Dusseldorf Sparkling wine can also be an economic barometer – especially at the turn of the year. “A bad mood is usually reflected in the consumption of sparkling wine,” said Andreas Brokemper, head of the world’s largest sparkling wine manufacturer Henkell Freixenet, the Handelsblatt.
It is difficult to estimate how price-sensitive the Germans will be in view of the inflation in sparkling wine and champagne. Brokemper expects high-priced brands to lose out. In the Corona period, many people had resorted to premium products: “During the pandemic, guests were served better sparkling wine in small groups than at larger parties, which are now possible again,” says Brokemper.
On the other hand, it is easy to estimate that sparkling wine and champagne are likely to become more expensive again in the new year. Christof Queisser, head of Rotkäppchen-Mumm, expects “about 50 cents to one euro more per bottle”. Every second bottle of sparkling wine drunk in this country comes from the German market leader.
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Henkell-Freixenet boss Brokemper also says: “Further price increases cannot be avoided in 2023. Already more than a year ago the costs increased with unbelievable force.” Spring frosts in France led to a historically low white wine harvest. Other wine countries could not compensate for that.
Champagne bottles are scarce and expensive
Energy prices have skyrocketed since the war in Ukraine. “As a result, everything in and around the sparkling wine bottle has become more expensive,” says Oliver Gloden, CEO of Schloss Wachenheim, Germany’s third largest sparkling wine producer. Brokemper reports that two glassworks in Ukraine were destroyed, which otherwise shipped more than a billion bottles to all of Europe. Since then, glass bottles have been scarce and significantly more expensive.
The head of Rotkummel-Mumm Sektkellereien, market leader in Germany, expects sparkling wine prices to rise in 2023.
(Photo: Little Red Riding Hood Mumm)
Prices for packaging and labels have also increased this year. “We can’t swallow the high additional costs, our margins are simply too small for that,” says Gloden, who sells a lot of sparkling wine in the entry-level price segment.
The vintage in Germany was better this year than in 2021. The German Wine Institute estimates the volume of wine must at around nine million hectoliters, an increase of six percent compared to the previous year. Here, precipitation in September could make up for the summer heat.
But apart from the local winemaker’s sparkling wine, the base wine for the mass producers often comes from southern Europe. In Spain, persistent drought led to a below-average harvest. “Many vineyards there have no irrigation. The prices for cava grapes have therefore risen significantly,” explains Brokemper.
Prosecco has also become more expensive because demand remains very high. “And champagne is getting more expensive every year, that’s almost a law,” says the Henkell boss. In fact, there is also a risk of a supply gap for the French luxury product.
Brokemper expects consumers to be more likely to turn to cheaper sparkling wine in the new year. This has been shown by past experience when real incomes have fallen. However, the trend is currently not discernible.
Schloss Wachenheim, which sells 40 percent of its bottles as inexpensive private labels, has other concerns. Company boss Gloden fears a drop in sales of up to 20 percent. If psychological price thresholds were exceeded, price-sensitive consumers would not buy sparkling wine at all.
Little Red Riding Hood boss Queisser is more confident: “We got through the pandemic well with strong brands – they will also carry us through inflation.” The sparkling wine brand from Saxony-Anhalt is the one with the highest loyalty. According to a study commissioned by the winery, most Germans want to remain loyal to their favorite brands despite inflation.
Every second heralds the weekend with champagne
“Despite challenging times, the Germans don’t let themselves be taken away from the glass of sparkling wine at Christmas and New Year’s Eve,” says Queisser. And enjoyment remains important to people throughout the year. 46 percent of those surveyed regularly ring in the weekend with a glass of sparkling wine.
>> Read here: Schloss Wachenheim: Profit of three cents per bottle – why cheaper sparkling wine now has to become more expensive
Little Red Riding Hood generates around 20 percent of its sales on New Year’s Eve. In 2021 as a whole, as in the previous year, revenues were around 1.2 billion euros including sparkling wine tax – higher than in the pre-Corona year 2019. However, business has been somewhat more restrained in recent months.
Henkell-Freixenet, the sparkling wine, wine and spirits company of the three youngest Oetker siblings, achieved record sales of 1.3 billion euros in 2021. Revenues including taxes were therefore also above the level before the corona crisis. “The first Corona year was the year of wine, the Germans stayed at home and cooked,” says the Henkell boss. “2021 was the year of high-quality sparkling wines, consumers treated themselves to indulgence. Spirits came back in 2022.”
Germans drink a liter less sparkling wine than they did ten years ago
The growing popularity of rosé sparkling wine and non-alcoholic sparkling wine is proving to be a crisis-resistant trend. “The non-alcoholic beverage niche is growing by two percent every year,” says Queisser. Rosé accounts for 15 percent of sparkling wine consumption in this country. Overall, however, Germans are drinking less and less sparkling wine. According to the Association of German Sparkling Wine Cellars, consumption has fallen from 4.2 to 3.2 liters per capita over the past ten years.
“2021 was the year of high-quality sparkling wines,” says the head of world market leader Henkell Freixenet.
(Photo: dpa)
Supermarkets and discounters are therefore trying to lure customers with competitive prices. Aldi Nord, for example, sold Rotkummel sparkling wine before Christmas for only 2.29 euros a bottle, previously 2.49 was the cheapest promotional price.
Of the 2.29 euros, 1.02 euros of sparkling wine tax and 44 cents of VAT are deducted. After deducting 30 cents for the base wine and 25 cents for the pressure-resistant bottle, only 28 cents remain for all other costs of the manufacturer and retail, the “Lebensmittelzeitung” calculates.
With such special discounts, the trade wants to push the consumption of sparkling wine again at the end of the year. After all, it’s the first New Year’s Eve in two years that can be celebrated without corona restrictions. One thing is clear: sparkling wine will no longer be offered so cheaply in the new year.
More: Success with premium sparkling wine: world market leader Henkell Freixenet achieves record sales