Raise a glass to cheaper bubbly

TEN years after the flashy extravagance of the millennium party, Australians are still downing champagne at a rate that would put some European nations to shame.

The financial crisis saw only a limited slackening in the sound of corks shooting out of French bottles, with consumption of the beverage growing twice as fast as wine.

The limited recession and the commodities boom money have partly underwritten champagne's popularity here, while the British, Americans, Spaniards and Italians have chosen not to hit the bottle as unemployment rose and economies staggered.

Although Britain is still the world's largest export market for champagne, shipments fell 15 per cent last year, down to 2002 levels. The leading champagne houses, such as Moet et Chandon, Bollinger and Pernod Ricard, allocated 26 per cent less product for outside Europe, principally the United States and Japan.

But Moet, its stablemate Veuve Clicquot and rivals G.H. Mumm and Bollinger have never been so popular in Australia. Volume growth was at a heady 18 per cent to January and, retailers say, it is picking up to match the 30 to 35 per cent growth booked before the economic crisis.

Mumm is the fastest-growing brand in Australia, based on recent industry data, up more than 60 per cent in the 12 months to January.

''I think some of the biggest champagne houses in Australia had their best year [last year],'' said Stephen Donohue, national merchandising manager for Dan Murphy's, the nation's biggest seller of the product.

''Champagne … hasn't missed a beat, frankly, even with the global financial crisis. If anything, it is bigger.''

This has helped cement Australia's spot amid the top 10 champagne drinkers globally, with just under 3 million bottles guzzled last year.

The Bollinger brand manager at Fine Wine Partners, Paul Boothby, said: ''Australia has never been out of the top 10 nations, not just on a per capita basis but [by] volume.''

But while champagne sales are booking near-20 per cent volume growth against falling sales in North America and the euro zone, value growth has managed only 10 per cent.

The reason is a sustained and furious price war as retailers take advantage of consumer confidence to lift sales. They are also sourcing cheaper champagne from overseas wholesalers and suppliers desperate to offload stock amid awful domestic conditions. The strong dollar against the euro is aiding Australian buying power.

Retailers such as the Woolworths-owned Dan Murphy's can often import champagne from such ''grey'' markets at better prices that what the official importers can offer. The perfume and imported premium beer markets operate in a similar way.

''We have got an obligation to buy at the best price and there have been times when [that] hasn't been that on offer from the local distributor,'' Mr Donohue said. ''It may well be the case that some producers were charging a premium for their product in Australia, [so] some customers went out and sourced parallel stock from markets where it's cheaper and forced those importers and distributors in Australia to revise those prices.''

That's diplomatic talk for using the international grey market to put the screws on local distributors. This has meant cheaper prices but also more volatile pricing. A bottle of mid-level Bollinger might traditionally sell for $120 but can be discounted to $75. G.H. Mumm, the most popular champagne in France, having knocked Moet of its perch, will usually fetch $80 for certain vintages but can go down to below $60.

''Retailers, [with] heavy discounting, … are temporarily resetting consumers' expectations on price,'' said Paul di Vito, the Australian marketing manager for Pernod Ricard, owner on G.H. Mumm and Perrier-Jouët.

Retailers see it differently. ''I think the customer very clearly understands the value proposition,'' Mr Donohue said.

''The customer expects to pay [about] $50 for a bottle of French champagne, whereas you will find the average price of Australian sparkling wine … tops out at $20.

That theory could be tested later this year with signs of a recovery in some champagne markets. LVMH, the world's biggest luxury goods firm, this month reported first-quarter drinks sales lifted 20 per cent on the back of robust champagne demand.

If this trend continues, champagne supplies to Australia could again be constrained as wholesalers switch the golden pipelines elsewhere. Spring racing carnival fans could be paying more if that happens. There is always the local sparkling - just don't let the French hear you call it champagne.