In France, Dollar's Decline Fails To Burst Champagne's Bubble

REIMS, France -- Fancy some French bubbly this holiday season? Brace yourself. The bottle of tongue-teasing champagne that was 20-something dollars last year is up to 30-something this year, thanks largely to the season's big party pooper, the tanking dollar.

Here in the heart of France's Champagne region, the rising price of champagne is causing a sinking feeling about U.S. sales this month and next, when Americans traditionally make most of their purchases. With the declining dollar and gloomy economic feelings, champagne sales were already down more than 12 percent in the first half of this year, and officials say the remainder of the year looks equally grim.

"It's getting less profitable for everyone," said Daniel Lorson, a spokesman for the region's trade association, known by its French abbreviation CIVC. With the value of the dollar down about 15 percent since last holiday season, he said, "we're starting to suffer."

But it's not all gloom and doom here in Champagne, a region of rolling, vine-laden hills and small villages about 80 miles east of Paris, because champagne sales are a remarkably accurate barometer of the world's economic health. While sales are dropping in the United States, they are skyrocketing in places where times are good.

Sales to Russia rose 158 percent and to China by 74 percent in the first six months of the year, according to CIVC data. The data prove that, economically speaking, when America sneezes, the rest of the globe no longer gets a cold.

"If I sell a little less in the U.S., I sell a little more in India -- market share means nothing to me," said Pierre-Emmanuel Taittinger, 54, owner of Champagne Taittinger, a legendary house that has been making champagne since 1735. "We live in a global world."

"The dollar is weak today, tomorrow it is strong -- what can I do?" he said.

Sitting in a spacious office 100 feet above 3 million bottles of his product, which are aging and fermenting in nearly two miles of ancient Roman quarries and caves excavated by Benedictine monks, he struck a philosophical note: "I'm like the monks 300 years ago in our cellars. My job for 50 years is to produce a marvelous champagne and then pass away."

The dollar's decline is raising the cost of a variety of U.S. imports, from foreign cars and clothes to airplane parts and pharmaceuticals. It is contributing to price increases in oil and food, and has raised concerns about increases in interest rates and inflation.

A year ago, it took $1.25 to buy a euro. In early trading yesterday, the euro hit $1.4966 before retreating to $1.4838. Some currency analysts expect the euro to top $1.50 before the end of the year.

Treasury Secretary Henry M. Paulson Jr. said recently that a "strong dollar is in our nation's interest," but some analysts questioned his conviction, noting a trade-off: A weaker dollar makes U.S. goods cheaper to buy abroad, which fuels exports and lowers the trade deficit with other countries. The opposite tends to be true for products from countries whose currencies are gaining in value. For example, officials at the European aircraft company Airbus say that for every 10-cent decline in the dollar's value, they lose about $1.3 billion in profit.

In a speech to Congress during his recent visit, French President Nicolas Sarkozy cautioned that a weak dollar "cannot remain solely the problem of others" and warned that "monetary disarray could, indeed, morph into economic war."