Price Increases Flatten Market for Champagne : Sales: French producers are faced with a sharp increase in grape costs as California sparkling wines gain a greater market share.

There is little to toast in Champagne these days.

Vintners in the French region that produces the world’s best-known sparkling wines are confronted with a sharp rise in grape prices, which could force them to increase the cost of their already pricey bubbly.

Such an increase couldn’t come at a worse time. Champagne sales in the important U.S. market were down 15% last year to $250 million on 1 million cases. In some U.S. cities, sales are dropping sharply as consumers who used to buy French champagne are switching to sparkling wines from California.

“Champagne in the last 12 months has been in a state of turmoil,” said Christian Bizot, president of Bollinger & Co., one of the Champagne region’s most prestigious producers. He said the slump was continuing this year, with sales off 14.5% in the first two months.

Bizot visited Le Cirque restaurant in Manhattan earlier this month to introduce two of his company’s priciest vintages--one, Bollinger R. D. 1982, retails for $100 a bottle. Bollinger traditionally has held its press gatherings in London and Paris.

The New York area accounts for 20% of all U.S. champagne sales, said Frank Walters, research director for Impact, a publication that monitors the wine and liquor industries.

To be sure, wine sales in general have been declining for the past five years, due partly to campaigns aimed at curbing abusive drinking and drunk driving.

Champagne makers’ problems are also tied to the long-term decline of the dollar in international currency markets, which has the effect of making the wine more expensive. The strengthening of the dollar in the past two months has not offset the greenback’s overall five-year slide.

Depressed conditions on Wall Street also share the blame. Champagne sales began their drop in 1987, the same year the stock market crashed, said Jean-Louis Carbonnier, communications director of the Champagne News and Information Bureau in Manhattan. In the bullish era before the layoffs of many investment bankers, Wall Street wheeler-dealers thought nothing about springing for 10 cases of bubbly to celebrate a deal.

The kinds of deals now being done “don’t mean the same kind of celebratory reaction the bigger deals used to,” said Peter Morrell, president of Morrell & Co., a Manhattan wine merchant.

Perhaps the primary reason for champagne’s fizzle was the suspension last year of a 50-year-old agreement between the grape growers cooperative and the winemakers. The pact had fixed champagne production and prices. When it broke down, vintners suddenly had a free market in grapes--something Bizot said that they had not anticipated--and prices soared 20% to about $6,000 a ton for the best grapes. The leap followed increases of 13% in 1989 and 9% in 1988 because of strong demand for champagne worldwide.

It takes about 2 1/2 pounds of grapes to produce one bottle of champagne, and a typical bottle now retails for $20 to $30, with the prestige cuvees (blends) even more. Bollinger’s house brand retails for $30.

“Consumers in the United States cannot afford and don’t want to pay these outrageous prices,” Bizot said.

On top of all this, grapes on one-third of the vines in the Champagne region were lost this month when overnight temperatures dipped as low as 19 degrees for three nights. This, of course, means prices will probably rise again.

Champagnes typically are pricier than other wines because the champagne-making process is more labor-intensive.