PARIS (Reuters) - Champagne drinkers in Britain - the biggest export market for bubbly - face higher prices next year as the impact of the shock Brexit vote on the British pound takes its toll, champagne industry executives warned.
“The market in Britain is undergoing a period of adjustment. The brands have not yet factored in the effect of foreign exchange rates on their prices,” said Charles-Armand de Belenet, marketing director for Pernod Ricard’s Martell Mumm Perrier-Jouët champagne brand.
The June vote for Britain to quit the European Union led sterling to slump to its lowest level since 1985 against the U.S dollar and to fall against the euro, although it has since edged back up from those lows. [GBP/]
The weak pound makes euro-priced products more expensive in sterling terms.
French champagne industry executives told Reuters that while they had managed to offset the Brexit impact to an extent this year, with some firms delaying price rises, they would have to raise prices in Britain in 2017 to protect their profit margins.
Bruno Paillard, who heads the Lanson champagne house, said that while Lanson’s sales were showing signs of an increase from last year, exchange rates remained a worry.
“The question of exchange rates is a cause for concern, it represents quite a considerable loss of money,” said Paillard.
Jean-Marie Barillere, president of the Union of Champagne Houses, said champagne firms that billed in euros were seeing their costs go up and their orders go down.
Taittinger head Pierre-Emmanuel Taittinger said his company had had a “good year, even in England,” but Bollinger executive Jerome Philipon warned champagne drinkers of higher prices next year.
“The major brands will have to hike their prices from January onwards. But one price hike still won’t compensate for the hits from the exchange rate,” he said.
France exported 150.7 million bottles of champagne in 2015, worth 2.64 billion euros (2.24 billion pounds), according to an industry group. Britain accounted for nearly 23 percent of France’s champagne exports by volume that year, equivalent to 34.2 million bottles.
Writing by Sudip Kar-Gupta; Editing by Adrian Croft