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Champagne producers uneasy over takeover bid

A bid by India’s United Breweries to take over the French champagne group Taittinger has sparked concern among wine professionals in the company’s home region in Northern France.

Welcomed by some as a chance to get a foothold in the Indian market, the $660-million bid is seen by others as a threat to the French system of locality-based appellations for wine.

Industry players also question the group’s long-term intentions for Taittinger — which was acquired by United States group Starwood Capital only last July.

The United Breweries Group, the world’s third-largest spirits producer, which also has interests in construction and an airline named after its beer brand Kingfisher, is one of six bidders shortlisted for the Taittinger buyout.

Bruno Paillard of the Interprofessional Committee of Champagne Wines (CIVC) said the Indian bid ”has raised concerns” in the Champagne region.

”The CIVC has reservations about the possible acquisition of a major player in the champagne market — Taittinger — by a firm from a country that does not respect the principle of controlled origins for wines,” he said.

French winegrowers are strongly attached to the system of Appellations d’Origine Controlee (AOC) — brands meant to guarantee a bottle’s precise geographical origin — of which champagne is one.

”India has wonderful commercial potential, but champagne is not always protected there. That bothers me,” added the head of the French general winegrowers union, Patrick Le Brun.

Le Brun — whose union represents many Taittinger suppliers — also voiced scepticism over United Breweries’ long-term plans.

Taittinger is the world’s ninth champagne producer, with 4,5-million bottles sold per year, 62,5% of them outside France.

”What is this group’s strategy for the champagne business? Can it ensure we have a future? Or is it just there to make a profit before pulling out of Champagne, as pension funds have done before?”

Nathalie Viet, a specialist economist, warned that United Breweries would have to take into account ”the specificity of the appellation d’origine controlee, which implies relatively high costs for both labour and grapes”.

But she also pointed out the attraction of easy access to a market of ”hundreds of millions of potential consumers”.

A CIVC spokesperson interviewed by Le Figaro newspaper tempered his colleague’s remarks saying: ”It would be out of place for there to be hostile reactions considering that champagne survives largely from exports.”

However Le Brun’s union is more inclined to see the company move back into the hands of the Taittinger family, which was bought out last year but which has mounted a bid with the support of the French bank Credit Agricole.

”It seems to us to be a reassuring offer,” Le Brun said. ”We sell them our grapes — we need to know who we are selling to and for how long”.

Prior to the reportedly higher offer from United Breweries the family’s bid had been tipped as the favourite.

The local branch of the CGT, France’s biggest union, has also said it would agree to bid by the Taittinger family.

A bid by India’s Mittal Steel to acquire the European steel giant Arcelor has been received with extreme hostility in France, sparking tensions between the two countries. The bid is currently being examined.

But Champagne wine professionals had no bitter words for the Indian drinks group, and one stressed the positive contribution of foreign companies to France’s champagne industry.

”The history of Champagne is rich in outside influences,” said the head of the Union of Champagne Houses, Yves Lombard.

”In recent years, people have come from abroad to Champagne and succeeded wonderfully,” he said, citing the example of the Belgian group Vranken.

”There is a period of observation, after which they are settled in. What concerns me is not race, origin or religion — but skills and ambition.” – Sapa-AFP

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