on the domestic market, which will walk over half of a euro. The export market is heating up for the growers and along with it the prospect for higher prices.
I see a similarity between the Champagne of today and the Burgundy of the late 1960s. In both places vineyard holdings are small and owned by many, many different individuals. Forty years ago in Burgundy the negociants owned the sales, but the growers managed a reversal. Now all of the most sough-after wines are estate grown. Is such a reversal possible in Champagne with the gigantic marketing muscle of the big houses? It does not seem likely, but stranger things have happened.
We currently are selling the Bonville Belles Voyes and the 1996 Fleury for $64.99. Both easily compete as wines with any of the famous names above. The Tarlant Cuvée Louis is also of this quality and sells for $44.99. When my next container arrives in December, these prices will go up, but only due to the euro. The ex-cellars prices have remained constant. These growers will no doubt raise their prices for 2008, but only 2 or 3%... How long will deals like this last? For our sake, I hope that the great domains of Champagne do not capture the imagination of the robber barons the same way the great domains of Burgundy have.
My final bit of news from the appellation is news, not speculation. The long, slow process of expanding the Champagne area is now under way and it looks like most of the new vineyards will be in the Aube, Sezanne, and Aisne, all outlying areas of the region. It will take a long time to satisfy the growers (who have half the vote on this issue) of the technical merits of each new hectare. Even after approval it is four years from planting to first fruit and an additional two years from fruit to bottle. It is hoped that this expansion will facilitate a steadier rise in prices—the Champenois are worried that if they don’t expand, prices will go up too quickly and possibly create a crisis. We will taste the first of these new Champagnes in 10 years. I think the writing is on the wall.
Gary Westby, K&L
K&L's German wine buyer Jeff Vierra evaluating the Wehlener Sonnenuhr auslese wines from J.J. Prum.