Investing is not necessarily buying only abstract assets like stocks, bonds or crypto-currencies. You can often combine investment and passion/pleasure. As you can imagine, the price of champagne is not closely related to the price of stocks or crypto.
The champagne market is currently experiencing a real boom. The returns on investments made by buying the best French sparkling wines have beaten those of the stock market over the last decade. All you have to do is resist the temptation to pop the cork once you’ve bought your bottle! So we say that champagne (seen as an investment) is an asset that is uncorrelated with the financial markets. If the price of stocks or crypto collapses, the price of champagne will not necessarily collapse.
This makes it a good way to diversify your investments and smooth out portfolio movements.
Prices are skyrocketing
We can therefore observe on this market :
Rarity: only one small region in the world can produce champagne.
High demand: champagne is a festive drink consumed all over the world. It is also a sign of social status.
Rarity x high demand = high prices. It’s as simple as that.
In 2020, more than 230 million bottles were produced for a value of just under 4 billion euros. These 240 million bottles represent about 1/3 of the global sparkling wine market. Among these 240 million bottles, 1/3 are Dom Perignon.
The biggest importers ? The United Kingdom and the United States, which absorb 20 million bottles per year each. They are followed by Japan and Germany who each buy about 10 million bottles per year. When Dom Pérignon 2008 was released last month at 1,200 euros for a case of 12 standard 75-centiliter bottles, investors rushed in. In one day, prices had risen 16%, with wine lovers paying 1,400 euros.
Other vintages that have recently enjoyed impressive returns include Louis Roederer’s 2005 Cristal, which has risen in value by 30% over the past year, with a case now changing hands for nearly 1,500 euros.
How to value a bottle of Champagne?
As you all know, champagne must come from Champagne to be called champagne (exception if you live in Russia).
Another restriction to have the chance to have the name champagne on your label is to pick the grapes by hand. No machines.
Although there are seven “approved” grape varieties for the production of champagne, the majority are obtained by blending only three types of grapes: pinot noir and meunier, as well as white chardonnay. There are of course other “niche” varieties such as Blanc de Blancs (only white grapes, mainly Chardonnay) or rosé champagne, which is a mixture of non-sparkling red wine and sparkling white wine.
It’s not just about how critics rate the champagne, but also about the year the grapes were harvested, the so-called vintage. A great vintage can add to the appeal of other bottled champagnes. The best vintages that a champagne producer bottles are often referred to as “cuvée de prestige”.
On the other hand, if a producer feels that a particular vintage is not up to par, it is usually discarded. They are then used to be blended with others to be sold as non-vintage champagne, destined for the supermarket shelves.
The demand for quality contributes to the attractiveness and price of the vintages that the producers consider worthy of their name. Champagne is “simply” a sparkling white wine. The bubbles are born from a second fermentation that takes place directly in the bottle.
The shelf life of a champagne is shorter than that of a wine. Vintage wines can be kept between 15 and 20 years before losing their sparkle.
Why invest in champagne?
Until recently, champagne was relatively shunned by wine investors. Things are changing and investor interest in bubbles is increasing. The potential growth is stronger than in the wine world!
Champagne today represents about 7% of secondary transactions (resales of bottles after initial purchase). This 7% figure will certainly increase and allow even more growth for this asset.
How to invest in Champagne ?
When investing in champagne, it is important to distinguish between vintage and classic bottles. So what does the adjective vintage mean? Quite simply, 100% of the grapes used to create the champagne were harvested in the same year. Most champagnes, in order to maintain a certain level of taste, will blend champagnes from different years. A vintage can only be created in an exceptional year in terms of grape harvest. As a result, they are much rarer and more valuable than other non-vintage bottles.
If you want to buy quality champagne as an investment, you won’t find it in your local supermarket. Instead, you need to visit a specialist wine merchant or use an agency that specializes in buying and reselling bottles of Champagne. These specialists regularly scour the French vineyards to find the best vintages.
The brands that investors and consumers are focusing on are the following:
– Moët & Chandon “Dom Pérignon
– Louis Roederer “Cristal
– Boërl & Kroff
– Bollinger “Grande Année” and “R.D.
– Pol Roger “Sir Winston Churchill”
The quality of the “millésime”.
Before investing in a champagne, you should also look at the quality of the vintage.
As a reminder, a “millésime” is produced when the grape harvest is incredible. A grape that has ripened perfectly will generally give birth to a new vintage.