Raising a glass: Investors in champagne can raise a glass to some fizzing returns
Investors in champagne can raise a glass to some fizzing returns as the price of the most sought-after bottles has almost doubled over the past year.
With the end of the pandemic seemingly in sight, revellers have been turning to high-end champagne to celebrate freedom.
Prices of some bottles have already jumped as a result – and there may be further exciting investment opportunities to come.
Louis Roederer Cristal – a favourite tipple of celebrities such as Mick Jagger and Madonna – has seen prices rise by more than 75 per cent over 12 months.
Other champagne houses that have seen high double-digit annual returns including Dom Perignon, Bollinger, Taittinger and Krug.
Matthew O’Connell, chief executive of wine trader LiveTrade, says: ‘The hospitality industry has been throwing open its doors after the lockdowns and this has had a huge impact on champagne values as people celebrate with a glass of bubbly.
‘The subsequent squeeze on limited supplies has caused prices to rise.’
Quality champagne has proved a good investment for some years. The value of the 50 most collectible champagnes has risen by 93 per cent over five years, according to the fine wine trading platform Liv-ex.
This compares favourably with the main wine index, the Livex Bordeaux 500, which has risen 12 and 22 per cent over the past one and five years respectively.
Even that is better than the FTSE All-Share Index of companies listed on the UK stock exchange, which is up 7 per cent over the past 12 months and 8 per cent over five years.
However, not all champagnes have risen in value. If you’re buying as an investment, it is important to choose carefully.
Vintage is key
The quality and value of a bottle of champagne is hugely influenced by its vintage, which is simply the year in which the grapes were picked.
Some years the weather and conditions are perfect, producing an excellent vintage. In other years the taste produced is of a lesser quality.
Robbie Stevens, of Liv-ex, says champagne houses tend to share the same great vintages.
This is because all champagne is made in the same region of north-eastern France and so conditions are fairly consistent.
He says: ‘A great year for grapes, such as 2008, is likely to be reflected in a top quality champagne for most suppliers.’
A 2008 vintage Krug brut was released in October last year at a cost of £265 a bottle.
But within hours, it was changing hands for about £350. Now investors might pay £500 for it. Louis Roederer Cristal has seen its 2008 vintage rise in value over a year by 62 per cent to £264. Its 2012 vintage has risen in the past 12 months from £163 to £284.
Other great vintages that appeal to investors include 1971, 1978, 1988, 1996 and 2002. Stevens says of more recent vintages: ‘Looking forward, it is still too early to say, but there is a chance the years of 2012, 2013 and 2014 could produce some top vintage champagne.’
Size can add to rarity
Champagne is usually sold in standard-sized 750-millilitre bottles. However, unlike most other wines, it also comes in a wide range of other sizes. These include the double-sized 1.5 litre magnum – as enjoyed on the podium after the end of a Formula 1 race.
Even bigger are the three-litre Jeroboam, six-litre Methuselah, 12-litre Balthazar and 15-litre Nebuchadnezzar bottles. There is even a 30-litre Melchizedek that can fill 240 champagne glasses. A Boerl & Kroff 1995 Melchizedek sold for £173,000 last year.
Stevens adds: ‘We recently sold a six-litre Methuselah for a 1990 vintage Louis Roederer Cristal for £6,090. Size rarity certainly added to its value – but it was also a top quality champagne from a prestigious house.’
Find a good specialist
Working out which bottles are likely to increase in value is tricky. It pays to enlist expert advice.
Unfortunately, champagne purchased in the supermarket is rarely going to grow in value – no matter how fancy the label or fizzy the tingle on the tongue. Typically, this champagne does not have a particular vintage because it contains grapes from different sources.
Seek out the help of a specialist wine merchant, such as Berry Bros & Rudd, Farr Vintners and Justerini & Brooks. Details of local merchants can be found on wine expert websites such as that of Tim Atkin, which also offer tasting tips. Such merchants will not only offer investment advice, but should make the experience fun.
Most investors never see their champagne as it is kept ‘in bond’ with the merchant. This means that the champagne is stored in a cool and dark environment to preserve it. And because it is kept in bond it is insured against loss or theft, and there is no duty or VAT to pay.
However, some investors like to buy an extra bottle to enjoy at home and get a taste of what they own. Kept well in storage, champagne can last for decades. O’Connell says: ‘Some people have a misconception that champagnes must be drunk young, but they can age really well – keeping for 40 years or so before being enjoyed.’
Wine merchants and dealers such as LiveTrade may charge between £13 and £25 a year to store a case of 12 bottles. Investors typically trade in 12-bottle cases.
The merchant will also usually buy the champagne back when you sell as they are in a better position to find a buyer willing to purchase a bottle. As a rule of thumb, expect to see 10 per cent of your investment go on buying and selling costs.
Don’t forget rosé
Champagne is mainly made from three grape varieties – chardonnay, pinot meunier and pinot noir. The latter two can also be used to make rosé by keeping their skins on. Stevens says: ‘Rosé champagne is made in fairly small amounts so can be a great investment as supply is limited but demand is high.’
For example, Dom Perignon and Louis Roederer Cristal have seen their most sought after vintage rosé grow by 61 and 59 per cent respectively in price over 12 months, with bottles of their finest bubbly now selling for £519 and £844 each.
And if it doesn’t work out…
Champagne has an added appeal in that it is a drink for celebration. It means that – should your investment not go as well as you had hoped – you still own a tangible asset. And what better way to drown your sorrows than by popping open a bottle of quality bubbly with family and friends?