Exceptional year 2022 for champagne, turbulence in sight in 2023

Exceptional harvest, high-end bottles and record exports: the year 2022 will have been extraordinary for the champagne market, which could however face some tremors in 2023 due in particular to inflation.

After an already excellent 2021, driven by the reopening of bars and restaurants after the Covid-19 pandemic, the prestigious drink confirms its rebound despite tensions on raw materials or logistics, taking advantage of a global thirst sharper than ever. According to the annual report of the Interprofessional Committee of Champagne Wine (CIVC), 325.5 million bottles were sold in 2022 (+1.6%), the highest volume in 15 years, with a "record" turnover of 6.3 billion euros (+11%), he said in December.

Since then, several Champagne groups have posted good results, with an increase in their net profit. That of Laurent-Perrier, number two in the sector according to the Champagne Committee, is up 16.4% on its fiscal year 2022/23, the group announced Friday. Earlier in March, its competitor Lanson-BCC (number 5 in France, according to the CIVC) announced the doubling of its net profit last year compared to 2019, the base year, before the pandemic.

To curb the soaring production costs (glass, gas, etc.), champagne houses have increased the prices of their bottles, accelerating a policy of "moving upmarket" initiated in recent years. This increase - which the Lanson-BCC group estimates on average at 12% for its bottles and 9.4% for the entire profession - has not however discouraged wealthy buyers in the United States or the United Kingdom.

Exports of prestige cuvées, for example, grew by 18.2% last year, according to the Comité champagne. And nearly 58% of French bottles are now sold for export. The average price per hectare in Champagne also rose again in 2022 and exceeded one million euros (+2.4%), "on a very active land market," said Thursday the rural land regulator Safer.

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2023, a "more difficult?" year

However, the champagne market showed some signs of fatigue in the second half of 2022, due to tensions on raw materials, especially glass, and inflation that is weighing more and more heavily on consumer purchases. The share of fine bubbles sold on the French market decreased by about 2% last year, according to the CIVC.

While the increase in the price of bottles helped maintain sales growth, sales in number of bottles decreased for family groups such as Laurent-Perrier (-7.9%). Global giants such as LVMH (Dom Pérignon, Veuve Clicquot...) are less affected. After "two years of recovery (...) we believe 2023 is likely to be a challenging year," broker Oddo BHF said in a note on Monday.

According to financial analyst Fatma-Agnès Hamdani, the slowdown in demand "seems to have begun in the second half of 2022 in the distribution channel in France, the United States, the United Kingdom and Germany". Brands "highly exposed to French retailers", such as Burtin and Chanoine for Lanson-BCC, have also had a "more difficult" year than those sold abroad, the group said in mid-March.

According to Oddo BHF's note, various houses have chosen to sell fewer bottles in the second half of the year "to preserve future sales", at the risk of encountering difficulties in meeting orders. The sector also anticipates a decline of 5 to 8% in the volumes of champagne shipped, to which are added "the uncertainties related to the geopolitical context and the economic situation," said Lanson-BCC.