MOST EXPENSIVE CHAMPAGNES

Most Expensive Champagnes 2005

It's more than the bubbles that makes champagne different from other wines.

Most obviously there is its price, but that's only a material expression of its more elusive qualities; that air of sophistication and luxury, magic, celebration and above all, romance that are its real asset.

This is why champagne is so relentlessly marketed, not like other wines, but as the luxury product it strives so hard to project itself as. The way it is sold has more in common with other luxury goods, like haute couture, astronomically expensive handbags and perfume than it does with even the world's best still wines. It is no coincidence that two of the top champagne brands, Krug and Dom P�rignon, are owned, not by one of the world's large drinks groups, but French luxury goods conglomerate Louis Vuitton Mo�t Hennessy.

Yes, regular champagne is expensive--a bottle of ordinary non-vintage fizz can easily cost $40, the price of a really fine California chardonnay--and expensive champagne is eye-wateringly so, but there is a lot more than supply, demand and cost that is driving these dynamics. Like a limited-edition single malt scotch or an Herm�s Kelly bag, the price of better champagne is only peripherally related to it's cost. This is the very antitheses of a commodity being sold here. Champagne is not widgets.

A far more meaningful calculation in the marketing men's minds is the estimation of what the market will bear.

Everything from exploiting the dubious myth that Dom Pierre P�rignon "invented" champagne to its sponsorship of prestigious sporting and social events, serves champagne makers' relentless drive to maintain bubbly's image as the epitome of the good life. Veuve Clicquot--another LVMH brand--for example, specializes in sponsoring chic events such as polo matches, the America's Cup and elegant race meetings. There's not a lot of NASCAR here.

What the producers are selling is image as much as what's in the bottle. Whereas the French consumed, on average, 2.9 bottles per capita of the stuff in 2004, in the U.S. and U.K. people drank only 0.07 and 0.5 bottles each respectively, according to industry trade group Champagne USA. That means that less experienced champagne drinkers go for either low price or, when shopping for more expensive bottles, for branding. And the more a champagne house can enhance its brand, the more price leverage it has.

Recently, a senior executive for a top champagne house told me of a revealing debate between his sales and marketing departments. The sales people wanted more ros�. There was no technical problem increasing production of these romantic pink bubbles and, as demand was strong and ros� is the high-end sector of the champagne market, there was pricing flexibility, too--i.e., they could increase supply and raise prices. But the marketing guys gave an emphatic Non! They liked the fact that there was a scarcity of the ros�--it increased its allure, and at the same time burnished the house's image as the provider of rare and special products. So they sacrificed a short-term boost in the bottom line in return for a subtle brand-enhancing strategy.

Then there's the decision on how to price a new release. Krug has just released the latest vintage of their limited-production, single vineyard, Clos du Mesnil, the 1995, at a whopping $750. Yes, that's per bottle. This compares with the previous release, the 1992, that cost $500. This 50% increase in price has almost nothing to do with higher costs--Krug owns the vineyard after all--and everything to do with their estimate of what the market can bear. And it doesn't do the reputation of their other, less expensive, cuv�es any harm to be associated with the world's most expensive champagne.

Of course, this thinking does not apply when the marketing gurus are trying to decide whether to price the few dozen surplus cases of Fizz Inconu at $24.95 or $26.95 per bottle at your local Wal-Mart but that's a whole different story.

Now, to be sure, production costs are a contributing factor to what makes expensive champagne expensive. They employ the best grapes from the best vineyards in the region, and as most houses own only a small percentage of the vines they need, these have to be brought in. Then there's the way champagne is made, the M�thode Champenoise, that's extremely labor intensive. Finally, there is the need to age all those bottles for anything up to ten years before they are released. The whole process is a business consultant's nightmare.

However, not missing a trick, the champagne business then enlists these high costs in the cause of bolstering champagne's image as an artisanal, hand-crafted product that is worth paying more for.

And when you are selling luxury and sophistication, you cannot do it at a discount.