How to Invest in Champagne

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Sipping Champagne for no reason?  You’re going to have plenty of reasons for toasting to your success after investing in Champagne. For those investors familiar with the merits of investing in wine and other types of spirits such as tequila, Champagne is the next logical drink to invest in. There are many aspects that differentiate this choice drink from other alternative liquor investments. Some of them are beneficial and others prove some difficulty when trying to create a Champagne investment plan.

Champagne is a sparkling wine that is produced only in the region of Champagne, France. A lot of the times sparkling wine is called Champagne, but this is an inaccurate term if it does not hail from this region. There are a select set of four distinct champagne types that include, Rose, Brut, Blanc de Noirs, and Blanc de Blancs. For investing purposes, the most important brands to take note of are Dom Perignon, Cristal, Krug and Salon, just to name a few of the most prestigious and well known expensive brands worthy of investment.

Demand for Luxury Champagne

The general sentiment around the high end liquor investment sphere has been an increased interest for investors in Champagne. Savvy investors aren’t just drinking this fizzy drink but pouring a lot of cash into the drink to maximize returns. This is another great alternative investment for skilled investors looking for other places than static stock markets or plummeting investments in other traditional areas.

Currently, top buyers are not only buying the established brands, but also looking forward to new avenues that are being touted as the next best Champagne investments. One of these examples is Armand De Brignac, also known as Ace, this brand shot into the spotlight after Jay-Z began talking about it. This type of media presence has been integral for exclusive Champagne rising to prominence, as not just some far off European aristocratic drink of choice, but something that appeals to the general populace and for that matter, gives investors more reason to invest in this burgeoning alternative commodity.

According to Scott Assemakis, one of the founders of European Fine Wines, he has said that more and more people are inquiring about Champagne as an attractive investment asset ever since the drink rose through prominence because of celebrity endorsement. Investors do need to keep in mind that this is another long term alternative investment. The typical timeframe for investing in Champagne is around six to ten years before maturation.

Unlike the usual wine investment that persists of investing in an established brand, for example a good Bordeaux, Champagne has traditionally been seen as just something to drink and not an investment. This means that the idea of Champagne as a recent investment is new as opposed to traditional idea of investing in wine.

With this being said, some of the more ideal years to invest in some of the top brands are from the early to mid nineties and to a point some mid 2000’s fetch some decent prices.

Top Branded Bottles

The spectrum of Champagne that is worth investing in is minimal and that makes it more important to look out for certain types of brands. Here are some of the top performing Champagnes from 2014 to 2015.

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From this list it can be gauged that most of the top Champagnes are from a select few brands.  For a long time prestigious Champagne has been an excellent investment, it’s only until recently that the market has begun to recognize its full potential. This new phenomenon has been a welcomed change in the Champagne industry. From the outside collector’s perspective it can be viewed as a safe and often times affordable type of investment that is not going anywhere anytime soon. At the lower range of Champagne are bottles worth a thousand dollars or euros, with a scope that goes up to the upper thousands. A few choice bottles have yielded incredible prices from Krug, Armand de Brignac, and of course Dom Pérgnon.

  • An example of a premier Champagne is the Krug Clos d’Ambonnay originating from 1995.  This bottle commands a price tag of $4,000. Before this Champagne was released it was aged for fifteen years and was one of the most expensive release prices for a bottle of Champagne. Of the Clos d’Ambonnay variety — there are only 250 cases produced and this Blanc de Noirs has been created completely from Pinot Noir from a southeastern village in the Champagne region.
  • Armand de Brignac Brut Gold is the top choice drink at this Champagne label. It’s made from a balanced mix of Pinot Noir, Pinot Meunier and Chardonnay. This non-vintage Champagne bottle goes for $6,900 right off the shelves.  Connoisseurs have considered this a prestige drink with lively and silk bodied textures, something that is definitely going to be on the elites’ taste palate and ripe for buying.
  • Dom Pérignon Rosé by David Lynch is produced by the largest Champagne label in France, Moët et Chandon. This select bottle was outlined and designed by a Hollywood director, David Lynch. There were only 10 of these bottles created and each bottle costs  $11,200. It was made in 1998 and the price will only be increasing. The taste is said to have a rich fullness of dried fruit.

Procurement & Storage

There are many places for investors to both buy and sell Champagne, similar to the wine industry. There are a large pool of private investors along with collectors and varied auction houses. These are luxury goods and there will always be a growing demand for them. Another benefit to Champagne is the fact that French authorities regulate this high quality alcohol through something called Appellation d’origine controlee (AOC). This group regulates the available stock of high end liquor in order to not flood the market or displace the prices. As an after effect from this, liquor assets can only increase in value as stores of Champagne become more difficult to find.

It is recommended to only look for the top quality brands that are well known when looking to buy and store Champagne. There are of course going to be excellent and delicious Champagne out there, but the money comes from the famous brands commanding the prime price and being able to hold their value throughout the years. These Champagnes are the prestige cuvées and they need a safe place to age before coming to fruition to sell.

Champagne needs to be stored in temperatures that range from 45 to 55 degrees Fahrenheit. It needs to be placed in a dark room and not exposed to light to minimize any light damage along with the humidity level at around seventy percent. What most people do is contact a specialized Champagne merchant that sets up your investment in a storage warehouse created specifically for the purpose of keeping your Champagne safe. It has all the correct climate controls so the investor doesn’t have any additional worry.

Price Predictions for Future Investment

Champagne is a great starting point for liquor investors because it is at times more affordable than directly investing in Bordeaux wines and it is a growing new industry for alternative investments.  Vintage Champagnes saw an average increase of around 10 percent growth from 2014 into 2015.  An example of a large increase has been the Krug Brut 96 that has increased by 50 percent in the past five years.

While investment markets are looking for alternatives in the liquor sphere, vintage Champagnes have become the new premier investment vehicle. According to one of the top websites for tracking wine and Champagne, Liv-Ex tracked an additional increase from just the Champagne index – which tracks a variety of vintages, an increase of 11.9 percent between the years of 2011 and 2013.  In comparison to an elite starter Champagne to a Bordeaux wine, investors can see the price discrepancy for beginning investors. For example a top vintage in the premier selection will cost around $2500 as opposed to a Bordeaux wine that may be starting out at around $10,000 for a bottle.

Even more evidence of Champagne’s quality for investment is comparing the Liv-Ex data from the past five years between the Champagne and wine index. Over this time period the Champagne 50 Index surpassed the Liv-ex Fine Wine 1000 Index at an increased rate of 170% returns compared to the wine’s return rate of 143%.

Champagne offers investors of all kinds unique benefits; beginners have a low entry point, while experienced investors get valuable diversification in their drink portfolios. The market is quickly growing out from its usual area as investors from Asian markets are increasingly getting more interested about fine wines and Champagnes. As their education and thirst for the finer things increases, so will the value of these bottles. The future of Champagne investment has a few great things going for it. There is the fact that the creation of these fine sparkling wines has its traditions rooted in hundreds of years of history. This helps the integrity of the business to not cut corners and keep up with its legendary image. Along with that fact is that the regulatory forces in position are not going to allow any volatility to hit the market.

Champagne houses are catching wind of this new trend and hoping to capitalize on it.  Dom Pérignon is the best example as they have begun proliferating pre-release campaigns in order to hype up their products before they go out to the public. The way this works is that buyers can purchase their sparkling wine a couple years before it is even bottled. This gives them a cheaper price point to begin and already establishes the notion that the buyers are doing this in order to invest in the Champagne. The future for investment is ripe with promises and potential growth, leaders in the industry would like nothing better than to see the increased interest in Champagne investment.

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Mike Colagrossi is an analyst at ActivistStocks.com covering activist investors and major deals at hedge funds. He also regularly contributes to SeekingAlpha.com and has a strong interest in alternative investments and emerging markets.