Ch 2 part 3

Question 1

QUALITY HIERARCHY IN CHAMPANE

Echelle des crus

Answer 1

• early 20^th century rating system established grape prices
• prices were fixed by the Comite Champange the price reflected percentage given to the village

100% Grand cru for 17 Grand Cru villages

90-99% premier cru for 42 Premier Cru villages

80-89% for the other 257 villages

Question 2

QUALITY HIERARCHY IN CHAMPANE

today’s market prices established?

Answer 2

EU was pressured to disband the Echelle des crus system

today determined by market w/ Moet & Chandon setting the trend

Question 3

QUALITY HIERARCHY IN CHAMPANE

What would be on the label to signify a single village vs multiple vilages for grand cru and premier cru wines?

Answer 3

Grand Cru Crémant- all grapes com from single village

Grand Cru (with out village)- grapes come from several grand cru

Question 4

QUALITY HIERARCHY IN CHAMPANE

conterversty between village naming an house naming?

Answer 4

-controversy over naming grand cru or premier cru a village name with all the variation - aspect, soil, size of village

-house tend to focus on blended wine emphasize quality of vintage vs. promote individual villages or vineyards

Question 5

STRUCTURE OF THE INDUSTRY

size of industry?

Answer 5

16,000 growers own 90% of vineyards

340 Champagne house

• vast majority of growers sell grapes to houses or co ops
• Grower Champagnes- keep their grapes and make own wine
• Co-op bridge growers and houses
• Brokers find wine for houses, act as go between

Question 6

QUALITY HIERARCHY IN CHAMPANE

business types reflected in the codes on bottle include?

Answer 6

NM: Negotiant manipulant

RM: Recoltant manipulant

CM: Cooperative de manipulation

Question 7

QUALITY HIERARCHY IN CHAMPANE

negociant manipulant

Answer 7

NM designation

-business referred to as houses

-buy grapes, must, or wine to make champagne on own premise

-use own label

-often just called negociant and the group is called negoce

Question 8

QUALITY HIERARCHY IN CHAMPANE

Recoltant manipulant

Answer 8

RM designation

-business commonly referred to as growers

-make & market own label from grapes exclusively from own vineyard

-processed on their own premise

Question 9

QUALITY HIERARCHY IN CHAMPANE

Cooperative de manipulation

Answer 9

CM desiganation

• business are co-ops that market under own member’s label
• top 5 groups account for 2/3 of all sales by value

Question 10

QUALITY HIERARCHY IN CHAMPANE

list Co op major groups

Answer 10

LVMH = largest and owns Moet & Chandon, Dom Perignon, Mercier, Veuve Clicquot, Ruinart and Krug

Vranken Pommery Monopole owns Vranken, Pommery, monopole Heidsieck, Charles Lafitte and Bissinger

Question 11

COMMERCIAL CONSIDERATIONS

Answer 11

domestic vs. export

half is sold to domestic and half exported

Question 12

COMMERCIAL CONSIDERATIONS

sell by busines type?

Answer 12

Houses- biggest sales, strong in export markets, 73% of all sales and 87% exports

Co-Ops- small and evenly split home and export

Growers- mostly sell in home market

Question 13

COMMERCIAL CONSIDERATIONS

role of Comite Champagne?

Answer 13

manage relations between houses, co-ops and growers

co -ops have been diversifying sell base wine to large houses & promote own brand

Large houses -moved to buy grapes from growers via agent, less with co -ops

Question 14

SUPPLY AND DEMAND -influencing the supply

vineyard side is able to influence supply by?

Answer 14

the region is in review of

1 Setting the max yield for grape that can be madeinto champagne in the coming harvest (kilos per hecter)

2 Reviewing potentially adding / subtracting land available for the production of Champagne - what is in/out of the appellation

Question 15

SUPPLY AND DEMAND -influencing the supply

how is the max yield determined for a harvest?

Answer 15

1 grape yield for base wine in that year

2 plus an allowance for wine to go into reserves

• decision is made with respect to current hold levels, world demand, and progress of season (decisoin in late july)
• average yield 10,500 kilos/hectar

Question 16

SUPPLY AND DEMAND -influencing the demand

-price of a bottle of champagne?

Answer 16

-price is low due to volume sold in supermarkets

France is cheapest and has dropped steadily recently

Question 17

SUPPLY AND DEMAND -influencing the demand

main export markets?

Answer 17

UK, USA, Japan, Germany, Belgium (2018 order)

2 most valuable market w/ highest price paid per bottle US & Japan

UK biggest market by volume and lowest average price / bottles

Question 18

SUPPLY AND DEMAND -influencing the demand

price ques?

Answer 18

rebranding for more exclusivity

move away from volume markets in light of growth of mid-priced sparkling wine (prosecco)

• new focus on higher prices
• volume dropped 10% but value rise

Question 19

SUPPLY AND DEMAND -cost of production v. sought price

what factors contribute to the price produces seek?

Answer 19

Champagne is expensive to produce and is large cost of product

grand cru/ premier cru increase cost (longer ageing , more labor, longer time product not transferred to cash income)

Vintage> NV -likely made from better quality fruit

Rose – more wine required

use of oak for primary ferm or base wine ageing

Question 20

ROUTE TO MARKET

Marketing costs?

Answer 20

For large houses, marketing can account for 20% of the bottle $ =cost of production =30% and 20% to commercialization

-push to own/ run distribution systems

Question 21

ROUTE TO MARKET

cost from producer to market?

Answer 21

• major brands are apart of conglomerates that have distribution system in place to support several brands
• more control, economy of scale to control end price sold – hold price ques
• some house prefer to use agents to distribute and typically provide a budget for promoting their wines.
• small producers use specialist for specialist wine ships, private clients, and hospitality sectors

Question 22

NEW PRODUCTS AND TRENDS

Answer 22

• niche market for Brut nature wines in specialist wine shops
• dry category gain ground- Brut Nature and Extra Brut
• launched sweet wines intended to be drunk over ice in cocktail Moet & Chandon Ice Imperal that is Demi Sec
• Rose increasing in market share
• increasing interest in single vineyard champagnes
• Grower Champagnes gaining attraction