Is there anything more paradoxical than Champagne? Often mistaken as a product or category, Champagne is neither.

It is a region from which a combination of grapes, usually chardonnay, pinot noir and pinot meunier, are blended. Despite representing one of the world's most luxurious wines, it comes from an austere region of Northern France where vines struggle in the cold climate. Many of us would have difficulty naming half a dozen brands of Champagne, yet there are more than 15,000 separate producers.

Perhaps most paradoxical of all, despite the downturn in the global consumption of French wines, Champagne has never been more popular. In 2006 sales will again surge by 10% and Brits will drink about one bottle in every eight. Last week provided a timely reminder of the continued success and beguiling nature of this wonderful drink.

At the top end, Pernod Ricard was unveiling the world's most expensive champagne. The addition to its Perrier-Jouet Belle Epoque range will sell for EUR1000 (about £670). Chairman Patrick Ricard informed shareholders last week that the champagne would be made in 'very limited quantities' and marketed only in China, Russia and the US. While the company is likely to realise fabulous margins, this is very much a brand move and not one driven by the bottom line.

Despite a strong heritage and reputation, the house of Perrier-Jouet is in the shade of many of its more luxurious, notorious and expensive rival brands. The super-premium launch is intended to attract editorial coverage and snare some of the ultra-rich alpha consumers who influence the Champagne preferences of the masses. It is also designed to help Perrier-Jouet negotiate an age-old problem for all Champagnes: scarcity, or rather the lack thereof.

Despite all its allusions to exclusivity, Champagne is relatively commonplace: more than 300m bottles will be consumed this year. The problem for its producers is how to communicate scarcity while still selling millions of bottles of the stuff.

The answer lies in brand architecture. Perrier-Jouet will use its super-exclusive Champagne to build its brand, while making most of its sales and profits from its standard, mass-produced champagnes.

At the other end of the spectrum, you could buy 45 bottles of Marks & Spencer Champagne for the same price as a single bottle of the new Belle Epoque. According to Egon Ronay, that might not be a bad idea: in a blind tasting last week, he found many supermarket Champagnes were better than some of the best-known labels, despite costing about £15.

Supermarkets now account for 64% of UK Champagne sales and are using the wine in the exact opposite way to Pernod Ricard. Thanks to economies of scale, very discerning category buyers and a plethora of producers, most UK supermarkets can offer top-class bubbly at very attainable prices. The message that the very best quality can be had at the very lowest prices is one that all supermarkets aspire to, especially with the festive season around the corner. It is also a great way to attract the millions of bargain-hunters who want to stock up for that prolonged drinking binge commonly known as the Christmas break.

So there you have it. The delightful paradox of Champagne: one company making tiny quantities of it at ridiculously high prices to build its brand, while another achieves the same goal by selling huge amounts at incredibly low prices.