Wine investment: Champagne on the plateau

Champagne has lost some of its market fizz in recent months, but merchants and analysts say that buyers are still on the look-out for opportunities. Prestige Champagne has been on a rollercoaster ride on the secondary market. Liv-ex, a global marketplace for the trade, said its Champagne 50 index rose in value by nearly 77% in the five years to the end of May 2023, yet the index fell by 2% in May itself and was down by 9% in 2023 year-to-date. [subscriber-content]Bordeaux Index data ( see chart, below ) showed that an index tracking Cristal , Krug , Dom Pérignon and Salon rose by 59% in value in two years to 4 June, but had reached a plateau by mid-2022. UK merchant Goedhuis & Co said some owners of top Champagnes sought to sell stock following stellar price rises. ‘We have continued to see clients listing Champagne through our broking team,’ said Ruairi O’Hara, who works across Goedhuis’ private client and investment teams. However, he added that Champagne’s ‘price correction’ in the past six months has more recently made sellers think twice, and also brought buyers back into the fold. ‘We are seeing an increase in clients now picking up cases where prices are starting to look appealing for long-term positions,’ O’Hara said. Looking ahead, he added, ‘a lack of upcoming stellar vintages should lead to more consumer demand for the existing supply of top-quality vintages’. Matthew O’Connell, CEO of the LiveTrade online trading platform at Bordeaux Index, said Champagne gains would stick. ‘There’s no suggestion in any way that prices are heading back towards the levels [seen] before they went up.’ Liv-ex said ‘buyers are looking for opportunities at the right price’. Dom Pérignon 2013, released in January 2023, was said to be the most traded wine on Liv-ex year-to-date. [breakout] One to watch: Dom Ruinart Bordeaux Index recently added Dom Ruinart to its LiveTrade platform. It reported sharp price rises on Dom Ruinart 2002 and 2009 vintages since mid-2021. 'I think it still has a way to go in terms of overall market recognition and demand, but it ticks all the boxes,' said O'Connell, noting the Champagne's high quality scores and good market trajectory. [/breakout] The Bordeaux Index view Fine wine & spirits specialist Bordeaux Index kindly sponsors this section of Decanter , and provides its view on the market here every issue. It can be found at bordeauxindex.com The Champagne market saw outsized gains of about 60% during H2 2021 and H1 2022, primarily driven by three factors: the global post-Covid reopening; ongoing increase of luxury demand, particularly marked in Asia; and a correction of Champagne being fundamentally underpriced versus similar quality wines from some other regions. The wines which led the market up were generally those with the most prominent brands – Cristal, Krug, Bollinger, Dom Pérignon – but ultimately most cuvées posted gains of at least 40%-50% in that period. Post-summer 2022 and across this year, things have been more muted, in line with the wine market generally. It is no surprise that there should be consolidation like this when prices have seen such a move. However, while some prices have drifted from the peak demand points of 2022, this is limited compared to the scale of the overall moves and seems more reflective of a quieter market than any sustained weakening of prices. We do expect prices of Champagne to resume an upwards trajectory over the medium term – primarily because its penetration in the key potential demand pool is still significantly lower than might generally be assumed. [/subscriber-content] Related articles Wine investment: Tuscans holding steady Investment: will 2023 see a resurgence for Bordeaux? Investing in Champagne: Will the surge top out?

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Wine investment: Champagne on the plateau

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