A Veuve Clicquot bottle is seen in this file photo.Della Rollins/The Globe and Mail
Depressed by weak economies and the lingering shadow of a sovereign debt crisis, Europeans are struggling to find good reasons to crack open the bubbly.
The European gloom means that after two years of increases, producers will dispatch about 9 million fewer bottles of champagne worldwide in 2012, a 3-per-cent drop to around 314 million, industry estimates gathered by Reuters showed.
But more expensive tastes in export markets such as Japan, the United States and China mean champagne revenue as a whole will likely match or even pip the €4.1-billion ($5.4-billion U.S.) achieved last year.
"Despite the drop in volumes, champagne will still have one of the three or four best performances in history," said Bruno Paillard, chief executive of Lanson BCC, the world's second-biggest champagne group.
The market is dominated by luxury group LVMH Moët Hennessy Louis Vuitton SA, which owns the Dom Perignon, Moet & Chandon, Veuve Clicquot, Ruinart and Krug brands. Specialist champagne-makers also include Laurent Perrier, Vranken and drinks group Pernod Ricard's Mumm and Perrier-Jouet brands.
Sales of champagne – which by definition can only be produced in the northern French region of the same name – peaked at 339 million bottles in 2007 for record industry revenue of €4.5-billion.
In France, the top sales market for champagne accounting for 52 per cent of volumes, demand was down 5 per cent by October with no sign of the trend improving.
"This year has been tough, with a fraught economic situation in France and Europe," said Thibaut Le Mailloux, spokesman for the Comite Interprofessionel des Vins de Champagne (CIVC) trade association, of the stagnant economy across most of the zone.
The British market, the world's biggest importer of champagne with 10 per cent of total exports, remains very difficult and competitive after seeing a drop of 3 per cent in 2011, industry executives said.
Despite the Diamond Jubilee celebrations for Queen Elizabeth and the Olympic Games in London, champagne sales volumes were down 7 per cent at the end of October in Britain.
The overall drop in Europe 10 months into the year was 6 per cent. The CIVC is due to publish detailed statistics for 2012 in February.
"Consumption remains bad in Europe, with a significant slowdown in demand, particularly in France," said Etienne Auriau, finance head at Laurent Perrier.
In contrast, champagne exports to countries outside the European Union were up 5 per cent as of October, boosted by demand in the United States, which in 2011 took 35 million bottles, and Japan, which took 7.9 million.
Russia has remained dynamic, while Chinese demand is expected to double this year to about 2 million bottles.
"The (Chinese) market is still in its infancy, but it is capable of evolving very quickly," Laurent Perrier's Auriau said of a market which this year became one of the top-ten export destinations for champagne ahead of Sweden and behind Spain.
Consumers in markets outside Europe are particularly attracted to rose champagnes, special vintages and bottles containing grapes from a single harvest, as opposed to normal "brut" champagnes that contain a mixture of years.
"Upmarket bottles are selling better outside the European Union," the CIVC spokesman said. "The positive trend in new markets is favourable in terms of value."
Still, the diverging trend between Europe and countries such as the U.S., Japan and China, is creating a two-track industry contrasting independent producers that sell almost all their champagne in France with big groups with large distribution networks that can tap into growing markets further afield.
"Champagne is two-speed: the houses with a strong image, highly exposed to exports, are doing well," said one industry insider. "The others are having to fight."