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

As for champagne, "the next six weeks will tell us a lot," said John Polis, sales manager for Republic National Distributing Co., the largest wine distributor in the Washington area. Last year, some premium champagnes could be found for under $30 a bottle, he said. Not this year. "It's a pretty critical price point they passed over."

Industry officials said U.S. distributors and consumers are absorbing most of the price increases, not the French producers, whatever they may say. The nature of champagne, these officials said, is sparing the producers the need to chase money.

"One factor of the declining dollar is the success and growing aspirations and investment opportunities in other parts of the world, and people who become wealthy as a result want to buy things like champagne," said Andrew Lilico, managing director of the London financial consulting firm Europe Economics.

"It's probably no coincidence that there are very high oil prices recently, and Russia is an oil exporter, so there is a group of Russian elites feeling that times are very good, and they're buying lots of champagne."

Agnes Laplanche, a senior official at G.H. Mumm, producer of the third-largest-selling champagne in the United Statesi, said, "There's new money in the world, and these guys are ready to pay full price." The company is one of several in Reims that has massive, state-of-the-art production facilities alongside magnificent chateaus.

Sales in Asia, Russia and India were "exploding," Laplanche said, while sales in the United States for the 12 months ending in June were down more than 927,000 bottles compared with the year before, a 4.4 percent decline.

Three years ago, the United States was the biggest customer for J. Lassalle, a highly regarded boutique producer in Chigny-Les-Roses, a small village about five miles south of Reims surrounded by gently undulating hills that nurture neatly pruned rows of gnarly vines. Today, Russia is its biggest customer, followed by Japan and the United States, said Angeline Templier, who owns and runs the company with her mother and grandmother.

The dollar's decline so far has had "no impact" on sales in the United States, Templier said, but "the emerging markets are growing and growing."

Champagne producers, meanwhile, said they were concerned about the downward trend in U.S. sales because the United States is considered a key market for growth. American consumers typically drink champagne only at times of celebration, such as Thanksgiving, Christmas, New Year's and birthdays. In "mature" markets such as Britain, however, people drink six times as much champagne as Americans. In France, almost 40 times as much is consumed.

Sales of some brands seem to be immune from price increases, analysts said. Consumers willing to pay $275 for a bottle of vintage 1990 Dom Perignon probably are not going to flinch if the price rises by $25. In fact, economists and industry officials said, a reverse psychology sometimes kicks in with luxury goods: The more the price goes up, the fewer people can afford it, the greater the prestige if you can buy it, so the more you want it, and the more you are willing to pay.

For others, champagne has a built-in defense against such forces as currency fluctuations.

"As Churchill said, 'In victory you deserve it, and in defeat you need it,' " said Lorson, the champagne trade association official. No matter what happens, "In the end, it's positive for the Champagne region."

Researcher Corinne Gavard contributed to this report.