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Friday, June 5, 2009

FRANCE: Laurent-Perrier defends price rises amid sales slide














Laurent-Perrier, which this week reported full-year sales down 27%, has defended its decision to raise prices for its Champagne as many of its key markets faced recession.

15 comments:

stacy woods said...

I won't be surprised to find that they still sell every drop as long as Asia is still buying.

Anonymous said...

Hi Stacy: Should we use this as a piece of the puzzle for the essay that we (I) have to write until Monday? :)

Blake Brown said...

Is the price increase reflective of a quality increase? There are other wonderful Champagne houses to choose from, so there are options. I buy Krug anyway and am less inclined to try any LP now.

Anonymous said...

I don't see that he'll increase
price of its champagne; he will
sell its castle Epernay;
America and Japan buy less Perrier-
Champagne.

Anonymous said...

Its the usual arrogance of French winemakers that still believe the wine world revolves around their wines. I have already stopped buying big-brand French Champagnes and I'm using what I have in my cellar. What I'm purchassing is Prosecco, sparkling Italians like Ferrari and small producer product from France. At a quarter or less of the price, I'm having as much fun as drinking the big names.

Michael Donohue said...

Champagne producers intent of raising prices need to give their head a shake...with traditionally fermented new world blends of chard & pinot going for $20 or less and Cava being given away for substantially less (in California), they had better think twice, before their market share completely evaporates.

Anonymous said...

Typical French notions of marketing but as long as they are able to sell the product, so be it. Let's see what happens when their sales keep dropping. I am happy to drink and serve the lesser known labels. Cheers.

Chef Sun

pascal said...

Time for change!! In Italy we have beautiful vintage franchiacorta wines who are methode champenoise.And more than 50% cheaper!

Anonymous said...

Many firms raise prices when sales fall down. That's exactly the opposite they should do - if there is a recession, people will want lower, not higher prices. Sounds inappropriate.

Luiz Alberto said...

Let's see what happens when another year's production starts to fill their cellar. The harvest keeps coming, and if they don't sell they will be forced to dump, sell cheaper, or go to alternate labeling at a lower price. When winemakers decide what to charge based on what profit they want, rather than a fair profit for their efforts, they will fail in this market place. I see the same thing happening in some areas of Italy ( Brunello, etc.) and Burgundy.

Bernard Kenner

Anonymous said...

I do not believe that there is any reason that can be justified to raise prices except greed.
To purchase a French wine or Champagne is not held in the same esteem that it was once.

Perhaps Laurent-Perrier should look at the world market and come to terms with the fact that Italy, Spain, and the US have Sparkling Wines that are equal in quality and are better values.
When will the French come to terms that with their arrogance, we do not need to purchase their Champange or wines anymore.
Via the Revolution in the wine Industry!
.

Anonymous said...

Interesting comments but slightly misled.
There are several factors for a large luxury compagny to not put up their prices despite a slowdown in sales.One is that the long term market for French Champagne is an upward trend not a downward one. The supply of Champagne in the medium to long term will be far below the world demand which will unfortunatly push prices even higher then current.
The other factor is that a serious company like Laurent Perrier is seing by the world as a luxury brand and the last thing they want to do is to destroy that perception with a discounting strategy.
Now I hear you say what about the excess stock (especially after what looks like being another bumper crop harvest!) well if need to discount they might do it on the French market only and under the 'table deals'. I am afraid very little price bargain to be had here is australia.

BobZaguy said...

The Champagne market is indeed in an upswing. There just doesn't seem to be enough to go around during Holidays.
But in Chicago, Champagnes are now at their lowest prices in the year. And this happens each year as well.
Normally $40+ bottles going for $31-32; $35+ for less than $27; etc. These are 20%+ discounts. Not from the store's cash either. But distributors and suppliers are making this happen. Not many are buying Champagne in April, May, June, July — hence the sales.
Just like Laurent-Perrier, all prices will go back up again come November.

--Lumpen Guru said...

He is doing the right thing. The market for luxury goods never varies. Those who can truely afford a luxury good will pull back from purchasing for fear of markets, war or whatever, but never because they don't have the money to buy. There is no price elasticity in luxury products which means no matter how much he lowers the price, it will not increase sales by an amount great enough to cover the price decrease. He is not being arrogant or greedy. Raising the price will not decrease sales to the "core" wealthy, and once the "wish they were wealthy" have been removed from the market, sales will stabilize until the next upturn. As regards the wealthy purchaser's perception of luxury, if he raises the price within reason, he will make the same number of sales of his wine at a higher price, and make the brand an even more sought after and exclusive luxury item while keeping the "wish they were wealthy" out, and waiting for the time when the wealthy open their purse strings once again. Fear, not money, is the issue during times like these. He's smart - the "core' will return.

--Lumpen Guru

GregT said...

Its true that they sell it as a luxury item. And in the long run that is exactly what is going to kill the entire wine market, at least for the "prestige" French regions. Your idea of luxury today will not be your childrens idea of luxury tomorrow. The wine market in the US has been on a growth path for a number of years, at least since 1982. Today the Asian countries are buying into it in part as a way of emulating the western trends. But growth does not last forever and eventually, as the Asian countries don't consider themselves "emerging" but become more comfortable with their own status as first-world powers, they will eschew imported customs for their own.

In the 1950s the most recognized luxury car for a large part of the population, especially in the US, was a Cadillac. Who buys those today? GM is going out of business. In part because they felt like the French houses do - that their current world would last forever. And to the degree that the French believe they will always symbolize luxury, they are repeating the same mistake.

Moreover, arrogantly increasing prices in a down market drives home the fact that they don't see customers as long-term assets to be nurtured, but simply as suckers to be fleeced. Who, except a masochist, will feel any customer loyalty to a house with that attitude?

Is it genetic? Roughly 200 years ago the French aristocracy had a similar attitude towards the peasants, including some of the proprietors of great wine estates. Does anyone even remember what happened to them?