Corks pop towards Asia, Mumm's the word

One of France's best known Champagne houses, G.H. Mumm, will pivot its attention to booming markets in Asia, especially China, as double-digit growth in sales of bubbly across the Pacific counters an expected slowdown in western Europe under the weight of that continent's continued economic malaise.

Philippe Guettat, chief executive of Martell Mumm Perrier-Jouët, a division of the French drinks giant Pernod Ricard and which makes him the man in charge of iconic Champagne brands G.H. Mumm and Perrier-Jouët, warned overall global sales could shrink to 3 per cent growth in the near term due to nervous consumers in Europe.

"I think the global champagne market is doing very well. Last year was a good year overall and our friends are doing pretty well as well, but overall we might expect a bit of a slowdown in Europe, especially with the difficult economic time," Guettat said in Melbourne this week as he attended the Melbourne Cup carnival where G.H. Mumm is the official Champagne.

"I think we might have a slowdown this year because of the weight of western Europe, and overall in the long run we are seeing growth of 3 per cent on average."

A flat global Champagne market of about 3 per cent would be less than half the growth witnessed last year when sales of Champagne worldwide recorded a 7 per cent jump to a volume of 323 million bottles.

But any growth would be welcomed by France's close-knit family of Champagne producers after sales plummeted as much as 20 per cent in some countries during the worst of the global financial crisis in 2008 and 2009. Champagne sales were quick to bounce back after the GFC; in 2010 global sales rose nearly 9 per cent, recovering from a drop of 5 per cent in 2008 and of close to 10 per cent in 2009.

Earlier this year the industry association Comite Interprofessionel du vin de Champagne (CIVC) estimated that about 330 million bottles of Champagne were dispatched last year when prices were up 3 to 5 per cent on average. That would take sales close to the record year of 2007 when 339 million bottles were sold and revenues reached €4.5 billion ($5.68 billion).

During the GFC it was the emerging markets of Asia and to some extent Australia that helped shift extra bottles unwanted by European and North American drinkers, and it is in the region to our north that Guettat sees great potential for G.H. Mumm as well as Perrier-Jouët.

"Elsewhere in emerging economies, the Asia-Pacific, the Champagne market is growing and continuing to recruit new drinkers," Guettat says.


Last year Champagne sales to Singapore were up 20 per cent to 1.45 million bottles and China was up 19.4 per cent to 1.31 million bottles.

"At the moment Asia is doing very well. China is one of the key markets and has been growing on average 37 per cent for the whole industry every year for the last 10 years.

"We are pretty strong in China and we are No.1 in imported wine and spirits, and in terms of Champagne we are equal leader [with Moët]."

Pernod Ricard's success in China is being driven by a massive thirst among Chinese people for its Martell cognac and its Chivas Regal whiskey which is outselling Johnnie Walker in that liquor category.

Closer to home in Australia, G.H. Mumm is increasing in popularity with locals thanks to a massive investment in the brand which includes its sponsorship of the Melbourne Cup, now in its third year, which it took from arch rival and market leader Moët & Chandon.

Guettat says G.H. Mumm has grown 120 per cent in the past year.

"That has been an amazing boost. I think the brands [G.H Mumm and Perrier-Jouët] have jumped from eighth position to third position and this exposure we are getting from the Melbourne Cup is an enormous springboard for the brand and has really enabled us to grow to new dimensions, and building awareness at the same time."

Almost 100,000 bottles of Champagne are consumed during the Cup Carnival each year.

Indeed, Australians are reaching for a glass of Champagne like never before with figures from France's Champagne Bureau showing Australia imported 4.86 million bottles last year, an increase of almost a third, helped by the soaring dollar.

That made Australia the eighth-largest import market in the world for the beverage.

But that strong Australian dollar, which has made the beverage much cheaper, has also come at a price for Champagne houses with many retailers sourcing their supplies from outside the official distribution channels organised by Pernod Ricard and buying bottles on the grey market. This strategy is also sometimes known as parallel importing and is especially popular when retailers can buy Champagne at cheaper prices overseas than from the local distributor.

It is an issue Guettat is keenly aware of.

"It's a free market and there is always a possibility to buy elsewhere. I think our duty is to just make sure we can really provide the best value for money here in Australia both in terms of the service and price.

"With the increased power of the Australian dollar it means we have to adjust our overall commercial policy at the same time to make sure that in fact we can let the retailers source directly from Australia, which is a guarantee as well for the best quality in terms of the way the Champagne is kept and stored under the best conditions."

Helping Champagne houses such as G.H. Mumm in the battle against parallel importing and falling prices could be early indications that France's grape harvest was expected to slump by almost 20 per cent compared with last year, to mark one of the weakest harvests in nearly 50 years. French figures show that in Champagne the harvest could decline by up to 40 per cent.

This will put extra strain on supply and limit the amount of Champagne leaked into the grey market.

This article Corks pop towards Asia, Mumm's the word was originally published in The Sydney Morning Herald.