It may be difficult to find champagne for your New Year's celebration.
There has been a shortage of Champagne this season due to a combination of supply chain issues, a massive increase in demand, and extreme weather events. Wine Enthusiast's Hillary Richard reports that production limits set in 2020 at the height of the Pandemics will mean less Champagne in the future.
The Champagne industry saw a drop in sales in 2020 as restaurants and bars closed due to the Pandemic. The Comité Interprofessionnel du Vin de Champagne reported in January that sales fell 18% in 2020. The total sales of champagne dropped from 300 million bottles to 245 million in 2020.
Sales began to rebound at the end of 2020 as life returned to some semblance of normal. It's too early to tell how the category will perform in 2021, but sales seem to have exploded. Industry experts think that Champagne sales will surpass pre-pandemic levels this year.
"If I have to guess, I think that consumers are ready to celebrate even the little things in life," Natalie Pavlatos, a spokeswoman for the Champagne Bureau, USA, told CNBC.
Champagne has been caught in supply chain snarls like many other products. Cases of champagne are imported from France, and distributors have to place orders in advance and navigate shipping delays.
The issue appears to be hitting high-end brands the most. Retailers are concerned about selling out of champagne altogether, as many markets have sold out of it. According to a recent survey by Drizly, 80% of beverage retailers are concerned about running out of champagne during the holiday season.
It's a good chance that Champagne costs more than it used to. The cost of alcohol in the US has gone up 1% in the last year thanks to supply chain challenges, with the US Labor Department showing this in data from earlier this month.
There could be shortages of Champagne for a long time.
The season's Champagne shortage is a result of production limits being set at the height of the Pandemic.
Francois Nascimento/AFP via Getty Images.
We're likely to see more shortages of champagne after the holidays.
The CIVC, the Champagne trade group, sets limits on production each year, and they dictate how much growers can harvest, how much should be held back, and how much will be used to make Champagne vinegar.
The production limit was set 25% less in 2020 than in the previous year. Wine Enthusiast reports that the limits set in 2020 are likely to have a domino effect because Champagne must age for at least 15 months.
Extreme weather, including heat, frost, and severe rains, damaged this year's Champagne harvest. According to the CIVC data, frost took out 30% of the region's crop in 2021, hail damaged over 1,200 acres of vineyards, and mildew destroyed 25% or 30% of the region's crop. The family's vineyard in the Champagne region lost most of its grapes this year, according to one grower.
Wine Enthusiast was told by the CEO of MHW that these issues will impact the industry for years to come.
He said that the market will affect for years with reduced production in recent vintages.
