What goes up, must come down

The tariff yoyo's potential impact on champagne sales

Dear friends, at the start of this newsletter, I would like to announce another “message of Hope” Substack LIVE on Tuesday April 22nd at 5 pm Paris Time, 4 PM Uk time, 11 AM Eastern time and 8 AM Pacific time. My guest will be Cédric Moussé, who has unified his whole village to forgo herbicides in favor of mechanically weeding by robots. Cédric will also share his experience with husbandry in his own vineyards. I hope you can join us for another Champagne feel-good moment!

It is by now ‘old’ news that the 2024 champagne sales are at their lowest level since 2001, with the exception of the 2020 Covid-19 sales, but little attention has been given to their continuing decline this year. The first quarter posts another 1.1% year on year volume decrease, indicating an 800,000 bottle sales loss compared to last year. The decline could have been larger if the March sales had not bounced back. In fact, driven by an 11.5% increase in export sales (+ 1 million bottles), March sales posted roughly an 800,000 bottle sales increase compared to last year.

But before anyone engages in a happy dance, it may pay to put these figures into context. Donald Trump’s on again – off again tariffs, and especially the threats he made mid-March to impose a 200% import tax on European wine and alcohol, could have been at the core of Champagne’s March export sales boost. While many smaller importers halted all orders after Trumps threats, houses who often own (part of) their US distribution chain were quick to stockpile bottles before April 5^th Liberation Day. The New York times reports that LVMH has been stockpiling wine, spirits and champagne, as well as setting aside a $10.5 billion cash cushion to navigate future tariffs on the whole of its portfolio. It is likely LVMH is not the only house that has been stockpiling champagne in the US, still before writing off March increased export sales as preventative tariff sales, it may pay to wait for figures of the upcoming months.

One of the reasons I believe the increase has been tariff driven has to do with the analysis I conducted for an article I wrote for Wine-Searcher at the end of March. The Champagne export data I went through showed a sales decline in 8 of Champagne’s top 10 export markets – the only exceptions were the US in first position – which maintained its sales – and the UAE, where sales increased by 21.6% allowing the UAE to push Sweden out of the top 10. This also follows the continuing falling sales trend in France, where sales volumes further declined by 7.1% in the first quarter of this year, after having posted a 7.1% year on year sales loss in 2024.

Trump’s tariff mayhem has been upending the world economy, and if he persists with his blanket tariff policy, economic hardship is likely to be felt by consumers no matter where they live. In fact, a tariff driven global recession has been predicted by several economists. And even if Trump has reduced his reciprocal tariffs on the world to 10% until the beginning of July, he has held steady on the 25% tariffs imposed on Canada and Mexico - which he also paused for a month - and has escalated his trade war with China. Moreover, the many trade negotiations the US has been engaged in to reduce reciprocal tariffs seem to be going no-where if one is to belief comments of Japanese and EU negotiators. None if this is promising for a booming champagne trade, which traditionally has suffered in times of recession and stagflation.