France: Champagne sales hit due to US tariff threats and Brexit

French Champagne producers are facing a great deal of trouble after President Donald Trump targeted the luxury drink amidst trade disputes with Europe. Consumers across France have been reportedly taking less of the beverage as the producers face the threat of the US tariffs and trade turmoil due to Britain's exit from the European Union. Though the overseas demands remain intact, reports suggest that the sales of champagne in France have fallen by 6.5 million bottles. The situation has been marred with the surge in the sale of wine during the country's autumn wine promotions and a transport workers' strike in the Christmas season, cutting end-of-year spending.

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US tariffs on champagne, buildup due to Brexit

The US is threatening 100 per cent tariffs on the drink in response to a French digital-services tax affecting the likes of Alphabet Inc.'s Google and Amazon.com Inc. Even the export markets for champagne like that of the UK are full of the buildup of stocks due to Brexit that could weigh on demand in the coming months as retailers unwind excess inventories, according to Thibaut Le Mailloux, a spokesman for industry lobby Comite Champagne.

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Other factors affecting champagne sales

About 147 million Champagne bottles were shipped in France in 2018, which amounts to three times the combined total of the UK and the US. Though a huge amount of capital flows in exports of brands like LVMH's Dom Perignon and Pernod Ricard SA's Perrier-Jouet, domestic drinkers remain key to the industry. Drinkers have always been able to buy profuse beverages as the French supermarkets have put up two-for-one promotions that cut the per-bottle cost to less than 10 euros ($11). Yet a new law aimed at boosting prices for farmers barred retailers from dangling such loss leaders which in led to a 34 per cent slump in Champagne sales during retailers' autumn wine fairs, according to research firm Nielsen.

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Champagne sales are also affected by cheaper alternatives in the market. Champagne volumes sold in supermarkets fell 3.5 per cent in 2018, while foreign bubbly such as Spanish Cava and Italian Prosecco jumped 58 per cent, according to data from Symphony IRI published by FranceAgriMer, a trade group for farming and fishing. Nathalie Viet, head of France's Syndicat des Cavistes, a union of specialist wine sellers told the media that shoppers are tempted when they can buy a good bottle of foreign bubbly for 10 euros less. 

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