Appellation downside

In 1908, the French government made plans to delimit the geographic area that would be the appellation called Champagne. The decree came after years of disaster in the region from a phylloxera devastation of about 15,000 vineyard acres, a string of bad vintages, and the complaint that grapes from outside the Champagne region were being bottled as Champagne, giving bottlers and merchants profits and leaving Champagne growers in the lurch.

The 1908 decision was not the first attempt by the government to fix matters. Its first response was a law that demanded any wine labeled Champagne include a minimum of 51% from local grapes, but it was not enough to stem the growers’ frustrations. Since Champagne producers held all the clout, they sent representatives in the field who were paid a commission based on how low they could get grape prices from growers, forcing growers to compete with one another at their own disadvantage.

The government’s delimiting plan also failed at first. It did not include the Aube district of the region, which housed the region’s recognized capital city, a fact that did not sit well with growers in that district. In 1910, riots began slowly and blew up in January 1911. The growers’ targets were the wealthy wine producers; they smashed equipment and facilities throughout the region. When mobs burned nearly the entire village of Ay, the government sent in troops.

In an attempt to appease the Champenois in the Aube district, the government wound up creating more animosity, this time in the Marne district where growers did not like their status being reduced by the elevation of the Aube. Soon, however, the breakout of World War I saved the day, as everyone suddenly had even bigger problems—Champagne was a major passageway between Germany and France during the war.

It wasn’t until 1935-36, when the Champagne region gained DOC status and a classification system to control grape prices among the villages. Over the decades, it’s been up and down, as this or that problem resulted in this or that group complaining.

In 2009, it’s the producers and merchants doing the complaining. Champagne sales are dropping like a thermometer in a Finger Lakes winter. In 2007, 338 million bottles of Champagne moved out; in 2008, 322 million bottles sold; and the projection for 2009 is under 300 million bottles will sell. The British and American markets seem to be the cause of much of the problem.

Reducing the harvest is the only way for producers not to add to their already bloated inventory of Champagne in the cellars where an extra full year’s supply is already being held. Building anymore inventory would surely put downward pressure on prices to export markets (Champagne prices in France have already dropped). Producers and merchants have no interest in telling the export market that Champagne is cheap.

It looks like for the first time in its history, Champagne enjoys agreement among growers, producers, merchants, and the government about what to do.

Well, not so fast.

Producers and merchants want to cut the harvest in half, but the growers aren’t sure about that plan. You see, merchants and producers want to keep prices for the wine buoyant but they have no plan to pay a higher price to growers for less volume. Growers are expected to take the loss from a reduced harvest.

The joke in farming is that it is the only business that buys retail and sells wholesale. A farmer is that rare vendor that does not get to set the price of its own goods. That’s because producers and government continually intervene to either cause serious price drops or serious price increases (sadly for farmers, it seems to work out mostly as price drops). In grape farming, there are those appellation controls for farmers to deal with and worry about.

Forget the effect of a bad economy farmers suffer even worse from the fallout of public policy or of bad producer forecasting for and marketing of the end product. In the case of Champagne, if the farmers and the merchants cannot come to agreement on the harvest figure, the government will step in and set a number. Any farmer who exceeds the government’s imposed limit would then have a legal problem on his or her hands.

If there is a down side to appellation controls, this is it: Champagne grape farmers will be told how much revenue they will be allowed to take in for their 2009 labor, and without an avenue for recourse.

If you are reading this entry anywhere other than on the vinofictions blog, be aware that it has been lifted without my permission (and without recompense), and that’s a copyright infringement, no matter that the copyright information appears with it.

Copyright Thomas Pellechia
September 2009. All rights reserved.

Comments are closed.