Expensive champagne is becoming scarce – economy

Finally you can really treat yourself to something! The fear of the pandemic is fading into the background, the restrictions on travel and restaurants are over, and the constant testing is over. So finally get out again, celebrate life, enjoy the beautiful things, no matter what the cost. That’s the mood at the moment and the consequences are only logical: luxury groups like LVMH are exceeding sales expectations, Ferrari is raising its profit prospects, Hermès is selling so much more of its silk scarves despite the price increase that they’re just going to get even more expensive soon.

And now this: Philippe Schaus, responsible for the drinks at LVMH, warns in an interview with the news agency Bloombergthat some champagne brands are running low on stocks. The reason? Of course, after people have been starving for a good two years, they finally want to treat themselves to something again. Internally, the French luxury conglomerate is already saying that the “golden twenties” have dawned again. And don’t be afraid of the return of sadness, by the way – Schaus also assures that the supplies would be replenished in a few weeks. So let the party go on, raise your cups!

If that seems strange to you, if only words like “inflation” and “additional cost surcharge” come to mind while reading, let me tell you: It’s a different world in which this hedonism is currently raging. The world of the very rich and especially the super rich. In other words, people who, to put it bluntly, don’t care whether heating costs go up or groceries cost twenty percent more.

There is still enough cheap bubbly out there

It’s not just any champagne, which is sold out. According to Philippe Schaus, these are the top brands in his group, such as: Dom Pérignon (from 160 euros) or Krug (from 190 euros, prices for both have a wide range of upwards). Everyday brands like Moet, which is available in every supermarket for 40 euros, tend not to have any delivery problems.

Although the decoupling of the super-rich can be seen in almost every crisis – this has one pleasant feature for luxury manufacturers: Because they practiced so much renunciation in the Corona years, people who can afford it now feel morally justified to kick ass. Consumer researchers call this “revenge shopping” – consumption as revenge on the pandemic. Quite different from the economic crisis of 2008/2009, when it seemed unseemly for many rich people to party too loud. When things are so bad for the poor people.

Luxury manufacturers like LVMH are also immune to economic crises because of a rule of thumb that applies in this segment: 80 percent of their customers only make up about 25 percent of their sales. These are customers who may have enough money for a 10,000-euro purse, but who are far from super-rich. If these 80 percent limit themselves a bit in a crisis, that’s not a big deal. Because what really matters is the top 20 percent of luxury customers, who are partying away three quarters of the sales.

Tiffany with home problems

By the way, there is one luxury group that is currently suffering: jewelry manufacturer Tiffany is struggling with declining sales. It’s your own fault, you can only say, because Tiffany had recently increasingly opted for cheaper silver jewelry. That would not have happened with gold and precious stones.

Finally, a little consolation for everyone who can’t be there at the big champagne party. Leonard Lauder from the cosmetics company Estée Lauder put forward the thesis of the “lipstick index” many years ago. According to her, in times of crisis, when people can no longer afford expensive fun, they buy a cheap but visible luxury: lipstick. At least in the USA, this theory seems to be confirmed again. So some drink the champagne supplies empty, others treat themselves to a new lipstick color. So the world is fair after all. A glass to that!