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Is Champagne ready for a return to socialism?

By Nina Dos Santos, CNN anchor
April 30, 2012 -- Updated 1010 GMT (1810 HKT)
This composite photo shows candidates for the French presidency, Francois Hollande, left, and incumbent Nicolas Sarkozy. This composite photo shows candidates for the French presidency, Francois Hollande, left, and incumbent Nicolas Sarkozy.
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STORY HIGHLIGHTS
  • French presidential frontrunner Francois Hollande will be pitted against incumbent Nicolas Sarkozy in a run-off May 6
  • Key to election success will be showing ways to tackle the eurozone crisis and France's domestic economy
  • Making champagne is big business in France, bringing in $5.8 billion last year
  • Champagne producers are aware of potential challenges on the horizon

Epernay (CNN) -- French presidential frontrunner Francois Hollande chose to spend the final day of his first round campaign in the Ardenne, an area famous for that most Gallic of luxuries -- champagne.

Some of the vintners he met there may well be disappointed to learn the Socialist candidate chose not to crack open that ceremonial bottle of bubbly after sailing to victory on April 22. CNN was informed he toasted with red wine instead.

With 28.6% of the initial vote, Hollande will be pitted against incumbent conservative President Nicolas Sarkozy's 27.2% in a run off on May 6.

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To make champagne you need good weather, good soil, good grapes -- but you also need a good economic climate.
Claude Giraud

Before the final showdown, each side will try to win support from the eight other parties who failed to make the cut.

Key to their success will be proposals to tackle immigration, the eurozone crisis and, above all, France's domestic economy.

High times, hard times

Nestled in the north east of the country, near the border with Belgium, France's champagne belt provides a unique glimpse into one of Europe's most protected agrarian economies. The region is something of a national treasure while also being heavily reliant on exports abroad.

At its heart is the picturesque town of Epernay.

The champagne business is big money. Revenues last year amounted to €4.4 billion ($5.8 billion).

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And despite finances being fragile these days, the champagne industry's trade body, the Committee Interprofessionnel du Vin de Champagne, says the world quaffed around 323 million bottles of the stuff last year.

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But champagne producers remain aware of potential challenges on the horizon.

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"How can I put it?" says Claude Giraud, owner of the 300-year-old champagne house -- or "maison" -- Henri Giraud. "To make champagne you need good weather, good soil, good grapes but you also need a good economic climate."

Giraud's firm has survived two world wars and one revolution. Now into its 12th generation, centuries of investment have left the family well placed to weather the storm.

Annual revenues reach around $4 million. But with net income only hitting a tenth of that figure, making this finite commodity isn't cheap.

Only 33,500 hectares of prize vineyards can give rise to the wine that will ultimately become champagne. Just three varieties of grape are used: One white and two red.

Though the actual process of making the champagne may be standardized, the (often secret) blends are not --thus leading to a plethora of distinct champagnes to sample for anyone lucky enough to visit the region.

Pricey to drink and expensive to make

Producing champagne requires extensive experience, and the bottles must mature for three to six -- sometimes even nine -- years before consumption.

The result: A vibrant wine carrying the promise of high labor and storage costs. Not to mention concerns about varying levels of stock from one year to the next.

Over a glass of his fresh and fruity Cuvee "Exception" Grand Cru ($40 a bottle) Jean-Michel Lagneau explains why, after 20 years at prestige houses like Krug, Ruinart and Veuve Clicquot Ponsardin, he decided to go it alone.

"My wife, Agnes, and I are from this region. Our family had land and it made sense. We were passionate and convinced we could make great wines," he said.

Economy: French election's unspoken issue

And the Lagneaus are finally reaping what they sowed. After six years of hefty investment, Champagne Paul-Etienne Saint Germain is posting a profit.

Into only their third year of trade, the Lagneaus now count top hotel groups among their clients, like Relais & Chateaux and the Leading Hotels of the World.

Bon viveurs in Paris can find Paul-Etienne Saint Germain on top tables, like Pierre Gagnaire's eponymous culinary mecca in the 8th arrondissement, a winner of 3 Michelin stars.

What Lagneau would really like to see from the next French government is support for those who take risks to start a business.

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With ambitions to expand his foreign customer base, Lagneau also reckons the viability and stability of the common currency are crucial.

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"We need the euro. As champagne producers France isn't the only market for us. Much of the champagne we make in this region is sold elsewhere," he said.

Wine of kings and the king of wines

Last year, six out of the top 10 foreign markets for the luxury liquor were outside the eurozone. The rest include supposedly cash-strapped countries like Spain and Italy, which also make their own rival sparkling wines.

Yet France still has the biggest thirst for its royal nectar. In 2011 domestic demand swallowed 56% of bottles sold.

As such, talk by Hollande of a 75% tax on the nation's wealthiest citizens risks eroding demand for Champagne in its target market.

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"It will probably not hurt the big fortunes too much but effectively it's a concern," concedes Lagneau.

Giraud is more philosophical. If anything, he says, unlike his latest vintage this year's elections have left him rather flat.

"No one seems to be tackling the real issues that matter to people," he said.

Both Sarkozy and Hollande aim to balance the books but they differ on how to achieve that goal. The center-right says controlling spending is the way forward whereas those on the left would rather focus on growth.

The one thing they do agree on -- much to Giraud's delight -- is a proposed tax on financial transactions, which the winemaker says should rein in "speculators who do nothing to contribute or support France's economy.''

The economist John Maynard Keynes, famed for encouraging governments to spend their way back to health, once quipped that his "only regret in life" was that he "didn't drink enough champagne."

Champagne socialists the world over -- or the Gauche Caviar in France -- have often trotted out his rhetoric as justification for splashing the cash during a downturn.

So, is France ready for its first left-wing leader in 17 years?

"I'm not sure," muses Giraud. "Mind you, it could be a bit like Champagne. It's cold up here and we make white wine out of red."

He adds: "On paper it shouldn't work but somehow it does and now this region is rich."

Saksya Vandoorne in Paris contributed to this article.

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