Cult Wine cautiously optimistic as Champagne continues to soar on the secondary market
Fine wine investment company Cult Wines said it is “ultimately positive” about the continued investment potential for Champagne, as it reports strong growth of both Grandes Marque and grower champagnes, despite recognising some reasons for caution.
According to Cult Wine’s Champagne Investment Report 2022, Champagne has seen 76.6% surge between January 2021 and October 22, which Cult Wines points out is more than twice the pace of the wider Liv-ex 1000 index (+36.1%) and ahead of the Liv-ex Burgundy 150’s, which was up by 68.4%.
Champagne’s market share has hit an all-time high this year with a current monthly average of 12.8% (September) up from a mere 1% a decade ago.
However the company reported growth in sales of both Grandes Marques vintage wines, which are reflected in the Liv-ex Champagne 50 index, as well as in the Grower producer category.
This has seen increased attention in recent years, it said, pointing to names such as Jacques Selosse and Cedric Bouchard, a grower who “has played a lead role in the company’s performance in recent years”.
The company’s Cult Wine Investment’s Champagne selection grew by 114.9% between September 2017 and October 2022, it said, slightly ahead of the Liv-Ex Champagne 50, which tracks the price performance of the most recent physical vintages of the 11 most actively traded champagnes, up 109.7% over the same period.
It’s top performer tracked over a one-year return period was Cedric Bouchard’s Roses de Jeanne Cote de Val Vilaine 2016, which rose 146.6%. This was ahead of Bollinger, RD 1997 (+110.9%), Salon, Le Mesnil-sur-Oger Grand Cru 2002 (+86.5%), Salon, Le Mesnil-sur-Oger Grand Cru 2006 (+79.4%) with Louis Roederer, Vintage Brut 2008 coming into the top five (+79.1%).
Bouchard maintained the lead in the five-year return period, with an impressive return of 331.7%. Meanwhile, among the Grandes Marques Salon’s “iconic and very rare” Le Mesnilsur-Oger Grand Crus continued to make an impact, with the 2004 vintage and 2006 vintage in second and third place in the top five, up +245.8% and 232.3% respectively. Charles Heidsieck, Blanc des Millenaires Brut 1995 and Krug, Clos du Mesnil 2000 completed the list.
However as recently warned by Liv-ex, there could be “a whiff of caution” in the air about the continued expansion of the success of sparkling on the secondary market – although Cult Wines remains optimistic.
“It’s reasonable to wonder how much fizz is left in Champagne’s bull market,” it noted before adding that ultimately it remained “positive on Champagne’s ability to outperform” despite recognising some reasons for caution.
“While fine wine has demonstrated an ability to maintain performance during different macro backdrops, a protracted slowdown and cost-of-living concerns could impact fine wine consumption including Champagne,” it cautioned.
It also pointed out that following the “huge price rises” of the past two years, Champagnes are now more expensive and therefore offer less relative value compared to other fine wine regions.
“The fact that Champagne is unique and supplies limited should mean prices keep trending higher over the long term, but the pace may ease,” it said.
However, it argued that the global prestige and scarcity “anchors Champagnes’ investment potential”.
“Specifically, we believe Champagne can continue to outperform many other segments of fine wine,” it said based on its track record during downturns, strong correlation between age and price and scarcity.
It also noted room for growth in the lucrative Asian market, which currently makes up only 7% of Champagne trade so far this year, (as per Liv-ex data).
“The potentially massive Asian market’s small representation indicates that more demand could still come on board,” it said, noting the demand from Asia in driving sales of Bordeaux and Burgundy over the past decade.