Champagne grapes are expensive. Very expensive... Indeed, they are among the most expensive grapes in the world! The production sites are well defined in the Champagne vineyard, and the price of the berries is between 6€ and 7€/ kg. A premium can be added to this price in the case of estates using organic farming or other environmental practices. In the Champagne region, several estates cultivate hectares of vines according to the principles of organic farming or sustainable agriculture. The vineyards of Champagne are indeed invested in environmentally friendly viticulture and within the next ten years, almost all the farmers will be certified organic, to meet the growing demand for organic Champagne.
The most commonly used grape varieties in Champagne are Pinot Noir, Pinot Meunier and Chardonnay. These are the varieties that give the most flavour and complexity to the famous sparkling wine. However, other grape varieties are allowed in the blends, although they represent only a very small quantity. These include Arbane, Petit Meslier, Pinot Blanc, and Pinot Gris. To produce a 75cl bottle of Champagne, 1.2 kg of grapes are needed. For the grapes in the bottle alone, this represents about 7.20€ per bottle.
Producing Champagne is complex and time consuming. The cost of production represents 10% of the price of the final product. The price of the bottle and its label is about €1.50. Other less expensive methods exist to produce sparkling wines. However, the Champagne method is the one that offers the best results. There is no doubt that on the nose and palate, good Champagnes stand out from all other sparkling wines.
From the moment of harvest, the highest quality standards are applied. Manual harvesting is therefore compulsory in Champagne, in order to harvest the whole bunches and not to damage the grapes. This already implies a cost in terms of labour and logistics, in order to transport the grapes from the plots to the winery. If for the vast majority of Champagnes the final product is the result of blending grapes harvested in different vintages, Vintage Champagnes must be made from a one year's harvest. The cool continental climate makes viticulture sometimes complicated in Champagne, so Vintage Champagnes are only made in exceptional years. These elements directly influence the final price.
The complex vinification method, known as the traditional method or the méthode champenoise, requires not only time, but also precise handling and know-how. In the case of Champagnes, the blending is done in a rigorous manner. For big brands or Vintage Champagnes, the blending is even more precise and subject to strict rules.
Once the riddling stage has been completed, which used to take up to eight weeks before the arrival of machines, the Champagne is matured. This can be done in oak barrels and can last several years. For entry-level Champagnes, the ageing process, as with the previous stages, is reduced to a minimum. In the case of Vintage Champagnes, the ageing time is extended to 36 months. For the Champagne house in charge of ageing, this prolonged ageing generates a storage cost which is obviously reflected in the final product.
The margin on a Champagne can represent 20 to 30% of the total price of the bottle. This percentage includes both the producer's and the distributor's margin. However, these margins are often unevenly distributed between the producer and the distributor. To take a practical example, on a bottle of Champagne sold for €30, the producer receives €2.50, while the distributor earns €6.50. The best value for money is obtained directly from the property, by not going through an intermediary. This is an opportunity to take an interest in small Champagne producers, as well as in Grower Champagnes, to discover cuvées that are different from the big Champagne brands!
To help you find your way around when buying a bottle of Champagne, look at the small letters on the green capsule. These two letters indicate the status of the producer and the bottler.
This is the case of a company buying grapes from winegrower(s). This company vinifies and produces its own Champagne from grapes that are partially or entirely purchased from other growers. A part of the grapes can be sourced from the company's own vineyards. The bottles of Champagne can then be marketed under the company's name or brand. This category concerns almost 50% of the Champagne houses on the market.
The winegrower cultivates their own vines, vinifies their harvest and makes their own Champagne, which is called Grower Champagne. They bottle and market their cuvées under their own name or brand. The winegrower controls all the stages from A to Z.
The winegrower entrusts his grapes to a cooperative. They then recover the product once the second fermentation in the bottle has taken place. This Champagne is then marketed under the name or brand of the winegrower.
A cooperative cellar to which members bring their grapes. The employees of the cooperative are responsible for pressing, vinification and blending. The Champagnes are then marketed under the cooperative's name or brand.
A distributor markets under its own brand name bottles purchased from a Champagne producer.
Buyer's brand or Auxiliary brand this category refers to a retailer who markets a Champagne of which they are not the producer. It can also be a secondary brand owned by a handling merchant, a Champagne in the name of a supermarket distributor, or a merchant distributing Champagne made by another merchant or winemaker.
Marketing is very important in Champagne and impacts all producers, from large Champagne houses, to large luxury groups such as LVMH, to independent winemakers. Marketing costs include the organisation of and participation in events related to the tasting and promotion of the product. On the cost of a final bottle, marketing costs can range from €3 to €6 per bottle. These costs can increase, depending on the nature of the product. Indeed, more luxurious cuvées with special packaging or limited editions can raise the marketing cost considerably.
Some labels and boxes are created in collaboration with artists or famous personalities. Painters, actors or big names in music, many have partnered with major Champagne houses to create a unique design. The marketing costs for this kind of collaboration are of course reflected in the final price. The standard 75cl bottle being the most common, there are other larger Champagne formats that can also play into the marketing budget. Magnum, Jeroboam, Rehoboam, Methuselah, Salmanazar and Balthazar all contribute to the final price of Champagne.
In the United Kingdom, the sale of Champagne is subject to 20% VAT. To take the example of a £30 Champagne, £6 is spent on VAT. As a consumer product that is widely exported throughout the world, VAT is not the same from one country to another. Champagne is also subject to excise duties. Excise duty is an additional tax, which concerns all products whose consumption the government wishes to limit. Along with tobacco and petrol, alcoholic products are no exception! This indirect tax on sparkling wines is higher than for still wines.
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