Toast of the 20s: Age of decadence as luxury champagne sales bubble
18 Nov 2022 --- A gold rush of affluent consumers toward champagne is draining stocks of high-end bottles. Meanwhile, even during a year of inflationary pressures, other luxury foods, such as caviar, are seeing firm-up demand. Signs are pointing to a new roaring 20s for the food industry, in an authentic renaissance of the now centennial “années folles,” or “crazy years,” where excess primed over old-fashioned Aristotelian moderation.
“Champagne sales are expected to be around 325 million bottles by the end of 2022, compared to 320 million bottles in 2021. We are rather optimistic for the coming years. Still, of course, as a luxury good, it is sensitive to the global economic evolution,” Brigitte Batonnet, press officer at the Comité interprofessionnel du vin de Champagne, tells FoodIngredientsFirst.
“Some brands or some special cuvees may be missing [from shelves], but the whole champagne appellation has more than three-year stocks and there will be no champagne shortage,” she highlights.
While general champagne sales have grown 1.6%, high-end sales are driving profits in the sector, with chief executive Philippe Schaus of LVMH telling Bloomberg that they are running low in stocks for their best champagnes and that the company is dubbing the situation internally as “the roaring 20s.”
Conversely, skyrocketing food inflation across nations is forcefully reshaping mainstream consumer attitudes toward money-saving mindsets, such as choosing lower-cost items and cooking from scratch.
This begs the question, can consumers engage in frugality while they are constantly bombarded through social media with posts from celebrities and friends engaging in expensive food-related experiences?
Redefining values fuels revenge spending
Innova Market Insights has identified “Redefining Value” as its top F&B trend for 2023, as consumers adapt to a global cost-of-living crisis in the face of economic and political volatility. However, consumers still remain determined to sample new experiences.
The market researcher also unveiled as its eighth trend, “Revenge Spending,” how consumers are urged to spend money now, even in strained economic times – and in part to make up for opportunities lost during the pandemic. With shoppers seeking these experiences from time to time, they opt for saving money on regular days.
Consumers are looking to indulge in enjoyable experiences. Mood-lifting and intriguing sensations are being prioritized with interesting collaborations and limited editions giving new life to old favorites.
“The majority of consumers say they are in a worse financial position this year, but they are likely to make a one-time impulse purchase when there is something innovative or fun,” Lu Ann Williams, global insights director at Innova Market Insights, tells FoodIngredientsFirst.
Innova highlights that “small pleasures” are posing a heightened effect as luxury spending comes under pressure. Still, consumers have evidently spent significantly more on F&B products post-lockdown, presenting new opportunities to enhance brand perception. This has led to a 30% average annual growth in launches with a limited-edition claim over the past three years.
No headwinds in the skyscrapers top floors
The world’s leading luxury brand LVMH and its Champagne Maisons – which comprises Moët & Chandon, Veuve Clicquot, Krug and Dom Pérignon – reported 23% growth in the first nine months of the year in a banner year for the company.
LVMH is banking on a “firm policy of price increases across all regions to offset the effects of the logistical disruptions in the US and the impact of health restrictions in China,” according to its Q3 financial statement.
The “excellent momentum,” as the company writes, is putting pressure on its supplies, even at higher prices.
For the following year’s bottles, producers have seen a “most fortunate” harvest this season, with Champagne Houses president, David Chatillon, noting that “market demand is strong” (up 9% at the end of August compared to the previous year) following 2021’s already high figures.
“The profession remains optimistic for the future, despite the uncertain economic climate. The fine grapes harvested this year are set to make great wines that will surely satisfy consumers’ expectations.”
After the pandemic, the boom of spending on online caviar sales is driving caviar producers to increase their manufacturing capabilities and feed the insatiable demand.
Uruguay’s Caviar Polanco will almost double its caviar production this year to 6.5 metric tons – up from 3.5 metric tons this year, to cover the demand of US consumers. The company is planning to double its production further to reach 13 million metric tons by 2027.
Meanwhile, Iran’s Head of Fisheries Organization says the country will multiply its caviar production by eight by 2025. Additionally, Iran will increase its aquaculture production of sturgeon eggs up from 12 metric tons to 100.
Iran is one of the countries that traditionally farmed wild sturgeons from the Caspian Sea, together with Russia, Kazakhstan, Turkmenistan and Azerbaijan.
The European Commission said in a 2021 report that “as pandemic restrictions ease, demand from traditional outlets for caviar such as high-end restaurants and luxury travel is likely to pick up again.”
By Marc Cervera
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