The Champagne Cluster
Presented By: Sasha Shapiro, Vala Goharbin, Mariya Minkova, Nishant Bangar
• Overview of France
• History of Champagne
• Champagne Cluster
• Recommendations
Overview of France
General Overview
Largest EU country at 643,427 square kilometers
– Location
– Terroir
– 33.4% of the land is arable
GDP – from € 2.12 million in 2009 to € 2.16 million in 2010
– GDP per capita € 33,000
Inflation was 1.5% in 2010
Unemployment in 2010 was 9.5% (from 7.4% in 2008)
In 2010, there were 28.21 million people active in the labor force
Public debt was 84% in 2010 (from 68% in 2008)
Budget deficit in 2010 was 7.8% (from 3.4% in 2008)
– Exports were € 508.7 million
– Imports were € 577.7 million
– Germany was the main trading partner
The French Economy
• Transited economy to market
• Strong government presence in energy, military and public transport
• Focus on social equality through legislative and tax policies
• Agricultural policies
– € 12 million aid from Common Agricultural Policy
• Cereal producers main recipients for years
– New priorities include
• Livestock farming, organic farming, energy conservation, water management and
increasing biodiversity
• Focus on three things
– Forming competitive clusters
– Reforming higher education and research
– HR renewal in tech and scientific fields
% Contribution to GDP
Agriculture 2%
Industry 19.2%
Eight agricultural sectors and nine
– Main revenue comes from tourism:
expenditures by foreigners in 2007
amounted € 39.6 billion
Transportation includes air, marine,
road and rail
Food Retail – France accounted for
13.5% of the entire European food
retail industry in 2009
Aerospace Industry
Services 79%
France Food Retail Industry Segmentation, 2009
– 40% of commercial communications
satellites market
– 50% of accessible market for launchers
History of Champagne
The Beginning of Bubbles
Romans were first to plant vineyards in the area of northeast France
Churches owned vineyards and monks produced wine for use in the sacrament of Eucharist
The Champenois were envious of the reputation of the wines made from their Burgundian
neighbors, and sought to produces wines of equal acclaim
However, the northerly climate of the region gave the Champenois a unique set of challenges
The wines were lighter bodied and thinner than the Burgundies
Cold winter temperatures prematurely halted fermentation in the cellars, leaving dormant yeast
cells that would awaken in the warmth of spring and start fermenting again
One of the byproducts of fermentation is the release of carbon dioxide gas, which, if the wine is
bottled, is trapped inside the wine causing intense pressure
The pressure inside the weak, early French wine bottles often caused the bottles to explode and
if the bottle survived, the wine was found to contain bubbles
Something the early Champenois were horrified to see
The First Champagne
Contrary to legend and popular belief, Dom Perignon
did not invent sparkling wine
The oldest recorded sparkling wine Blanquette de
Invented by Benedictine Monks in the Abbey of Saint
Hilaire near Carcassonne in 1531
Over a century later, English scientist and physician
Christopher Merret documented the addition of sugar
to a finished wine to create a second fermentation
Merret presented the Royal Society with a paper in
which he detailed what is now called méthode
champenoise in 1662
Although Dom Perignon did not invent champagne,
he did develop advances in production of the drink,
including holding the cork in place with a wire collar
(muselet) to withstand the fermentation pressure
Modern Champagne Industry
The Champenois and their French clients preferred their champagne to be pale and
– But the British were developing a taste for the unique bubbly wine
The sparkling version of champagne continued to grow in popularity, especially
among the wealthy and royal
Champagne was for a very long time made by the méthode rurale
– No knowledge about controlling the process or how to make wine bottles strong enough to
withstand pressure
In the 19th century, these obstacles were overcome, and the modern champagne
industry took form
Champagne production had an explosive growth, going from a regional production of
300,000 bottles a year in 1800 to 20 million bottles in 1850
The Taste
• In the 19th century, champagne was
noticeably sweeter than the champagne of
• The trend towards drier champagne began
when Perrier-Jouët decided not to sweeten
his 1846 vintage prior to exporting it to
• The designation Brut champagne, the
modern champagne, was created for the
British in 1876
Champagne Cluster
• Roles in champagne
• Law – barriers to
• Local demand
• World market
• China & the emerging
• Location, climate, terroir
• Champagne vine growing
• Capital availability
• Infrastructure
• Government
• Institutions: CIVC & INAO
• Glass bottles
• Packaging
• Corks
• Tourism
• Agriculture
• Education and R&D
General Overview
Four regions make up Champagne – Aube, Marne,
Ardennes, Haute-Marne
150 kilometers east from Paris
Trade routes from North Sea to Italy
1.3 million people at 52/km2
GDP - € 31 million in 2009
Agriculture (8.2% of GDP)
Industry, including smelting, metalworking, mechanics,
textiles/clothing, craft (2.5% of GDP)
Services, including tourism, retail/wholesale, banking, real estate
(1.6% of GDP)
Exports, including champagne and machinery
R&D expenditures are €238 million
Top French region for investments
Number one region for producing cereals
53,960 companies operating
€ 16,000 per year average salary
Best business include packaging, logistics, timber, textile,
metallurgy, automobile and medical instruments
25% of activities dominated by champagne production
Factor Conditions
• Transportation & Logistics
Historic architectural legacy – 17th century
Distribution coverage includes North-East France
Major transport network is the Channel Tunnel to South-East Europe
Five key airports with one for freight logistic hub
Three key ports are Rotterdam, Antwerp and Le Havre
Railways include the Chalindrey hub, TGV, Scandinavia-Rhine-Rhone-West
Mediterranean "rail highway" and Paris-Basel
• Capital Availability
– € 7.7 million to agriculture in 2011 and € 11.73 million (2007-2013)
– Champagne-Ardenne operational program – € 186 million
• Infrastructure
– Scientific and technological – CARRINA
– Administrative – Regional Council
The Champagne-Ardenne Terroir
• Geography
– North-East France
• Geology
– Subsoil deposits of 300-metter think chalk from 90
million years ago when the Atlantic ocean stepped
• Temperature control, drainage, underground
champagne cellars
– Creation of belemnite sediment from an
earthquake that occurred 10 million years ago
• Climate
Mild oceanic and harsh continental
Annual temperature of 10 degrees Celsius
Snowy winters and warm summers
630 millimeters of rainfall each year with 45
millimeters in September
Vine Growing in the Region
Vines in Champagne represent 4% of all vines in
France, but bring in 1/3 of total revenue from export
33,077 hectares of vine growing
– 22,107 hectares in Marne
– 7,740 hectares in Aube & Haute-Marne
– 3,230 hectares in Sainte-et-Marne
Yield in 2009 was 12,276 kilograms per hectare or 352
million bottles
In the region there are 4,776 vine growers, 66
cooperatives and 293 negociants
Grapes produced include:
– Pinot Noir – 39%
– Meunier – 31%
– Chardonnay – 29%
The Government’s Role
1852 – 1868, Werlé (Veuve Clicquot) was the mayor of Reims
Law in Champagne
– 1891 Treaty of Madrid to protect the product of champagne
– Échelle des Crus (ladder of growth)
Fixed pricing for vine ranking; Premier versus Grand Cru (100pt)
17 villages with Premier Cru rank
– AOC: Appellation d’Origine Controlee
– 2003 – 1010 Revision of the Champagne Area
Due to the program’s delay the first plantings will happen as early as 2015; expected first yield will be in
2020; first quantities to be released around 2021-2025
Started in 1908 when, with a decree, the Aube area was added
– Taxation regulations on export and import
– Production methods
15 months aging for NV champagne
– Strict regulations on alcohol advertising
Up to 2.5% alcohol volume
– CIVC: Comité Interprofessionnel du Vin de Champagne 1941
– INAO: Certification system to protect the French geographical indications for agricultural
products including wines, cheese and butters
Demand By Market
Main Markets
Emerging Markets
The French a little over half of the world’s
champagne (56%)
Fine wines and champagnes have
become a status symbol for the Chinese
Britain is the second largest consumer of
Drinking champagne at business and
entertainment events has created a
unique phenomenon and massive
The Italian market is also booming
Guests are expected to be impressed by
the price of expensive wine and
champagne, not by the taste
Demand in emerging markets such as
India, China and Russia, is also growing
Though a status symbol, the Chinese are
becoming more sophisticated
Increase in Demand
• There is an increase in demand of champagne due to:
Limited supply
Marketing success of the region
Image of quality, tradition, exclusivity and luxury
Positive image conveyed by France as the country of origin
Related Industries
Glass Bottles
•Located around Haute-Normandy and Picardie
•65 companies, employing over 7,000 people
•Produce over 75% of world’s luxury perfume bottles, spirits and pharmaceuticals
•230 enterprises, employing 11,700 people
•€ 1.8 million in sales, 10% of the entire packaging industry in France
•60% of products are for food processing industry
•France has only 4% of the world production of cork
•Use of cork has dropped from 95% to 70% in the last 15 years
•283 registered tourist hotels providing 9,168 rooms in the region
•Another 207 facilities offering guest rooms
•Five sites recognized by UNESCO as World Heritage Sites
•Accounts for almost 38% of the region’s total exports
•Employs almost 25,000 people in over 2,000 companies
Education & R&D
•Regional council spends almost 42% of their budget on education (approximately € 256 million)
•Almost 4,000 students enrolled in business schools, 2,500 in engineering schools and 22,000 in
other university programs
Global Champagne Market
Global Wine Market Segmentation: % Share, By Value
Asia-Pacific 6.9%
Sparkling wine
Americas 18.3%
wine 3.9%
Europe 74.8%
Still wine 80.5%
• During the 2008 crisis, there was an increase in stocks
– CIVC set yield limit for 2009 and 2010
• Stabilizing short-term cash flows
• In 2009, the global wine market was € 263.8 billion
Top Players
• Top three companies hold more than
30% of the champagne market
• Benefits:
– Vineyards and grape purchases
– Old versus new technology in
production – funds for modernization
of the production process
– Brand positioning
– Distribution system
– Marketing and advertising
• Moët & Hennessy (LVMH Group)
– The biggest group holding premium
champagnes and spirits
– In 2010, sold 19.3 million bottles of
– Started in 1991 with the acquisition of
Pommerchy Champagne
• Established in 1812 as the Laurent Perrier Champagne Maison
• Champagne and alcoholic beverages through own subsidiaries
• Seven key brands, including the iconic Laurent-Perrier Brut
• € 242.9 million in sales in 2009
Vranken Pommery Monopole
• Established in 1976 as Maison Vranken
– In 1978, became Veuve Monnier champagne brand
• € 269.8 million sales in 2009
• 10% market share with five key champagne brands
• 19.8 million bottles of champagne in production
– Porto producer with 1.7 million bottles
Lanson BCC
• Lanson BCC (Lanson International & Boizel
Chanoine Champagne) produces and sells
• Acquisition and grouping of Champagne
– 1991: Chanoine Frères et Champenoise des
Grand Vins
– 1994: Champagne Boizel (1834), Champagne
Chanoine Frères (1730)
– 2006: Maison Burtin (1843), Champagne
Lanson (1760)
• € 276 million revenues in 2009 with an
operating profit of €16.1 million
– 21 million bottles sold
• Governmental incentives for the
champagne producers
– Redistribution of funds from the
Common Agricultural Policy
– Taxation policy – common EU
– Encourage students to stay in the
area after graduation
• Sustain collaboration between local
government, research centers and
• Keep the Champagne area size
after the enlargement
– Helps ensure scarcity and luxury
• Improvement on the national level will build the foundation for upgrading the
Champagne cluster, as well as stimulating the full development of supporting
industries around it
Thank You

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