Has the bubble burst for Champagne?

Australia is the sixth biggest market for Champagne exports, but there are signs its dizzy growth is slowing as inflation hits hip pockets.

The Reserve Bank of Australia lifted the official cash rate on May 2 from 3.6% to 3.8%, while data released by the Australian Bureau of Statistics (ABS) shows Australians were already been cutting back their spending on alcohol and tobacco due to cost of living pressures.

According to bank data for February, tobacco and alcohol spending fell -8.9% in NSW, -13.7% in Victoria, -14% in Queensland, -16.9% in South Australia, -14.1% in Western Australia, -9.8% in Tasmania, -2.7% in the Northern Territory and -4.5% in the ACT.

During Endeavour Group’s Q3 results presentation this week, CEO Steve Donohue revealed customer behaviour is changing in Dan Murphy’s and BWS stores due to cost of living pressures.

He said there had been a shift away from high-end French champagne purchases due to price rises of between 10-15%, with many customers substituting Australian sparkling in their shopping baskets.

“It has reached that inflection where people are willing to try premium Australian sparkling and in so doing are discovering it is a very good product and are sticking with it,” Donohue said.

It’s a stark contrast to Christmas 2022, which Philippe Schaus, president and chief executive of Moet Hennessy recently likened to the “roaring twenties” in terms of champagne consumption.

While there were fears at the time of a global shortage of fizz, Schaus told The Australian: “There’s not a long term champagne shortage, just an excess of demand … and that’s where we had to restrict and make contingents to be able to fairly distribute bottles around the world.”

Schaus said Australia represented one of the top 10 biggest markets for champagne across its brands, which include Armand de Brignac, Dom Perignon, Krug, Ruinart, Veuve Clicquot and Moet & Chandon.

The rise of Australian sparkling

Australian sparkling wine has been winning accolades around the globe.

House of Arras 2001 Museum Release Blanc de Blancs snared a gold medal and the trophy in the “library vintage” class at Champagne and Sparkling Wine World Championships in November.

The Champagne & Sparkling Wine World Championships are deemed to be the world’s most respected, comprehensive and rigorous sparkling wine competition. It was the first time in the history of the show that French champagne did not win the class.

Tasmanian sparkling wine exports rose from $1.3 million in 2016-17 to $3.2 million in 2021-22. Domestic off-premise sales have risen sharply, too, from $46 million in 2020 to $74 million in 2022, with sparkling growing to 37% of wine produced in ­Tasmania.

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