There has been a lot of talk lately about the development of Champagne sales on the African continent, some of it factual, some of it grossly exaggerated. Much of the latter stems from a rather embarrassing factual error perpetuated by various media outlets following a BBC Africa interview earlier this year at the Africa Luxury & Wealth Summit in Johannesburg with Silvana Bottega, head of the Southern Africa Luxury Association. Bottega was quoted as follows: “In the sector of Champagne, it is very well documented that Nigeria has now become the second largest consumer of Champagne after France.”
While Nigeria did purchase 768,131 bottles of champagne in 2014, making it the largest market on the African continent, its consumption was significantly less than the 162.3m bottles that were consumed in France in the same time period. In fact, Nigeria was the 23rd-largest importer of Champagne in the world last year. Bottega misquoted a study by Euromonitor International, specifically a talk given by Spiros Malandrakis in 2013 in which he actually stated that Nigeria was expected to have the second- strongest actual gains in total Champagne volumes over the period 2011 to 2016.
The fact that this story was picked up by so many outlets shows the lack of knowledge about the realities of Africa’s economies. The African continent is extremely diverse, not only culturally, economically, linguistically and spiritually, but also in terms of regulatory and legal policies, political stability, financial systems, logistics and infrastructure. Yes, there is a developing luxury market in several countries and yes, a handful of smart Champagne producers are investing there now. But enthusiasm needs to be measured, more research needs to be done, and local partnerships need to be championed.
Emerging markets
Besides Nigeria, the other leading African markets for Champagne are: South Africa (684,696 bottles), Angola (360,631), Morocco (253,091), Ivory Coast (211,103) and Gabon (195,083). Each of them, however, pales in comparison to the 32.68m bottles sold to the UK or the 10.43m bottles sold to Japan or the 2.61m bottles sold to Sweden last year. That said, wine consumption across the continent is growing. In the case of Nigeria, Euromonitor International attributes this to “continued population growth, a desire for new types of alcoholic drinks, an increased female drinking population, an increase in health consciousness among Nigerians, and an increase in Westernisation.”
Emerging luxury markets in all sectors are routinely treated to a unique blend of xenophobia and misplaced resentment by the so-called established markets, and Africa is no exception. Consumer reports on Nigeria never seem to tire of talking about private jets and Champagne-fuelled nights. While Nigeria has indeed become Africa’s largest economy, this reality needs to be balanced by the threat of the Islamist militant group Boko Haram as well as the significant drop in oil prices. Lagos is not yet Cannes.
According to African Business Magazine, some of this new fascination with Africa started in 2012 when the region’s segment of high-net-worth individuals (HNWI) grew by 9.9%, the second-highest growth rate in the world after North America and above the global average growth rate of 9.2%. During the same period the growth rate for African HNWI increased 11.5% to $1.3tr, 1.5% above the global average. Johannesburg is now home to 23,400 millionaires while Lagos has 10,000 and Cape Town has 9,000. Wealth-X (formerly Ledbury Research) estimates that by 2017 the African continent will have 645,000 millionaires, or 2.6% of the global figure. Demographic projections are also providing to be seductive as it is estimated that by 2020, three out of four people in Africa will be an average age of 20. Luxury fashion and automotive brands are keener than ever to enter the market. The luxury alcohol segment is no exception, with the categories of Cognac and whiskey leading the charge.
A number of Champagne producers have indeed entered the market, but growth needs to be kept in perspective. The fact remains that in 2014, 10 countries accounted for 88% of all the Champagne consumed in the world. The CIVC now has bureaus in 14 countries, including India and Brazil, but not a single one on the African continent. Cindy Grimaud, marketing and communications manager of global logistics expert JF Hillebrand, confirmed that the shipments from Champagne to Africa managed through her company have not increased dramatically within the last year. But some are careful not to underestimate the realities of the market. “In 2014, the African countries accounted for 3.9m bottles of Champagne, while [mainland] China represented 1.6m bottles,” says Bastien Mariani, export area manager for Champagne Bollinger. “We must note that the African countries remain a bigger market for Champagne today than China.”
It’s also important to address the question of value, especially since many of Champagne’s established markets continue to erode in value due to the prevalence of buyer’s own brands. The average price per bottle shipped to the UK in 2014 was €14.61 ($16.37) while the average price shipped to Germany was €15.45 ($17.32). The average price per bottle shipped to Nigeria was €30.17 while the average price per bottle shipped to South Africa was €20.39.
Brands like Moët & Chandon and Laurent-Perrier are investing heavily in Africa’s future, although both are reluctant to say anything publicly. Pernod Ricard, owner of Champagne brands G.H. Mumm and Perrier-Jouët, was one of the sponsors of the Africa Luxury & Wealth Summit. One of the largest Champagne producers who ships to the African continent told Meininger’s that sales to Africa were “a sensitive subject, often open to misinterpretation” for his company. In addition to direct sales to various governments, a lot of exports are under-declared to avoid taxes.
On the other hand, one of the Champagne producers who has invested a great deal in Africa and is starting to see the fruits of its labours is Champagne Canard-Duchêne. “Canard-Duchêne started to work the African continent in depth starting in 2008 and we now enjoy permanent distribution in 12 African markets, representing 15% of our export business in 2014,” says managing director Alexis Petit-Gats. “The most significant markets for us are Nigeria, Benin, Cameroon, Ivory Coast, Burkina Faso and Togo. It is interesting to observe that our African business has doubled in value over the last five years.” Petit-Gats wonders why more of his neighbours are not yet present in Africa. “As far as the Champagne category is concerned, these markets are not actively ‘worked’ by all Champagne players.”
He notes that there are 37 Champagne Houses present in Nigeria, 16 in Angola, 35 in Congo and 40 in Gabon, “which is really small compared with the average base of 200 to 300 brands present in mature markets.”
One who is present is Bollinger. “We have been selling to Africa for quite a long time and started to sell our products to the Commonwealth countries first (South Africa and Nigeria in particular) due to the awareness that Bollinger has in these English-speaking countries, thanks to the Royal warrant obtained in 1884 and our long-time partnership with James Bond,” says Bastien Mariani from Bollinger. “For Bollinger, volumes in Africa remain limited compared to the rest of the world, but our growth rates in the African countries are bigger than in most of the other markets.” Mariani adds that, “South Africa is an interesting market for Champagne in general, and for Bollinger in particular. Indeed, by having a local production of sparkling wines, South African consumers already have a good education on wines. But on the down side, competition in South Africa is tremendous, and the market entry conditions require high investments.”
A wine country in its own right, South Africa presents further challenges to Champagne’s development due to the increase in both production and recognition of Methode Cap Classique, South Africa’s locally-produced sparkling wine.
Individual markets
Mariani says that, “Consumption of Champagne in Nigeria is about conspicuous consumption, in the nightclubs mostly. In this context, sweet Champagne and rosé perform exceptionally well (accounting for 48% of volumes shipped to Nigeria).” He adds that this this distribution method is why some Champagne houses are so successful in Nigeria today. “Regarding Champagne Bollinger, and due to a more premium brand positioning, volumes are still limited. But the evolution to a more traditional consumption should benefit to our wines in the future.”
Angola spends $1bn every year on importing wine. The 2014 Angola Wine Festival featured 85 exhibitors representing 500 brands of wine, mainly from Portugal, followed by Chile, South Africa and Italy.
Mariani says that, “Angola is quite close to Nigeria in terms of conspicuous Champagne consumption. We are not yet present in Angola but it is a market that we are prospecting.” Petit-Gats, on the other hand, is hoping for success in Morocco and South Africa.
Bollinger may have focused on the Commonwealth, whereas Canard-Duchêne focused on African consumers that had a very good knowledge of “Champagne brands”, because of their post-colonial connection to France. Petit-Gats says, “Unlike most of the mature markets where Champagne is an affordable luxury item, Champagne remains a strong luxury product as well as a status symbol in Africa, where consumers are seeking the most premium products. If you have had a chance to enjoy a night out in Cameroun, Champagne is simply part of it.”
Learning more about the individual markets and avoiding a single approach are essential tools for succeeding in Africa. The continent is, after all, home to 54 countries, making it as culturally diverse as Europe. Alexis Petit-Gats from Canard-Duchêne says that, “One of the greatest challenges in Africa is probably logistics, making sure that our wines reach consumers in the best conditions,” he says.
“Trust and long-term relationships are also an essential part of building our distribution. It takes time to establish a Champagne House in any market and Africa is complex in terms of distribution.” Petit-Gats suggest that one advantage for Canard-Duchêne is that it’s a family house, which means it can offer continuity of relationships. Another weakness he identifies in the African markets is knowledge.
“With wealth gaps extremely high and individual exposure to Champagne and other luxury goods affected by a complex post-colonial structure, education is definition a major challenge.”
According to Bastien Mariani from Bollinger, “Wine education will be the biggest challenge in Africa, in order to move from conspicuous consumption to a more gastronomic approach.” It’s important to remember that the same observations, typical of any emerging luxury goods market, used to be said about places like China and the US.
Some of the excitement about the growth of luxury retail in Africa has been tempered by falling oil prices, which have hit the economies of Nigeria and Angola hard. Yet the long term future for the continent looks good, as the youth of Africa grow up in a media rich environment, which is exposing them to education and aspiration. But long-term success in Africa belongs to those who can resist the temptation to see the continent as one, undifferentiated place.
