WSET Diploma

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When I first began inquiring about the WSET diploma program, I had several people warn me that the diploma is a much bigger undertaking than the intermediate or advanced levels. Yeah, yeah, yeah, I thought, no problem. Turns out they were right–the depth of knowledge, research skills and writing skills required for the diploma program is much greater than I imagined–not to say I wouldn’t enroll again! The course consists of six units: the global business of alcoholic beverages; wine production (viticulture/vinification); light wines of the world; spirits; sparkling wines; and fortified (liqueur) wines. So far I’ve only completed wine production, and am currently enrolled in the units for both sparkling and fortified. I can barely keep up with the massive amount of reading, writing and research required. But I’m having a blast with it all, and I learn new things about the world of wine every single day.

Here’s something fun I worked on yesterday. The assignment asked for students to write about the Champagne shortages of the early 1990s/2000s, how the Champagne industry dealt with the issue, what solutions were proposed, their benefits and drawbacks and how the actions taken impacted the Champagne market. This is what I came up with.

Rising Demand for Champagne

The 1990s and early 2000s saw large increases in demand for Champagne, from nearly all markets, particularly the UK and the US. Average growth in 1999 across all markets was 20% (“Finding the Fizz, Decanter.com, 1 May 2000, http://www.decanter.com/people-and-places/wine-articles/489842/finding-the-fizz). The Champenoise were barely able to keep up with demand, which was outstripping supply. This resulted in escalating prices, which affected producers as the price of grapes rose, as well as consumers, who experienced rising prices for Champagne. The delimited Champagne area was fully planted. How to address this problem and find ways to increase production and meet rising demand?

Several solutions were proposed. One involved raising yield limits for Champagne, which was introduced temporarily between 2007 and 2011, from 10,400kg/ha to a maximum of 15,500kg/ha. Tom Stevenson felt raising yields would be beneficial in helping to solve the problem, stating, “Maximum yields in Champagne have always been a work of fiction, with the Champenois growing vastly more than they need and simply harvesting up to a synthetic limit, leaving the unpicked grapes for the birds…The maximum legal yield in 2004 was 12,000kg/ha, plus 2,000kg en blocage, but the average actual yield was a massive 23,000kg. It goes without say that Champagne’s make believe maximum does nothing to affect the quality of the grapes grown. Those grapes harvested above 14,000kg are just as good, or bad, as the grapes in the same vineyard below 14,000kg” (Champagne’s €6 Billion Expansion, by Tom Stevenson, November 2007, http://www.wine-pages.com/guests/tom/champagne-expands.htm). Raising yields could be a factor in raising production, but it probably will not result in enough grapes to meet demand, provided demand keeps rising. It may also contribute to negative perception, as consumers and sommeliers alike generally equate low yields to higher quality, although this is not necessarily the case.

Blocage was another solution proposed for the problem of demand outstripping supply of Champagne. Blocage is the practice of building up stocks of reserve wine to use during shortages. Producers built up reserves during the mid-1990s, which they used to booster levels of production during years with lower yields and during times of increased demand. “The Champenois have managed the difference between supply and demand partly as a result of steadily building up stocks over and above prevailing demand levels during the mid-1990s. The qualitative reserve or so-called blocage has also played an important role. In years when the harvest is abundant and more grapes are available than the permitted maximum yield, some extra wine may be put into reserve if the appellation authorities allow it. Thus, in the 1992, 1993 and 1994 vintages, the equivalent of around 130 million bottles of Champagne were put into the blocage for possible future use at times of shortage…Even so, the Champenois would be hard pushed to satisfy another large increase in demand in 2000” (“Finding the Fizz, Decanter.com, 1 May 2000, http://www.decanter.com/people-and-places/wine-articles/489842/finding-the-fizz). Again, blocage can offer a partial solution, but is not a silver bullet for the problem of demand outstripping supply in Champagne.

One of the most contentious answers to the problem of demand outstripping supply has been to expand the limits of the Champagne region. In 2003, the SGV (Syndicat General des Vignerons de la Champagne) requested a revision of the Champagne AOC, and in 2007 the INAO (Institut National de l’Origine et de la Qualite) released proposed changes to the Champagne AOC. These changes included the addition of 40 new villages and the exclusion of two, which were already included in the AOC.

There are benefits and drawbacks to the proposed expansion of the Champagne region, and the expansion would very clearly benefit some growers and houses while negatively impacting others. Resistance from the two villages to be excluded (Germaine and Orbais-l’Abbaye) is expected, and compensation would have to be offered to those who would be declassified. On the other hand, the value of some growers’ land would increase exponentially. Stevenson says, “The value of each hectare will increase overnight from between €1,800 and €5,000 up to €1.2m, creating as much as €6bn of new wealth” (“Champagne’s €6 Billion Expansion,” by Tom Stevenson, November 2007, http://www.wine-pages.com/guests/tom/champagne-expands.htm).

In the same article, Stevenson points out that high Champagne prices have created an artificial demand on grapes, which are then sold at inflated prices. “With more wine sold than produced, needless pressure is placed on stocks, and the result is increased prices for the consumer.” Thus, one benefit of expansion of the Champagne area could be a halt of price increases or even lowering of prices both for consumers and for producers as pressure from limited supply is eased. However, demand for Champagne has historically been cyclical, subject to the boom and bust of markets. In the early 1990s, Champagne suffered from falling demand, found itself with a surplus of wine and suffered from falling prices. By the time any expansion is agreed on, grapes are actually planted and wines from the expanded areas hit the shelves, demand could fall once again, with disastrous results for growers and producers in Champagne.

Another drawback of expansion could come in the form of negative public perception. Consumers have equated Champagne’s proposed expansion with a position of greed, with growers and houses trying to capitalize on greater demands and make more money. Reputation is certainly a factor influencing demand in the various markets for Champagne. One way to overcome possible negative perception is to make sure that proposed expansion includes only villages that will strengthen the Champagne AOC, instead of watering it down with sub-par land. Stevenson says, “If all the new land they propose can be demonstrated to have a potential quality in excess of the average quality of the current AOC vineyards, then they will have produced an infallible case for expansion, because not to proceed would be to condemn the future of Champagne to an unnecessarily inferior quality” (Champagne’s €6 Billion Expansion, by Tom Stevenson, November 2007, http://www.wine-pages.com/guests/tom/champagne-expands.htm). He also points out that the proposed expansion is, in fact, a consolidation. The proposed additions included villages that were left out of the Champagne AOC but directly adjacent to villages already included in the AOC. The region didn’t get wider, but more villages inside the existing AOC would be included.

Currently, the proposed expansion is still under review. Various public inquiries will take time, and Stevenson predicts that the earliest consumers may see wine from the expanded areas on the shelf would be in 2021. Meanwhile, the Champenoise will have to continue to rely on a mix of solutions, notably increasing legal yields and allowing for greater blocage, to stay ahead of the increasing demand for Champagne—as long as demand continues to increase.