Ahh, Champagne. The drink of celebrations. Milestone birthdays, career successes, or finding out a child is on the way – there’s nothing quite like the feeling of triumph when you pop your first bottle. But not all Champagne is intended to drench everyone in sight after being sprayed around by victorious athletes. Rather, the decadent wine has become the cornerstone of the fine wine industry’s stellar performance over the past decade. But what exactly makes Champagne tick? And how can investors take advantage of the region's best wines?
The Champagne region
The good old Champagne versus Champagne versus Champagne debate can get a little tricky. There are three key things to remember here:
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Champagne is, first and foremost, a breathtaking wine-producing region nestled in the hillsides of northern France.
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All sparkling wines produced in Champagne are called “Champagne”
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Sparkling wines produced outside of Champagne can not be called Champagne.
The region has been producing highly-regarded wine since medieval times, with alcohol produced in Champagne (the region) strongly associated with French royalty in the 9th century. But Champagne the drink – the bubbly, golden liquid we know and love – didn’t appear until 800 years later in the 17th century.
Why are wines from Champagne so revered?
Champagne is noted for its steep, hilly landscapes that foster the growth of three principal grapes: Chardonnay, Pinot Noir and Pinot Meunier.
The awkward, high latitude of Champagne, combined with its low average temperatures, can make it a little difficult to grow grapes. However, the region’s winemakers actually turned these difficulties into an advantage – the cold weather results in high-acidity grapes, which are perfect for … you guessed it, sparkling wine.
This is because traditionally the freezing winters of Champagne would halt the fermentation process. But once the weather started to warm again, a secondary fermentation would occur causing carbon dioxide bubbles to form. This creates the fizzy texture of Champagne we know and love.
The soil in Champagne is also nutrient-dense thanks to age-old earthquakes and ocean beds. On top of that, it is filled with belemnite (marine fossils), which supports terrific drainage for growing grapes. Put together, the region’s environmental characteristics are a huge factor in how iconic the region’s sparkling wines – Champagne, the drink – are.
Caption: That’s right – these squid-like creatures are part of the reason why Champagne is so delicious. Source: FossilEra
Investing in Champagne: The state of the market
Champagne is close to, if not the, most famous wine-producing region in the world. Just by the merit of its reputation, alcohol from the French province will always have a certain aura and demand that emerging markets may not.
Since the early 2010s, when most major wine indices started to get published, the Champagne market has risen by 100% – ahead of all opposition except long-time rival Burgundy.
Caption: Sourced from Cultx
Like most vintage wines, Champagne has had a rougher start to 2023, but is still posting massive five-year gains of 62.8%. By comparison, the S&P 500 is up 49.01% over the past five years. And in even starker contrast, the ASX 200 (Australia’s top 200 companies) is only up 13.57% in that same timeframe.
Caption: Sourced from Liv-ex and Google Finance
So why has Champagne performed so well of late, even by fine wine’s standards?
The answer is naturally multi-faceted, but one factor stands out: the market actually exists now.
A decade ago, investing in Champagne was something that only the rich would do. Most everyday bottles were intended for immediate consumption (more on this later). According to Liv-ex, Champagne comprised a mere 2% of all secondary wine trading in 2013.
Today, that figure has sky-rocketed to 12.4%.
The newfound market liquidity piqued the interest of investors who had never considered Champagne as an investment-grade wine, which slowly bred demand. Now, only wines from the Bordeaux and Burgundy regions see greater trading volume.
On top of this, recent Champagne vintages have had troubles with frost, fires and other environmental impacts. Although this meant fewer top-tier bottles were produced, it also created an organic scarcity that put upward pressure on the price of available vintages.
Vintage vs non-vintage: What sets them apart
The Champagne you find at your local supermarket will almost always be non-vintage. Such bottles are meant to be drunk sooner rather than later and only have a shelf life of a couple of years.
Distinguishing between the two types is simple. Non-vintage (NV) Champagnes are produced from grapes grown in multiple seasons. These bottles have a less concentrated flavour, but are also cheaper and account for about 90% of all Champagne on the market.
Vintage Champagnes, on the other hand, are produced from grapes that are harvested during a specific year. Such vintages must mature for three years before they can be sold to the public.
The easiest way to tell a vintage from an NV? Look at the bottle. If the Champagne is labelled with a year, then it’s a vintage. If not, it’s a non-vintage and should be avoided (from an investment perspective. From a drinking perspective, it’s all fair game).
Caption: Note the year listed on the bottle’s labels… and also the words “Vintage” clearly marked. Source: Vueve Cliquot
The best Champagne has to offer
The climate in any given year plays a massive role in whether a Champagne vintage will be great, or just good. Years with long growing seasons and warm summers are always ideal. Recent vintages from Champagne have performed extremely well, with the last low-scoring batch coming way back in 2011.
Some of the best Champagne vintages since 2000 include:
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2002 kicked off the modern era of truly great Champagne vintages. The weather was terrific and produced some of the best bottles of sparkling wine ever made. The 2002 Krug Vintage Brut is valued at over $1,000 and received a critic’s score of 97.
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2008 was a stellar year and is considered one of the greatest vintages ever. The top wines produced this year, such as Salon Cuvee and Jacques Selosse, scored 95+ and are worth well over $1,000.
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2012 is considered a ‘miracle’ year for Champagne. The growing season got off to an awful start – disease, frost and poor weather ran rampant. But as the season evolved, the environment made an incredible recovery, producing a rich yield. Excellent bottles include the 2012 Dom Perignon and the La Grande Dame.
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2015 was a hot growing season that produced particularly flavourful Champagnes. Perhaps the most popular vintage bottle, the Louis Roederer Cristal Brut, received consistent scores of 95+ and is valued at over $500 today.
Case Study: 2012 Dom Perignon
2012 is considered part of the ‘Fab Four’ Champagne vintages of recent years (1996, 2002, 2008 and 2012). As the most recent year of the group, it is naturally a little less scarce. People have had less time to drink, lose or spray Champagne bottles from the vintage compared to, say, 1996.
The relative lack of rarity means that 2012 vintages are typically cheaper than their 2008 (and earlier) counterparts. However, after a few years in circulation, the secondary market is starting to dry up. On top of this, the 2012 climate was initially quite troublesome, meaning that most top-tier batches were smaller than normal.
Dom Perignon is a key winemaker in the Champagne region that has released stellar products time and time again. Their stature in the industry isn’t lost on investors, and previous Dom Perignon vintages have performed very well – especially in the past few years.
Dom Perignon’s 2002 vintage (one of the Fab Four) rose an absurd 90.4% between 2020 and 2022. The 2008 vintage wasn’t far behind, with its price appreciating 70%.
Caption: Sourced from Cru wines
Although both vintages have cooled off – along with the broader market – Dom Perignon products have a track record of appreciating significantly over time.
One only has to cast their eyes down on the average price of Dom Perignon vintages by year to see. The most recent available bottle, produced in 2013, is the cheapest available with an average retail value of ~$350. By comparison, vintages from the 1980s are worth in excess of $2,000.
The 2012 Dom Perignon vintage only became available in late 2021, which gives investors a chance to get in early while the vintage is yet to feel the pinch of limited supply. And given the stature of Champagne’s 2012 growing season among sommeliers (critics) and investors, it’s easy to see the market being snapped up pretty quickly.
In fact, availability on Wine-Searcher appears to have peaked in January 2023 and is already slowly starting to dwindle.
Caption: Sourced from Wine-searcher
This has correlated with an impressive increase in average price, from $308 in November 2022 to $363 in September 2023 (growth of 16%).
And most importantly of all, Dom Perignon vintages are popular. Searches for their Champagnes consistently rank in the top 10 by popularity, according to Wine-searcher.
Put it all together, and you have a recipe for an excellent long-term investment. The emphasis here is on “long-term” – like most new wines, it may take 5-10 years before demand really starts to outweigh supply and push the price up. But this champagne’s recommended drink window is between now and 2052, giving investors plenty of time to let their assets appreciate.
Caption: 2012 Dom Perignon in TradingGrapes secure, climate-controlled and insured facility.
Summary
Champagne might just be the most prestigious wine region in the world. Is there any other beverage as closely associated with special occasions as the sparkling wine produced there?
The region’s unique environment lends itself to some of the most remarkable and memorable wine vintages ever produced. And investors are only just starting to cotton on to the money-making potential held in these bottles of Champagne.
The past two years have seen wines from Champagne outperform basically every other investment you can think of – the housing market, the stock market and even other wines.
New wines on the block like the 2012 Dom Perignon vintage present a great investment opportunity for those looking to get in on the ground floor of a potential classic. There’s no guarantee that Champagne prices will continue to thrive in the short term, but with investors flocking to the market and demand growing, it’s easy to adopt a positive outlook and keep the bubbles in the bottle for a few more years.
