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Champagne producers are the most prestigious wine producers and their champagne is preferred by people around the world. Each year the CIVC (Comité Interprofessionnel du Vin de Champagne) determines how many grapes the champagne producers must buy from the grape growers. There are a number of champagne producers including LVMH (Louis Vuitton Moët Hennessy), the world's biggest champagne producer and a world leader in luxury brands.

Historical spending trends during economic downturns indicate that consumers are hesitant to pay high prices for expensive luxury goods. In response to these recessions, Champagne producers must employ strategies that protect the exclusivity of the brand and ensure that inventory and financial losses are limited.

Analyzing the industry using Porter’s model of competitive forces shows that one of the main characteristics of the champagne industry is that it has very high barriers to entry. From a resource standpoint, it is difficult to get access to the limited supply of certain quality grapes that are essential to the Champagne taste consumers expect. The process and technology of developing and storing the champagne requires an expert, industry knowledge due to the complexity, costliness, and time requirements of such an undertaking. Building a prestigious brand name and making it recognizable around the world requires a significant time investment an. Finally, regulations from the government and committees such as CIVC protect the champagne brand and make it hard for any producer to enter and be part of that industry. Suppliers, i.e., the grape growers, have strong bargaining power since they supply 90% of the fruit needed for the Champagne. There are no substitutes for that specific quality grape and the land where such grapes can viably grow is limited. Grape growers have the potential to dilute the market by choosing to make their own champagne, like the so-called “grower Champagnes.” These suppliers could stay small and sell to...