The Changing Face of Big Champagne

Has the world ever loved Champagne as much as it does right now??

In the US especially, where wine sales have been notoriously flat overall, the public's appetite for?Champagne?has been particularly thirst-quenching for a parched industry. Last year, 33 million-plus bottles of Champagne were shipped to the US, according to the Champagne Bureau – the highest volume shipped anywhere in the world. In terms of value, exports were up 58 percent to the US alone.

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For the first time ever, total shipments of Champagne globally exceeded $6.6 billion. (The US drank close to $1 billion worth of that).?

The vast majority of the Champagne sold and enthusiastically guzzled in the US is made by large entities controlled by corporations – but is this trend sustainable in the face of a younger generation's distaste for big business?

Exploring the landscape

There are around 84,000 acres under vine in the Champagne appellation, across 320 villages or crus – 17 of which are grand – with 280,000 plots supervised by 16,000 growers.?And while there are more than 2000 Champagne houses, just 100 account for more than two-thirds of all Champagne sales – and 90 percent of its exports.

Consider this: the wine and spirits division of Louis Vuitton Mo?t Hennessy (LVMH) owns multiple houses, including?Veuve Clicquot,?Ruinart,?Mo?t & Chandon?and?Dom Pérignon. In the US, Mo?t and Veuve Clicquot sell more than any other Champagnes, and together represent about two-thirds of the Champagne category, according to Market Watch. Just 5 percent of sales belong to smaller family-owned houses, many of which grow their own grapes.?

Champagne is beloved for the intoxicating aromas and flavors this painstakingly produced wine delivers, but also because of what it symbolizes. Luxury, craftsmanship, royalty – whether we think of Louis XV and Madame de Pompadour or Jay Z and Beyoncé.?

And as with all things wine, there's a popular sentiment that not only will smaller, independent houses produce better and more thoughtful Champagne, but that its unique story – not to mention more snackable size – will appeal more to younger consumers.??

But is it that simple? While it may feel more whimsical and romantic to support the hard-scrabble indie Champagne artistes vs. the corporate-owned congloms, economic and climate realities may turn the old David and Goliath truism on its head.?

Despite the financial success Champagne has enjoyed, there are significant headwinds challenging the region's continued smooth sailing. Are independent brands or large-scale corporate-backed houses better equipped to weather the storm??

Uncompromising independence?

At?Champagne Billecart-Salmon, independence from any outside influence is essential to the success of the brand, says the seventh-generation owner and CEO, Mathieu Roland-Billecart.?

The house was founded by Nicolas Fran?ois Billecart and Elisabeth Salmon shortly after their marriage, in 1818. Today, grapes are sourced from around 750 acres, one-third of which are owned by them, one-third of which are run by them by owned by others and one-third of which are grown by families they have long-term contracts with. All told, the house produces around 60,000 cases a year – far more than small growers, but much less than corporate giants like Mo?t.?

"We have a very old-school approach to sourcing grapes," Roland-Billecart says. "Done with a handshake. Our growers know that even during challenging vintages, we will support them, which creates trust on both sides."

This also, sometimes, means a financial loss for his house.

"But we answer only to ourselves," Roland-Billecart explains. "And that is essential to our success. We are one of the few houses where our surname is also the brand name. We live here, we grew up here and we have a deep pride and commitment to the quality and identity of our Champagne. This is not like owning shares of Google. It is part of us."

Roland-Billecart explains that they have thrived on their own by refusing to compromise their principles, but by also evolving with the times.?

"In the early 19th Century, we passed the house strictly from father to son because that was the way it was done," he notes. "But then it became less practical. Now for us, it is essential that we remain in the family, but we pass it from cousin to cousin, and uncle to nephew. It is more about the moment, and what is required, and who has the skills that make them well-placed to meet that need at that time."

The current moment, Roland-Billecart says, requires "relationships, quality and transparency".

"I personally focus on the distributors, importers and restaurateurs who have worked with us for decades and continue to define our success," he says. "I care about my 20-year-relationships with restaurants and Paris and Sydney, and am in touch with them constantly. I was in Italy last week to celebrate 50 years with our distributor, and I’m headed to California to celebrate 50 years with another distributor."

That attention to personal relationships extends to the cellar, where Roland-Billecart insists on aging cuvées well beyond the requirements.?

"Only God can cheat time," he says. "We give the Champagne the time it needs. Our 2008 was just released after 13 years in the bottle. Larger operations answering to investors focused on fast-speed profitability couldn't necessarily do that – but I have the trust of family to do what is right."

With quality and transparency in mind, Billecart-Salmon recently launched My Origin, a code added to all back labels of the brand's non-vintage cuvées, which will reveal details like the base vintage, dosage and disgorgement date.?

David Parker, CEO and owner of Napa's?Benchmark Wine Group, a source for fine wines for retailers, restaurants and collectors, agrees that "family-run companies generally offer commitment, attention to detail and tradition" that larger corporate entities will never be able to compete with.?

But.?

"On the other hand, a family-run business often has difficulty adjusting to new methods and market changes, is often financially strapped and limited on people resources and, where there is no such member of the next generation is ready to step in, can case a succession crisis," he says.?

The benefits of corporate ownership?

Bigger operations, Parker says, have the capital to sustain economically turbulent times and invest in operations that may help them weather climate change more effectively.?

"That extra capital can also go a long way to improving product quality, access to market and stability," he says.?

Ruinart, founded in 1729 by Nicolas Ruinart, is the world's first Champagne house. In the 1950s, the house fell into financial trouble, and Ruinart was eventually sold in 1963 to Mo?t & Chandon. Later, it was subsumed by Mo?t Hennessy when Mo?t merged with Hennessy in 1971, and then again by LVMH when Louis Vuitton joined forces with Mo?t Hennessy in 1987.?

While the game of hot potato likely led to all manner of logistical and personnel headaches, the brand itself thrived, insists Ruinart's president and CEO, Frederic Dufour.?

And thanks to the deep pockets of LVMH, Ruinart has been able to transform its vineyards with climate change in mind. Currently, the house sources 25 percent of its grapes from estate vineyards and the rest from growers.?

"We are committed to promoting sustainable viticulture and favor alternative techniques in estate and grower vineyards," Dufour says. "We are herbicide-free and we have reduced our use of chemicals and fungicides by 50 percent in 15 years. We are especially proud of a 40-hectare plot in Taissy, one of our historic vineyard on the Montagne de Reims, where we have been able to practice experimental vitiforestry, trying new methods of cultivation with the aim of limited the impact of global warming of the vines while promoting soil health and biodiversity."

Climate change, Dufour is quick to acknowledge, is here. And investment is key to ensure a healthy environmental and economic future. He refrained from commenting on how day-to-day and long-term planning works at Ruinart under the direction of LVMH, and whether they establish their own yearly goals and operate independently or whether they are subject to more regular check-ins.?

This reluctance to discuss the realities of work under a corporate umbrella is standard, of course. But observers say that in spite of the very evident financial success of these brands, and their ability to invest in the latest farming and production techniques, there is an element of magic that a certain type of connoisseur might notice is missing in the bottle.?

As Parker says, corporate entities also tend to "dilute the characteristics that make a brand special. While there are exceptions, in general the tendency is for quality to decline when a dedicated independent producer is absorbed by a larger corporate entity."

A middle ground

Just like there is a range of independent growers – from wee family-farmed and bottled 2-acre operations to world-famous mid-volume producers like Billecart – there is plenty of nuance in the world of brands are owned entirely by another entity, or have investors.?

Take?Laurent-Perrier. While the house is technically independent – it was founded in 1812 by André Michel Pierlot, and has changed ownership a few times, and is now owned by the Nonancourt family, who purchased it in 1939 – it is also listed publicly on the French stock exchange. Currently, third-generation family members Stéphanie Meneux de Nonancourt and Alexandra Pereyre de Nonancourt run the House.?

"It was listed in 1999, when Champagne was a hot commodity and we were preparing for the biggest party of all time – Y2K," says Michelle DeFeo, president of Laurent-Perrier US. "The family wanted to raise money and create a state-of-the-art house, and we saw this as an opportunity to do that."

Only 40 percent of the house's shares is traded publicly, and the offering was made in the spirit that everything is done at Laurent-Perrier, DeFeo explains.?

"We told the growers we work with first and asked them to participate," DeFeo says. "Now, many of them are shareholders. But by listing the house on the exchange, we were able to remain independent while still having the capital to invest. We acquired new vineyards and built a new winery."

Like Billecart, DeFeo says that their independence allows them to focus on quality, not short-term financial growth.?

"I have worked for other publicly traded companies that operated very differently," DeFeo says. "Here it's different because it’s a family of owners who are setting the strategy, not investors. We age our Champagnes for three years longer than the legal minimum for our least expensive line because we know it’s better in the long-term. We will never be the richest house, and we don't have higher-margin industries like luggage and watches to fall back on. But we make great Champagne."

The Nonancourts may not be knee-deep in monogram leather trolleys, but thanks to their canny economic strategies, the house has still thrived.?

"We went from being number eight to being number three in sales in the US," DeFeo says.?

At?Piper-Heidsieck, meanwhile – one of the many iconic houses bounced from one owner to another over the years – the brand has landed in the hands of a family-run corporation that appears to have the deep pockets of an anonymous corporation, with the philosophy of a family with deep roots in wine country.?

Founded in 1785 by Florent-Louis Heidsieck, the company merged with Heidsieck in 1839. In the late 1980s, Rémy Cointreau snapped it up as part of its wine and spirits division.?The fit was never great.?

"Rémy was focused on short-term financial results, and they never invested in Piper or really honored its incredible legacy," a Champagne executive notes on background, asking to remain anonymous. "The house did not thrive under Rémy."

And Rémy was more than willing to cut its losses and refocus on its spirits division. (Though in recent years, it has returned to Champagne, scooping up a majority stake in Champagne de Telmont in 2020). In 2011, Champagne Piper-Heidsieck and the?Charles Heidsieck?brand were sold to Société Européenne de Participations Industrielles?(EPI) in a deal valued at around $597 million. EPI is the holding company of the Descours family, which owns upscale French clothing brands and the smaller?Luberon?estate Chateau La Verrerie.?

Honoring Piper-Heidsieck's legacy by investing in the future soon became EPI chairman's Christopher Descours passion project. He approached Damien LaFaurie, previously the director of global operations for Rémy, for help.?

"We had worked together on the deal," LaFaurie says. "And, a few years after purchasing Piper, Christopher approached me and told me he wanted to create something truly special with Piper. I was intrigued, so I joined."

Since 2015 when LaFaurie officially came on board to chair all of the wine and champagne activities of EPI, he has worked with Piper-Heidsieck's chief winemaker émilien Boutillat to re-set the house's objectives and journey.

"For us it is about creating fresh and vibrant Champagnes, the same Champagnes that Piper-Heidsieck built its legacy on, despite climate change," explains Boutillat.

To do that, Piper-Heidsieck has started working with more growers in the Northern reaches of Champagne, "regions where growers once struggled to ripen their grapes. It also means increasing the percentage of?Pinot Meunier?in our cuvées, limiting malolactic fermentation and changing the way we and our growing partners farm. Most of all, it means investment and experimentation."

Since 2015, the house has obtained HVE3 (High Environmental Value) and VDC (Sustainable Viticulture in Champagne) for its vineyards, become a certified B-Corp, invested in two electric tractors, launched an experiment with organic growing in the vineyard, worked with growers to convert them to sustainable and organic viticulture and planted around an acre of the recently approved experimental mold-resistant hybrid grape Voltis.?

Starting next year, all of the wine shipped to the US will be done via an eco-friendly sailboat, LaFaurie says.

But the most exciting stride toward the future, according to Boutillat, is their new release: the Essential Blanc de Noirs.?

"This is our future," Boutillat says. "All of the grapes in this release are 100 percent sustainable. It is the Champagne of the future, and not just because it is sustainably farmed, but because of the blend of 80 percent?Pinot Noir?and 20 percent Pinot Meunier, which we see as being better positioned for climate change than the Blanc de Blancs. And it's exciting because I saved enough this year to build a new 100-percent sustainably grown reserve for future vintages. Plus, we're the first big Champagne house to delve into and label a Champagne Blanc de Noirs."

All of these farming and winemaking projects have required a financial outlay that EPI won't see a return on for many years – a rare gamble in the world of corporate Champagne.??

"Piper is in a much better place with EPI," the Champagne executive says. "Because the team there has a family mindset. It's not an investor mindset. They want what's best for the product and its reputation, long-term."

David and Goliath?

Beyond just long and short-term plays, and cash for experimentation, there are stylistic issues to contend with.?

"Grower Champagnes, which represent less than 5% percent of the Champagne sold, typically grow and farm the grapes and produce and bottle the Champagne," says Ryan Fillhardt, wine director and executive chef of Tasting House in Los Gatos, CA, which features a list of 400-plus wines on its list, and offers more than 65 options by the glass. "They have smaller vineyards, and their Champagnes could show variations from vintage to vintage."

While Fillhardt says he likes to "support these smaller operations", he notes that their can be "inconsistency or variation from vintage to vintage".

Larger houses typically blend their Champagne with the goal of making them consistent, he says, adding that "when a consumer finds something they love, it will usually be the same each year".

And as it turns out, when it comes to the luxury sector – which Champagne, more than any other wine region in the world, is a gilded occupant of – Millennials and Gen Z are less focused on the story and quirks behind the brand, whether it's a leather wallet or a bottle of bubbly.?

Consider this: despite economic challenges, social turbulence and the PR nightmares encompassing several iconic brands accused of everything from overt racism to perpetuating child pornography, the luxury market generated positive growth for 95 percent of brands, growing an estimated 21 percent year-over-year, according to an analysis from Bain & Company.?Millennials, Gen Y and Gen Z led that growth.?

Will America's romance with Champagne – in all of its guises – continue? And how will Champagne makers continue to create their iconic flavors and bubbles in a steadily warming and cash-strapped world? We'll be waiting and watching – and sipping.

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https://www.wine-searcher.com/m/2023/07/the-changing-face-of-big-champagne