Legislation limiting the word champagne to a specific category of sparkling white wines could lead to huge losses within the industry
A Ukrainian law limiting the word “champagne” to a specific category of sparkling white wines has created concerns within the industry that producers could suffer huge losses.
According to the wine law, passed last summer, only sparkling white wines produced using traditional technologies involving bottled yeast fermentation of three years’ duration can be labeled champagne. All the rest must be called sparkling wines. As a result, starting in 2006, most products formerly labeled as champagne were renamed as sparkling wines.
At issue are so-called champagnes produced using an accelerated method invented in the Soviet Union in the 1930s. This cut the aging process of the product down to three months.
Experts say that the widely popular “Soviet” champagne brand, which until recently occupied more than half of Ukraine’s champagne market, will likely be forced out of the market. Of the four Ukrainian plants licensed to produce the “Soviet”-brand, none had produced it using traditional technologies.
“The Soviet champagne brand occupies 72 percent of the market and is very popular,” said Vyacheslav Sokerchak, the president of SOVAT, Ukraine’s alcohol and tobacco industry lobbying organization.
Sokerchak said that the industry currently has little idea of how to work under the new law and that SOVAT will propose drastic changes to it before parliament reconvenes in February.
Volodymyr Belokonev, wine brand manager for Overline, which owns the Odessa Champagne Plant and controls the Myahkov vodka brand, said that if amendments are not made to the law, the Soviet champagne brand will cease to exist.
“Consequently, companies with [other champagne] brands in their portfolio have the opportunity to fill the gap” left by Soviet’s departure.
Among such companies are the Artemivske and Novy Svit plants that use traditional methods for producing champagne.
Hennady Kulzhinskiy, marketing manager for the First National Wine Production Holding, agrees that the law is difficult to understand and believes it was adopted mostly for political reasons.
“If we are going to Europe, then we must live according to the new law, but I think this law was just a political step,” he said.
Ironical twist
Kulzhinskiy pointed out the irony of the law, saying that while it bans Ukrainian producers from using the word “champagne,” French producers, who have had the exclusive right to the use the name within the EU since 1985 thanks to a European Union law, can and do produce their champagne using the accelerated technologies pioneered by the Soviets.
Belokonev said that most Ukrainian consumers are familiar with the champagne brands available on the local market, and that many of the former champagne brands with a recognizable design with simply substitute the words “sparkling wine” for “champagne.” He said, however, that these brands will no longer be competitive.
“For the consumer it will create even greater confusion than [distinguising the true] Soviet champagne brand, which is produced by five or six different manufacturers,” he said.
Restructuring expected
Belokonev said that this will result in a restructuring of the market.
“The extent of the redistribution on the market will depend on the current position of the brands, and their activity during the transition period.” In other words, Belokonev said, the survival of former brands, such as Soviet champagne, that change their names will depend on how they adapt to changing market conditions.
Kulzhinskiy doesn’t believe that the situation is that serious, since champagne is already popular in Ukraine, and the name changes will barely affect sales volumes.Industry experts generally agree that the new situation in Ukraine’s sparkling wine market resulting from the law could cause the “champagne” name to disappear from Ukraine altogether, and reduce sparkling wine sales of local producers, leading them to increase spending on advertising.
