Paris, Nov 27 - In the dark days before Christmas, the French champagne industry is suffering from lower sales while department stores are seeing business holding up and are hoping for a positive surprise over the festive season despite fears that the economic crisis will start to hit hard in 2009.
Both industries, part of the key luxury sector on which much of the French economy and a big part of the country's stylish reputation depend, are looking ahead with trepidation to the important Christmas and New Year sales. Total sales of French champagne were down 2.4 percent in volume over the first nine months of the year to about 195 million bottles, according to the UMC industry body.
"The current situation is difficult, especially for distributors who do not have a clear view on things to come. They are very cautious and order at the last moment," UMC managing director David Chatillion said in an interview.
"It is not certain that consumption is declining, but the deliveries are down over the last two months because the distributors, who can have cash or credit problems, are buying less," he added.
The decline in deliveries, which follows a record sales rise in 2007, is mainly due to the French market which makes up 55 percent of the sales volume. The United States, second-biggest export destination after Britain, is also in a marked decline.
"We have to wait until the end of the year to get a clearer picture but the current situation is not favourable," Chatillon said. "Champagne houses are reasonably worried due to the economic circumstances," he added.
"It is possible that Christmas 2008 will be a bit less good than last year, with a small decline in volumes and a flat turnover", he said.
The champagne industry makes 40 percent of its annual sales in the last quarter of the year, including big names such as Moet Chandon, Veuve Clicquot and Boizel Chanoine SHOPPING SURPRISE?
Meanwhile the new head of the French UCV retailers' organisation, Claude Boulle, told Reuters that business in its member's stores was holding up despite the crisis and Christmas sales could yield a positive surprise. But he was less bullish about 2009.
"Everybody is rather convinced that we are going to see some surprising things around the festive period, looking at the figure for the first half of November," he said.
"We are very optimistic and the outlook is excellent because traditionally families want to enjoy themselves with Christmas and a number of chains will be open on three Sundays in December," he said. The 600 UCV members have annual sales of 8.7 billion euros ($11.24 billion).
But for 2009 the retailers are more cautious.
"The impact of the crisis on consumpion is ahead of us. The economic crisis will happen in France in 2009. We suspect that we have already cried a lot without yet really suffering," he said.
UCV members include big department stores such as BHV, Galeries Lafayette, Printemps PPR , Monoprix, Bon Marché, books and music retailer Virgin, furniture chain Habitat and clothing group C&A.
Over the first 10 months these stores had a flat performance compared with the previous year but Boulle noted that a wave of strikes in November 2007 made comparisons difficult.
"Overall and up to November there is a slight increase in value, that is already not bad compared with other sectors," Boulle said.