Champagne fails to agree 2020 yield amid “worst crisis since WW2”

By Giles Fallowfield, Published by Harpers online:  24 July, 2020 

The two presidents of the CIVC, Jean-Marie Barillère, president of the UMC and (left) Maxime Toubart, president of the SGV

The Champenois are in disarray as efforts to reach agreement on the level of yield for the 2020 harvest failed at a recent meeting of the Comité Interprofessionnel du Vin de Champagne (CIVC) in Epernay.

The two sides of the business, the négociant merchants on the one hand, as represented by the Union des Maisons de Champagne (UMC) and the Syndicat Général des Vignerons de la Champagne (SGV), the main growers’ union, were too divided to deliver a mutually agreeable figure.

The UMC, which promotes the interests of the major houses that dominate worldwide sales of Champagne, wanted the level of yield for the 2020 harvest to drop by around one third in line with the fall in shipments in April and May 2020, following the disastrous impact of the coronavirus. The SGV, which aims to protect the interests of growers – both those selling grapes to the négoce and those marketing their own wines – wants to see yields stay at around the recent, already reduced level, of about 10,000kgs/ha (it was 10,200kgs/ha in 2019 and 10,800kgs/ha in 2018 but average levels have been nearer 12,000kgs/ha in the past two decades).

The meeting will not be reconvened until Tuesday 18 August, by which time there is a danger that picking the harvest will have already begun in the earliest ripening crus and villages of Champagne, such as those in the Côte des Bars and Sézannais.

It will be the sixth harvest since 2003 that has started in August and the CIVC has confirmed what Ruinart’s Chef de Cave Frédéric Panaïotis told journalists in a Sustainability in Champagne Zoom tasting earlier this week, namely that the harvest was running two weeks early.

The CIVC expects picking to start around the 20 August, but agrees certain individual crus could begin earlier, as Ambonnay did in 2018, when the secateurs came out on 17 August – a record for the appellation.

Disagreement and resentment has been building between the growers and négociant merchants pretty much since the impact of the pandemic became apparent. As many countries went into lockdown, total Champagne shipments fell by 68% overall in April 2020 compared with April 2019, with the monthly volume dropping by 13.23 million bottles.

In France, which still accounts for around half (47.5% in 2019) of the worldwide Champagne market by volume, shipments in April were down by 74.6%, or close to 7 million bottles, while shipments to the wider European market excluding France dropped by 65.2%, or 2.82 million bottles, and exports outside Europe fell by 59.7%, some 3.5 million bottles.

In May, the position only marginally improved in France, and although the month-on-month percentage decline is lower at 55.4%, it’s still a drop of another 5.2 million bottles.

In the rest of Europe, the decline also slowed with May 2020 shipments down 50% on May 2019 (2.4 million bottles), while outside Europe, the picture remained grim with the decline increasing to 62.6%, or 3.29 million bottles.

In the first five months of the year, overall shipments dropped 32% to 61.37 million bottles compared with 90.3 million bottles in the first five months of 2019. (And the total volume of sales in 2019 was the first in the past decade below 300 million bottles and the lowest since 2009 when, in the year following the global financial crisis, shipments fell to 293.3 million bottles).

The CIVC has estimated that the overall loss in sales volume in 2020 may be as high as 100 million bottles with turnover down by more than €1.7 billion (£1.54/$1.96 billion). In 2019, 297 million bottles of Champagne were shipped worldwide and their value reached a record €5.05 billion.

On 30 June, joint president of the CIVC and UMC president Jean-Marie Barillère took the unusual decision of going public on what he thought the yield level should be, three weeks before the ‘agreed’ decision was expected to be announced. He called for a maximum permitted yield of just 7,000 kg/ha, which is 3,200 kg/ha below the level of the 2019 harvest.

“Champagne is going through a serious crisis of a scale unprecedented since the Second World War,” he warned.

“The loss in sales is estimated between 20 and 40% and could reach 100 million bottles (representing a value of €1.7 billion) in the event of a possible rebound of the pandemic after the summer.”

He added, “the houses and their Union (the UMC) are ready to go beyond this figure, if and only if, part of this 2020 yield is considered as an advance on the 2021 harvest, to be used in blends of base wines in 2022, and also paid for in 2022”.

Since the aborted meeting ended, his counterpart Maxime Toubart, president of the SGV and also joint president of the CIVC, has said that the UMC position was based on too negative a forecast and accused the major houses of trying to reduce their stocks.

In the first five months of 2020, it’s the growers who have taken by far the biggest hit. Their shipments are down 42.5% in that period, dropping from 15.29 million bottles in the first five months of 2019, to 8.8 million bottles in January–May 2020, while the houses and co-ops have lost ‘only’ 29.9% and 30%, respectively.

The growers’ cash flow has also been hit by the drastic measures announced by the CIVC on 5 May this year aimed at maintaining a stable market. As well as temporarily suspending the sur-lattes market, where unbranded Champagne bottles are bought and sold, in an effort to prevent dumping at greatly reduced prices (a ban that ran until the end of June), the CIVC decreed that the last two payments for the 2019 harvest could be delayed.

Grape growers are usually paid for their grapes by the houses in four quarterly tranches: on 5 December after the harvest; on 5 March the year following the harvest; and then 5 June and 5 September. However, the CIVC announced that these last two, the third and fourth payments for the 2019 harvest, could be delayed until 5 October 2020 and 5 January 2021 respectively, thus helping the cash flow of many of the houses whose sales have slumped.

What will happen on 18 August is anyone’s guess, though historically the Champenois are very good at reaching compromises, which is a major part of why Champagne has been so successful. If shipments do indeed recover, such a compromise will be far easier to reach.


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