Market Analysis - Champagne - 14. December 2020

Champagne Investments Are Attractive Like Never Before

Rising trading activity and rising prices. Champagne steals the headlines for 2020 according to the English wine exchange Liv-ex, and thus manifests itself as an attractive in

To that extent, 2020 has been the year of Champagne when it comes to wine investment, and this despite the fact that for many there has been nothing to celebrate in the almost past year. To that extent, Covid-19 has put a damper on the festivities, but for wine investors there is reason for optimism, not least if you have Champagne in your portfolio.

Standing Recommendation On Champagne For Investment

At RareWine Invest, we have for almost five years, unlike a few others on the market for wine investment, had a standing recommendation on Champagne. Furthermore Champagne makes up almost a third of our recommended portfolio composition. We have often referred to the golden drops as the wine's response to government bonds, and the investors who have embraced Champagne have been repeatedly rewarded.

Champagne meets one of the most important factors for an investment wine, namely a huge current consumption in most parts of the world. For festive occasions, birthdays, receptions, celebrations, on bars and night clubs, etc. The examples are countless, there is always an excuse to drink champagne. In addition, you do not experience the same saving-tradition as namely the Bordeaux wines have been exposed for in many decades.

The lack of speculation in Champagne as an investment, the ongoing consumption, as well as a global increasing interest in the small wine region in the north of France leads to ideal conditions for wine investors. In addition, one can also speculate in further interest from the huge Chinese market in the future, as especially the young generations of Chinese are increasingly adopting Western habits.

Cristal investment One of the greatest names on the scene: Louis Roederer's Cristal

Champagne Top List In New Annual Report

The annual report of the English wine exchange, Liv-ex, which has just been published, confirms the growing global interest in alternative forms of investment, in a particular wine. Low volatility is highlighted by Liv-ex as being particularly interesting for wine as an investment - not least at a time when the stock market is surrounded by anxiety and large fluctuations.

The report states that Champagne along with the wines from Italy is the best performing in 2020. The Champagnes are highlighted for the biggest price increases, while the Italian wines - driven by 2016 Barolo and 2015 Brunello di Montalcino, have almost doubled their market share in the 'Fine & Rare' segment.

For the Champagne, especially the already legendary 2008 vintage, and the latest release, 2012 vintage, are the vast drivers, which has also led to price increases on the surrounding vintages.

On Liv-ex 'list of the 10 most traded wines in 2020 in the Fine & Rare category, we find no less than three Champagnes. 2008 Comtes de Champagne, 2008 Dom Pérignon, and 2012 Cristal occupy third, fourth, and fifth place respectively in the top 10 list.

With this in mind and Liv-ex's statements that there is no sign that Champagne's momentum will not continue into 2021, it suggests that the timing of investing in Champagne, in particular, may never have been better.

Champagne Has Been Spared From Punitive Tariffs

Worth noticing is that Champagne, and by the way the wines from Italy, have so far been exempt from US punitive tariffs of 25% which were introduced in October 2019. All other French wines are still covered by the tariffs.

When US president-elect Joe Biden replaces President Donald Trump at the beginning of 2021 the ongoing trade war between the US and Europe might finally come to an end, but no one knows for sure what the future might bring.

At RareWine Invest, we were even able to report price increases for Champagne of 4.5% at the end of the third quarter of 2020, which brought Champagne above 25% over the past 5 years. A solid return, given that we continue to believe in the main price escalations here, is ahead of us.

Champagne In Top 10 For Only The Third Time In More Than 30 Years

The positive trends for Champagne are further confirmed by the leading magazine Wine Spectator, which every year at this time publishes their Top-100 list of the best wines of the year. The list, which has been published since 1988, is published based on the many thousands of wines that their editors taste and review during the year.

In addition to the editors' own weighting, the wine's general points, price of the wine, and trading activity are also distinguished (though primarily in the USA). Only wines with a score of 90 points or more are eligible for the list.

The 2020 list may be topped somewhat surprisingly by the 2010 Rioja Castillo Ygay Gran Reserva Especial from historic Spanish producer Bodegas Marqués de Murrieta. Even more sensational is that for only the third time in history, there is a Champagne in the top 10 of the list. 2012 Bollinger Grande Année occupies the 10th place on the list, which testifies to Bollinger's enormous quality, but also the general potential in Champagne.

1996 Krug Vintage took 10th place in 2007 and was the first Champagne on the list, followed by 2008 Dom Pérignon Legacy Edition who took 5th place in the list in 2018.

2012 Bollinger Grande Année 2012 Bollinger Grande Année - only the second Champagne ever to make the Top 10 list on Wine Spectator

For Champagne Investors The Best Is Yet To Come

Several industry media, including respected Decanter, report rising production costs for Champagne over the past 15 years that are not commensurate with price increases. Therefore, experts and producers unanimously predict that Champagne prices will rise at a higher rate over the next 10 years than we have been used to in the past. You can read the whole story right here.

At RareWine Invest, we are also experiencing a growing interest in champagne, which historically, together with Burgundy, makes up the bulk of our investment recommendations, and expectations of price increases provide fertile ground for further Champagne investment, while prices are still at a minimum.

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