While many conventional investments are struggling to provide investors with a healthy, reliable return, Champagne is proving to be a wise alternative to stocks and shares.
For the last nine years the Liv-ex Champagne 25 index has tracked the price of one of the most sought after vintages.
In that time, the index has shown returns of 170.1% compared to the FTSE 100 which rose by only 25.5%. While the last year has seen the FTSE 100 suffer considerable losses, the Liv-ex shows only a fractional downturn in the market for the top Champagne vintages.
A little background
For a wine to carry the Champagne label, it must be a sparkling wine from the Champagne region in northern France. Champagne is traditionally a blend of two or three grape varieties: pinot meunier, pinot noir and chardonnay.
Sales of Champagne have increased six-fold from the 1970s and most producers are working at full capacity to fulfill demand. Champagne has a long tradition of holding back part of each vintage to be used to make blends at later dates. A particularly rich year, for example, may be blended with a vintage considered to be overly astringent to produce a more balanced final product. Increased demand, however, has led to producers releasing various portions from these stores. Moet Chandon, for example, released 11 cases of its 1911 vintage, each case being released to a different market. The first case was auctioned in Shanghai and raised over £75,000 for charity. The harvest limit, the amount of grapes per hectare the region’s trade body, the Comite Interprofessional du Vin de Champagne, allows producers to harvest, has also been raised year on year to help supply match demand.
A top consideration in Champagne investment, more so than in other fine wine, is the importance of branding. Top labels such as Dom Perignon, vintage Krug and Louis Roederer Cristal are usually considered the safest and potentially the most lucrative investments. A case of Dom Perignon 1996, for example, would have cost roughly £500 in 2004. The same case would now be worth £1800; an increase of 260%.
Vintage is another important factor to keep in mind. The aforementioned mentioned 1996 is second only to the 2002 in terms of desirability followed by 1988, 1989 and 1990. One must keep in mind that Champagne, unlike other medium and long term investments, is there to be consumed and every time a bottle is opened, that vintage becomes rarer and the value of the remaining bottles will rise. Champagne can last for up to twenty years in the bottle but, unlike other investment wines such as those from Bordeaux, they can be drunk at anytime without any loss of quality.
Storage can be an important factor with Champagne to a greater extent than even Bordeaux. It should be kept on its side, in the dark, at a temperature of about 45-55 Fahrenheit. The ambient temperature should remain relatively stable with only minor seasonal fluctuations. The cost of care and storage should be kept in mind by potential investors.