As President Donald Trump targets Champagne in an escalating trade tussle with Europe, makers of one of France’s quintessential luxuries are losing support from domestic drinkers.
Corks are popping less abundantly in France, an additional headache for Champagne producers already facing the double threat of U.S. tariffs and the U.K.’s planned exit from the European Union.
Even as overseas markets continued their growth, a decade-long slide in domestic demand worsened in 2018, with sales in France falling by 6.5 million bottles. The slump appears to have continued this year after a plunge in sales during the country’s autumn wine promotions. To top it off, a transport workers’ strike dragged on into the Christmas season, cutting end-of-year spending.
“In a difficult economic and geopolitical context, the uncertainties linked in particular to Brexit and the French market remain, and still call for much caution,” producer Laurent-Perrier said this month in warning about the outlook for its fiscal year through March.
The company said its Champagne sales fell 0.6% in the first half.
While globally recognized brands like LVMH’s Dom Perignon and Pernod Ricard SA’s Perrier-Jouet have ridden a wave of export demand over the past decade, domestic drinkers remain key to the industry. About 147 million Champagne bottles were shipped in France last year, roughly three times as many as the combined total of the U.K. and the U.S., the top two export markets.
French supermarkets have long helped drinkers stock their cellars ahead of the holidays with two-for-one promotions that cut the per-bottle cost to less than 10 euros ($11). This year, a new law aimed at boosting prices for farmers barred retailers from dangling such loss leaders. That contributed to a 34% slump in Champagne sales during retailers’ autumn wine fairs, according to research firm Nielsen.
The plunge during the September and October sales exacerbates a trend of falling Champagne demand in France as cheaper alternatives gain traction. Volumes sold in supermarkets fell 3.5% in 2018, while foreign bubbly such as Spanish Cava and Italian Prosecco jumped 58%, according to data from Symphony IRI published by FranceAgriMer, a trade group for farming and fishing.
Cheaper Alternatives
“There will certainly be a lot of volume that is not finding a home, and that’s never good for an industry,” said Nathalie Viet, head of France’s Syndicat des Cavistes, a union of specialist wine sellers.