The holidays are approaching, so you know what that means: talk of a champagne shortage and skyrocketing prices.
The most obvious pressure is the shipping crisis roiling the global economy as a result of the coronavirus pandemic. This problem has been going on for months, forcing importers and distributors to juggle inventory and place orders several months in advance. With the wide variety of wines available on the retail market, consumers may not have noticed much disruption.
And with champagne, at least, there’s low supply. The region has seen reduced yields the past few years, mostly because of vintage conditions. At harvest time, the Comité Champagne, the regional trade body, sets a limit on how much champagne can be produced per acre. (The rest goes mostly into vinegar or distillation.) Producers are required to hold a portion of each harvest back as reserve wine to be blended in with future harvests to create multi-vintage blends. This is a historic hedge against poor vintages in a northern wine region. It’s also a way to manage prices.
Last year, with a good but modest harvest, the Comité Champagne set levels even lower, at a little more than half the usual limit for an ample year, and about 25 percent less than 2019. The Comité Champagne president told Meininger’s Wine Business International that the region was facing its worst crisis since World War II. Demand for champagne had plummeted in the initial months of the pandemic, even though wine sales in the United States, at least, grew overall. But then came 2021, with 12 nights of frost in early April reducing the region’s crop by 30 percent. Another 30 percent was lost to persistent spring rains and mildew. Then there was hail.
Severely reduced production in 2020 and 2021 will be felt most acutely in the market in 2023 or 2024, because most champagne houses age their wines two to four years in bottle. But we (or at least, champagne houses) are already beginning to feel the effects of reduced harvests the past few years. So the acute shortage now is an incentive to hold on to stocks to assure they have product to sell in coming years.
And now let’s look at demand from an importer’s perspective. In late 2019 and early 2020, Vintus, a New York-based importer, stocked up on Bollinger champagne in anticipation of higher tariffs threatened by the Trump administration. When the pandemic hit and the economy went into a tailspin, sales plummeted initially, Alex Michas, the company’s president, told me.
“Then everything came back in June and July,” he said. Sales boomed through fall and winter, and stocks ran out in some parts of the country. By April of this year, “Bollinger told us our orders were off the charts and we had to place some limits,” he said.
Econ 101: High demand plus lower supply equals even higher prices.
“Champagne prices [are] rising fast on fine wine market,” Decanter warned in mid-October. The leading British wine publication quoted the head of investment at the Bordeaux Index (getting whiplash yet?) saying top vintage cuvées such as Dom Pérignon, Louis Roederer’s Cristal and Taittinger’s Comte de Champagne were increasing in price by as much as 9 percent.
Even champagne that’s not quite in that stratosphere is feeling the effects. Laurent Givry, co-owner of Elite Wines, a Lorton, Va.-based importer, says he has sold through his annual allocation of Billecart-Salmon, a popular label, and won’t be able to get any more before next spring.
“Champagne is exploding,” Givry says, adding that this was his best year for champagne sales. “I’m already making plans for 2022, and I don’t know if I’ll be able to buy enough,” he told me. He called the supply chain issues coupled with reduced harvests and soaring demand “a perfect storm.”
Givry quoted a maxim from his grandmother: “She always said that when the economy is poor, luxury goods do well.”
So what does all this mean for us consumers? Both Michas and Givry agree: If you have a favorite champagne, buy it now for the holidays if you can find it. It might not be available in December. Much will depend on local distributors’ inventories. This may be a good opportunity to try champagne from a smaller, less-known producer.
There are other bubblies, of course. Spanish cava and Italian prosecco are suffering the same supply chain issues, but not the production problems of champagne. And don’t forget domestic — even local — bubbles. They may not depend so much on container shipping, but they are enjoying high demand.
“We carry Iron Horse,” Michas says, referring to a top California producer of sparkling wine. “We can’t keep it in stock.”
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