Investment Tips - Champagne - 11. July 2019

There Is Something Wrong With Cristal - And That Means Opportunities!

Cristal has a very special vibe of luxurious extravagance but there is something wrong and a situation we have never seen before offers great potential

The 2009 Cristal Magnum Is The Center Of Something Quite Unusual

Cristal has a very special vibe of luxurious extravagance and right now you can take advantage of a historical low magnum premium – the price difference between a regular size bottle and a magnum bottle. It is a unique and unusual situation and you should welcome the magnum premium as your new best champagne friend.

2009 Louis Roederer Cristal magnum

Magnum Bottles Are Just More Cool ... And Better!

Champagne is truly a symbol of celebrations and luxurious lifestyles and the pearly drops are gaining in popularity, especially among the younger wine drinkers of the world. But what is better than a bottle of champagne? What about a BIG bottle of champagne? But while size alone is reason enough to look for magnum bottles, these have additional qualities that the wine investor can benefit from - qualities that are normally paid dearly for.

Champagne on magnum bottles is usually 2-3 years longer on the yeast and is therefore disgorged later than the ordinary 0.75 l bottles - this gives a product of higher quality than the same vintage champagne in 0.75 l bottles when released.

Although magnum bottles are twice the size of regular 0.75L bottles, the stopper and the amount of oxygen in the bottle are typically the same. For the magnum bottle, this naturally means that the double amount of champagne is exposed to the same amount of oxygen as a regular bottle. This contributes to better aging and increased storage potential for the champagne, which is extremely relevant when talking about top champagne with investment potential.

All good things come with a price, in this case an added cost, which in popular sense is called the magnum premium, which corresponds to the added costs you pay for a magnum bottle (1.50 l) versus two regular bottles (2 x 0.75 l)

That magnum is a better format than 0.75 l combined with the champagne houses themselves deciding how many magnum bottles they produce, the best champagne is usually traded with a magnum premium of 25% - 60%.

With 2009 Cristal in magnum, however, an unusual situation has arisen, where a magnum premium of just 5% offers great potential for the wine investor.

What Is A Magnum Premium?

A magnum premium is the additional price you pay for a magnum bottle (1.50 l) versus two regular bottles (2 x 0.75 l).

For example, if 2 x 0.75 l costs 2 x € 100 = € 200, and a magnum bottle costs € 300, the magnum premium is 50%.

Although there is no difference between the wine bottled in 0.75 l bottles and 1.50 l bottles, and the production costs of producing ordinary bottles and magnum bottles are in principle limited to a few extra years in the cellar, there is a significant difference between the final product and especially the storage potential, which is better for the magnum bottles.

The magnum premium is partly attributable to the higher quality, but to a large extent it is about supply being limited and demand high.

The magnum premium among the most exclusive champagnes is typically:

Cristal:  50-60 %
Krug Vintage:  25-30 %
Dom Pérignon:  40-50 %
Salon:  25-30 %
2009 Cristal magnum 5 %

Never Happened Before: Absconding Magnum Premium

Magnum bottles and magnum premium always come hand in hand when it comes to the best wines, but nevertheless that's not the case with 2009 Cristal at magnum at the moment.

A bottle of 2009 Cristal today costs € 145 *, while a magnum bottle costs € 305 *, which corresponds to a magnum premium of just 5%!

This is a very unusual situation and it has never been seen before that the magnum premium on Cristal has been this small as it is usually 50-60%.

The reason for this unique situation can be found in the fact that the 2009 Cristal of ordinary size has been the subject of large price increases since its release in 2016. The release price was around € 100 * per bottle, but rose by 32% (from € 110 to € 145) in just 6 months following the release of the legendary 2008 Cristal in June 2018.

2009 Cristal was released in magnum in early 2018 for approx. € 300, which at the time corresponded to a magnum premium of approx. 45%. While the prices of the 2009 Cristal 0.75 liter bottle rose sharply in the wake of the release of the 2008 vintage, the prices of the 2009 Cristal magnum did not rise significantly, which is why we today have the most unusual situation where a magnum can be obtained for the same price as two regular bottles.

Therefore, right now you can make an extraordinary investment in 2009 Cristal magnum with a negligible magnum premium.

* Prices ex. customs duties, VAT and duties

The Release Of The 2008 Vintage In Magnum Means Potential In The 2009 Vintage

Champagne is one of the least risky investment wines and has delivered 99% returns over the past 10 years and is considered the safe element of the wine investor's portfolio – the wine worlds bond you could say.

Cristal is one of the most classic champagne investments, and in that perspective, the 2009 Cristal magnum looks attractive. However, the absence of the magnum premium in this vintage is highly unusual and, in addition, gives this champagne a potential opportunity for a short-term upside as well.

2009 Cristal is highly acclaimed by the greatest wine critics, but after all, must be considered in the shadow of the all-encompassing vintage 2008:

2009 Cristal95+979696
2008 Cristal97+10098+98,3
WA: Robert Parker Wine Advocate JS: James Suckling AG: Antonio Galloni

The fact that 2009 Cristal, in terms of quality, cannot be compared to 2008 Cristal, is precisely the essence of the short-term potential that these magnum bottles possess.

No one knows when the 2008 Cristal magnum will be released, but a cautious guess will be in the first half of 2020. Regardless of when, it is expected that the 2008 vintage on the magnum will set a new record high for what the newly released Cristal can cost - just as it did when the 2008 vintage was released on the 0.75-liter bottle in June 2018, and the price hit € 205 before it stabilized around € 185.

Rare Wine Invest expects the market price of the 2008 Cristal magnum to land somewhere between € 500 and € 600 - almost twice the cost of the 2009 Cristal magnum today. If this is the case, the expectation is also that the price of 2009 Cristal will rise, just as we saw in the fall of 2018, where we could report on 20 investors who, with Cristal (the 2006, 2007 and 2009 vintage) in the portfolios over 6 months could see the value of their Cristal positions increase by more than 30% - from approx. € 850.000 in April to approx. € 1.1 million kr.

In addition to the potential short-term upside associated with the release of the 2008 vintage on the magnum, it should also be considered that prices usually begin to move seriously when stocks at the primary channels (the direct distributors) are emptied, which typically coincides with the release of the next vintage.

Thus, within the next 12 months, we can expect Roederer to report sold out of the 2009 vintage on magnum as well as year 2008 to be released, and therein lies a double potential.

2009 Cristal magnum champagne

Rare Wine Invest's Opinion

The fact that the 2009 Cristal magnum is currently trading at a magnum premium of just 5% is highly unusual and is a situation we have not seen before. The expectation of this being corrected means that in 2009 Cristal magnum also has a great short-term investment potential, which is why we have a strong recommendation on this.

At the same time, we are also approaching the time when the 2009 Cristal magnum is expected to be sold out from the primary channels, which is usually the starting point for starting price increases.

If that were not enough, the world's champagne drinkers are also facing a release of the legendary 2008 Cristal vintage on magnum, and if the release price of this set a new record, as we have seen it with countless 2008 releases, the 2009 Cristal magnum only to look even more attractive and give extra wind in the sails for price increases.

Take Advantage Of The Historically Low Magnum Premium And Invest In The 2009 Cristal Magnum At The Best Price In The Market:

2009Louis Roederer Cristal1,50 lOC/GB1€ 315
*All prices are in EUR ex. customs duty, tax and VAT for delivery to a bonded warehouse. Prices including customs duty, tax and VAT can be sent on request. The wines are only sold in whole cases unless otherwise specified and the price is per bottle. Minimum order size € 2,500. Assumes a total minimum investment of € 10,000. Prices may have changed since release of this article.

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