Michael Fridjhon: Just how worried should Cap Classique producers be about Prosecco?

By , 19 February 2020

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Bottega Prosecco Brut – R239 a bottle from Makro.

Prosecco’s successful invasion of some of Champagne’s major export markets is in full swing, causing no small amount of consternation to the marketing teams of the big houses whose brands dominate the glitzy fizz trade. The boom which even saw the French contemplate an increase in the demarcated area of the appellation is certainly over – at least for now. This is a situation which most people in the region could never have been predicted, just as whisk(e)y producers fifty years ago laughed off the possible risk of competition from vodka. (“It has no taste – why would anyone buy it?”) If you are so besotted with the “uniqueness” of what you are hawking you are at risk of never understanding what the market is actually buying.

The French assumed that consumers who bought Champagne (as opposed to any other sparkling wine) also bought the hype around its origin, its soils, its climate and its method of production. Secure in this misplaced belief they presumed that there was no real competition in the sparkling wine market: anything else would necessarily be inferior and would be selling on price, not on intrinsic appeal.

This assumption largely proved true when it came to other traditional (ie champagne) method sparkling wines. The hand-crafted nature meant that they could never really be cheap without tasting inferior. Once you’re halfway to the price of a bottle of branded champagne, consumers tend to buy “the real thing.” Cava positioned itself at not much more than the price of carbonated fizz – a premium slot in a much cheaper category, so it never threatened Champagne’s supremacy. Based on this experience, the Champenoises assumed that Prosecco – which generally isn’t even bottle-fermented – would never appear in the same space as Champagne.

It was a bad miscalculation. The mandarins of the Champagne business under-estimated the way millennials have broken with tradition, the value of Italian “sexiness’ versus French upper-class stodginess, and mostly, the sheer appeal of the new. Prosecco sounded youthful, it wasn’t dry, it wasn’t hide-bound by vinous tradition, and it caught Italy’s image as a friendly fashion capital, rather than the perceived prison of French formality. They probably also failed to realise that most people can’t taste the “champagneness” of Champagne: if it’s being consumed as an aperitif, anything fresh, fragrant and fizzy will do fine: biscuity, bready, and creamy might be positive attributes if your focus is yeast autolysis, but if you’re drinking frivolously, freshness, fragrance and finesse trumps the work of time.

The Cap Classique market in South Africa has enjoyed an extraordinary run. It has been booming alongside an ever-growing Champagne market. It has pretty much followed the same pattern, and the same trajectory: a few big brands account for 75% of the sales, and innumerable smaller brands make up the balance.

Accordingly, the Cap Classique producers would be wise to consider the impact of Prosecco on the British fizz market and start paying attention to their own turf. For a start – Cap Classique sounds French, and therefore runs the risk of Gallic tarnish rather than Italian shine. Secondly, while some MCC drinkers care for the nuances of bottle-fermented bubbly, I would suspect the vast majority respond to its fashion appeal. If that is correct, then as a category it is susceptible to assault from Prosecco. The Italian fizz sits comfortably in the right price bracket, comes with the appeal of an imported beverage, satisfies a broader organoleptic spectrum, and is internationally very much a la mode.

The success of Krone – which has sky-rocketed into one of the top slots in the local market on the strength of its high volume offerings (some of which are not dry and none of which show strong evidence of yeastiness) – should deliver an added warning. Guests who attended the annual VinPro Day symposium would have discovered – courtesy of Brandon de Kock’s excellent presentation on the evolution of the wine market  – the extent to which the growth of the middle class in the past five years will begin to transform the profile of the country’s wine drinkers. There is a new consumer, free of legacy baggage around brand or origin (more on this here). If these newcomers react – as Britain’s wine drinkers did – to the appeal of Prosecco, the growth in Cap Classique sales will slow down and the fizz market will hybridise. Champagne volumes may also suffer, but it is more likely to be Cap Classique that takes the body blows. It shares a common price point with Prosecco. For many of these new-generation consumers, the Cape is alien territory. In the midst of the turmoil and churn in the composition of the market, I wouldn’t bet on Cap Classique weathering the Prosecco storm unscathed.

  • Michael Fridjhon has over thirty-five years’ experience in the liquor industry. He is the founder of Winewizard.co.za and holds various positions including Visiting Professor of Wine Business at the University of Cape Town; founder and director of WineX – the largest consumer wine show in the Southern Hemisphere and chairman of The Old Mutual Trophy Wine Show.

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Comments

7 comment(s)

  • Neil Tabraham19 February 2020

    As Lisa has commented, Prosecco didn’t really hit Champagne sales in the UK. All it did was increase the sparkling wine category. I suspect the reason was due to price points in that a cheap Prosecco is around £7 whereas cheap Champagne usually starts at £18 for a cooperative wine (although it can be bought for as little as £12 on discount). Much of the risilience of Champagne during the Prosecco onslaught came from the recoltant-manipulant (grower-producer) sector which has created an affordable alternative to the big house Grande Marques. As yet there is little consumer differentiation in South African fizz to allow boutique producers to complete the product circle. Many consumers are even unaware of the difference between sparkling wine production methods, let alone who grew the fruit and how long it was aged on it’s lees for.

    My only concern is that the price differential isn’t there for most producers, but this might allow for future price point separation and greater profits for SA MCC producers. Another important aspect to remember; the Champagne houses will typically spend around 30% of the retail price on marketing. They also pay a levy in to the CIVC, which represents the interests of all Champagne producers with a coordinated marketing strategy to maintain its premier position in global markets. Maybe MCC producers should take note and start working together to keep ahead of possible competition to ensure that MCC is viewed as premium, while using a growing sparkling wine category to boost consumption of MCC overall.

    The worst thing to do would be nothing. Prosecco sales are slowing in countries with a mature market. The Venetians (or their global corporate owners) will be aggressively seeking new markets to exploit. Charmat method fizz is rare in SA but if there’s a desire for fresh and fruity fizz, surely it can be fulfilled locally. We merely have to look to the UK market for inspiration. Sparkling wine is a crowded market with Cava, Prosecco, MCC, English Fizz, Champagne and even a growing interest in Franciacorta. Nobody needs to be defeated if categories work together to find their own markets.

    • Michael Fridjhon19 February 2020

      Unless the Financial Times of 30th December last year has it all wrong both Neil and Lisa are incorrect about the impact of Prosecco on the UK’s Champagne market: “More than GBP100m in sales has been wiped off the Champagne market in the past few years as British partygoers have turned to cheaper sparkling options such as Prosecco….”

      I’m afraid I rest my case.

      • Neil Tabraham19 February 2020

        Michael, I’m sure there are statistics to support most views on the rise and fall of Prosecco vs Champagne. I agree that in the last couple of years, Champagne in the UK market has declined, however, this has little to do with Prosecco whose sales in the UK have also fallen 3 million bottles in the last year or so. Hence the reason they will be targeting South Africa. The recent decline in the category is as much to do with younger people drinking less and, to a lesser degree, the rise of English sparkling wine. Also, while volumes have fallen, the price has fallen less swiftly and is barely 2% less. Some could also argue that this is a correcting market after years of substantial growth in volume and price. My point being that Champagne has successfully held off sales from Prosecco along with the why’s and how. Surely MCC producers should be looking to develop the category rather than fear competition?

        • Michael Fridjhon19 February 2020

          I think we’re both agreed that MCC producers can and should develop strategies to support their category. I’m equally sure that there are a host of additional factors which have contributed to the changed profile of fizz in the UK. The crucial point here is that the success of Prosecco and the commensurate decline in Champagne sales provides a salutary warning for producers of bottle-fermented sparkling wines that a large chunk of the market doesn’t necessarily care about the production method as long as the taste meets its expectations and the category/beverage meets its perceived self-image. South Africa’s MCC producers ignore this at their peril

  • Duncan19 February 2020

    I’m not sure most South Africans really care about Italian chicness v French stodginess or whatever. Prosecco and Champagne are both seen as luxury European imports, and the former is cheaper.

    Why have Hennessy VS when you can have Van Ryn’s 10 for the same money? It has little to do with the traditions of Cognac.

  • Hennie C19 February 2020

    I have to be honest here – if you have a Champagne palate then Prosecco will never appeal. Even a basic champagne beats a top end Prosecco hands down. Prosecco appeals to people who don’t care what they drink and those people were never Champagne drinkers in the first place. So to echo Lisa above- the bottom of the MCC market may have a worry on their hands, but I have a feeling that even then Prosecco may appeal to the sodastream brigade rather than MCC drinkers.

  • Lisa Harlow19 February 2020

    Prosecco really didn’t hit the Champagne sector in the UK. It is very affordable bubbles and a feel good drink for many. Cost here is around equivalent of R100 for the truly awful stuff but it is drunk by many many people!
    It could harm your bottom end MCC market, which I also think lacks quality

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