Will the Fizz Fizzle?

Still looking for something special to toast the new millennium? Caviar House, the Geneva-based luxury food chain with 40 outlets in Europe and Asia, will be happy to sell you a bottle of 1907 champagne that has been maturing nicely at the bottom of the Baltic Sea just off the coast of Finland since Nov. 3, 1916. That was when the Swedish schooner Jonkoping, laden with wine and spirits for Czar Nicholas II's army, was sunk by a German U-boat. Salvaged in 1998, the bottles cost $4,000 a pop and are selling fast, particularly in Moscow. Something a little cheaper perhaps? How about a limited edition jeroboam of Perrier-Jouet's Reserve Belle Epoque delivered in its own beechwood case for $2,000? Or the special Noble Cuvee from Lanson, which comes clad in a chainmail jacket designed by Paco Rabanne, a snip at $2,800 per bottle?

As the Big Night approaches, revelers are digging deep into their pockets to buy the best. They're also buying in quantity and 1999 is already destined for the record books. By the time the fin-de-siecle festivities are over, some 320 million bottles of bubbly will have been consumed worldwide this year compared with a mere 27 million a century ago. Strong demand--and doubtless some covert scaremongering from wine merchants--has fueled fears that the bubbly might run out and there have indeed been some shortages. Majestic Wine, the biggest wine warehouse chain in Britain (which is in turn the largest export market for champagne), reported last month that champagne sales were up 60% over 1998 and that it was running short of upmarket fizz. Desperate French sommeliers are rumored to be begging British wine merchants and even restaurants to sell them quality champagne no longer available in France because of astute British buying ahead of the millennium rush.

But fears of a fizz shortfall have been misplaced. Pamela Gregory, chief wine and spirits buyer for Harrods department store in London, confirms that although some prestige champagnes are now difficult to find around Europe, there should be enough bubbly to see in the New Year and beyond. Indeed, to ensure that nobody goes thirsty and to prevent shortage-induced price hikes, the industry has released some 74 million bottles from a "strategic" reserve onto the global market to ensure that supply matches demand.

Although that has not stopped prices rising for the most sought-after cuvees, the strategy is to win over year-end revelers to "the real thing" on the assumption that they'll come back for more and abandon non-champagne forms of fizz, which currently enjoy a 12-1 sales lead in the global market. The hope is that the spumante, cava and sekt drinkers will try champagne and discover what they have been missing and that regular drinkers of regular champagne will in turn trade up to, and be seduced by, the more expensive vintages and special cuvees. And then, of course, there will be those drinking champagne plucked from the Baltic sea bed (it's in great shape, says Caviar House's Jean-Pierre Esmilair--but sweeter than the brut style now in vogue).

But even if millions are converted to champagne in the next few weeks, the industry could yet wake up to a 21st century hangover for the simple reason that strict rules limiting the amount of land that can claim the champagne name or appellation and even stricter rules limiting yields, mean that output is approaching its upper limits unless quality is sacrificed. Under the planting restrictions first set out in 1927, there remain only about 1,500 hectares of land that can legally be converted to vineyards--enough, perhaps, to bring annual production up to around 320 million bottles, but not enough to sustain the 2% annual expansion the industry has enjoyed over the past 20 years.

"In the long term there are serious limits to growth, which is why the big champagne houses are investing elsewhere," says Jancis Robinson, wine writer and editor of The Oxford Companion to Wine. Moet & Chandon cellar master Dominique Foulon concedes the point. "The best areas have already been planted," he says, adding that "there's also the problem of more and more independent grape growers wanting to sell the finished product."

None of the major champagne houses grows all its own grapes. Each year they buy and blend the grapes they need to create their own famous brands from small local growers. These so-called recoltant-manipulants have seen their share of grape production increased from 25% in 1990 to 42% in 1997. But with both demand and prices booming, grower-producers are keeping more of their grapes to create own-label champagne. According to the champagne wine growers' and merchants' federation (C.I.V.C.), over 5,000 grower-producers now bottle their own champagne, compared with just 17 in 1929.

It was the economic crash of that year and the subsequent Depression that led to the growth of the independents. The big champagne houses slashed production, grape prices plummeted and many grower-producers were ruined. "We wanted to liberate ourselves from the yoke of the big houses," says Paul Bara, a respected and successful grower-producer based in Bouzy whose father and grandfather struck out on their own. "They wanted increased independence and the dignity that goes with it." Today, says Bara, the independent grower-producers are an "irreversible economic force."

The big question is whether their rise will undermine champagne's global reputation for quality based on the consistency of the major houses' blended products. Bara's wines are a fixture on the wine lists of some of Europe's greatest restaurants. But for every superb own-label champagne produced by a small grower, there are a dozen or more modest offerings with much to be modest about. Also, with supplies under pressure, grapes diverted to own-label champagnes will mean higher costs for the major houses and higher champagne prices.

That cannot help the champagne industry, whose producers are hard-pressed to compete price-wise with many of the newer, more cost-efficient makers of sparkling wine around the world. It's not surprising therefore that the major champagne houses are hedging their bets with investments in lower-cost New World wine regions. LVMH, the luxury conglomerate which owns Moet & Chandon, Krug, Dom Perignon, Pommery and Veuve Clicquot, now makes sparking wine under the Chandon label in places as far afield as California, Argentina and Australia. Others have been quick to follow, including Taittinger, Roederer and Mumm.

Meanwhile sparkling wines from other regions are improving in quality by borrowing from champagne's methods even if they are forbidden by law from adopting the name. "At its best great champagne is better than other sparkling wines," says Robinson, "but consumers are catching on to the value-for-money offered by newer arrivals on the scene, both at home and abroad." As glasses are raised to toast the new millennium, many will be filled with champagne. But as the new century unfolds, the champagne industry will have to find some added fizz if it is to remain the benchmark for sparkling wine.