Bubble-bubble, toil and double

LIQUOR: Moet Hennessey seeks value growth through India as a strongly emerging Champagne market.

At the upper end, things are different. A good example is the market for Champagne, producers of which are focused on driving value growth over volume growth.

And that's precisely why India is so important to Eric Simonet, business development director, Moet et Chandon and Dom Perignon, Louis Vuitton Moet Hennessey (LVMH).

India consumes only 12,000 cases of Champagne annually, but the market is starting to bubble in quite another way. In fact, as developed markets saturate, it is making LVMH rub palms in joyous anticipation.

It's just that the prospect of larger volumes is not exciting anybody at LVMH. Of global champagne production of 330 million cases in 2004, sales were of 300 million cases.

"That doesn't leave us with so much more to sell. There are strict regulations limiting the quantity of grape produced per square metre. But there is a lot of potential for creating value," says Simonet.

So champagne makers are doing all they can to get a bigger buck for the fizz: higher price realisation per bottle, that is.

Achieving this is about ensuring that bottles reach exactly where they should in order to command top dollar. And this too, without letting the quantities go down. "It's a fine balance "" selling volumes without over-exposing the brand," says Simonet.

Nowhere is this a problem more acute than in markets like the UK (about 36 million bottles consumed in 2005) , the largest export market for LVMH's champagne business.

"Over-exposure is a real problem in our business, depending on the environment the brand is consumed in and the kind of people consuming it," says Simonet.

It is this very sentiment that recently got Cristal, a premium Champagne, into a PR soup. Following an unconfirmed comment from the managing director of the company suggesting the Champagne makers weren't too thrilled about the brand's cachet among America's rap stars, influential hip-hop artists boycotted the brand.

Simonet chooses not to comment on that. "We are selling brands, not Champagnes "" so yes, we are all fighting for value..." is all he says.

India offers sufficient value opportunities for luxury makers. The World Wealth Report 2005, put out by Cap Gemini-Merril Lynch, reports that India's high net worth individual population grew by 19.3 per cent in 2005, among the 10 fastest growing in the world.

Some of that money is being spent on Champagne: the market for it is has been growing at 25 per cent year-on-year for the last three years, according to Ashwin Deo, managing director, Moet Hennessy India, a full subsidiary of LVMH.

The value-upping efforts in India include the launch of high-margin rose varieties of Champagne as well as niche versions such as Krug and Veuve Cliquot.

"We're now introducing the older vintages," says Kavita Palekar, brand marketing manager, Moet Hennessy India. The company is also chasing new occasions to turn them into bubbly-popping moments.