Lots of consumption on New Year’s Eve: the champagne mood continues

Dhe year doesn’t start off particularly well. At least not for what they believe to be the oldest sparkling wine producer in Germany, Kessler from Esslingen near Stuttgart. She is currently unable to deliver many products and is therefore also closing some of her shops and bars. According to the company, the reason for this is the drinking mood of the Swabians. Kessler sees an “overwhelming demand” that triggered the bottlenecks. Because the “manufacturing methods are very time-consuming and our quality standards are still uncompromising”, it is not possible to react at short notice. In addition, there is a wave of illnesses, as a Kessler spokesman for the “Esslinger Zeitung” said.

Swabia will now be dry for a few days, and Kessler wants to be able to deliver again during the third week of January. Kessler is almost 200 years old and therefore very rich in tradition, but it is also very small. 35 employees work for the company in Esslingen.

However, the trend is confirmed by the big ones: inflation has not slowed down champagne consumption yet. The Verband Deutscher Sektkellereien, which claims to represent 95 percent of German sparkling wine production, reported a sales increase of 2.4 percent to 208 million bottles for the first eleven months. Sales are likely to have been even higher due to cost increases.

Expensive sparkling wine sells well

In the important year-end business, which accounts for almost a quarter of annual sales according to the association, manufacturers do not expect any signs of slowing down, despite inflation. There are no figures on this yet, but “we are assuming stable demand for sparkling wine for the Christmas and New Year’s Eve business,” writes Association Managing Director Alexander Tacer when asked by the FAZ

With an average consumption of 3.2 liters of sparkling wine and semi-sparkling wine per year, the Germans are the international frontrunners. In 2022, manufacturers benefited from the revival of gastronomy and the restart of cultural events. In summer, most of the restaurants were able to open without restrictions. During the Corona period, of all things, expensive sparkling wine sold well and apparently nothing fundamental has changed. The trend towards higher quality continued, but inflation and raw material-related price increases were increasingly felt in the last quarter, writes CEO Andreas Brokemper of Henkell Freixenet. The winery from Wiesbaden sees itself as the world’s largest producer of sparkling wine.

Despite the “multiple crisis environment”, premium is still in trend, albeit with slightly smaller growth than in the previous year, according to the German market leader Rotkummel-Mumm from Freyburg. According to his information, more than every third bottle of sparkling wine sold in Germany comes from the “Rotkäppchen” brand, but at the same time the company also sells higher-priced sparkling wine from the Geldermann brand.

“Sensitive Psychological Price Thresholds”

Only Schloss-Wachenheim was much more cautious. The Trier company is well-known for its inexpensive “Faber” sparkling wine. When asked by the FAZ, CEO Oliver Gloden reports extreme price increases for all raw materials for wine from the 2021 harvest, glass, energy, logistics, aluminium, paper, wood, sugar – everything has become more expensive. Because of the “inevitable passing on of the costs”, the brands from Schloss Wachenheim had exceeded “sensitive psychological price thresholds”, which had a direct impact on sales.

In the year-end business, sparkling wine is also an important “frequency generator” in retail. That’s why we’ve seen “extremely discounted offers” again in the last two weeks, which, according to Gloden, are neither comprehensible “nor representable”.

Opinions differ on how inflation will affect sparkling wine consumption in the long term. “Faber” manufacturer Schloss Wachenheim writes that since the middle of last year there has been a trend towards (cheaper) private labels again. Little Red Riding Hood Mumm, on the other hand, is betting that customers who buy higher-priced products anyway will be less affected by inflation because of their relatively high income. In any case, the manufacturers’ association reassured: Given the variety of German sparkling wine houses, there are no bottlenecks like at the Swabian traditional house Kessler.

The state has also benefited from sparkling wine consumption for more than 100 years. In 1902, Kaiser Wilhelm II introduced the sparkling wine tax to finance the navy. The fleet is history, but not the champagne tax. It is currently 1.02 euros per bottle.