Fine wine investment opportunities exist beyond the traditional Bordeaux and Burgundy, and vintage Champagne presents a real alternative for the discerning investor.
Fine wine has long been a popular option for investors looking to build a diversified portfolio, or indeed those with a taste for the finer things in life. The market for investment-grade wines is dominated by two major French regions: Bordeaux and Burgundy. Bordeaux is mainly represented on the secondary market by the Grands Crus Class.s, or classified growths, and their equivalents. The five so-called ‘first growths’ of the historic 1855 classification account for a huge level of activity. External influences, notably the ALTERNATIVE TO BORDEAUX AND BURGUNDY recent Chinese bull market, have seen huge instability in the market performance of some of these top wines over the last decade. Burgundy estates tend to be considerably smaller than those in Bordeaux. With lower production quantities come greater scarcity and demand. Vineyard land is divided into highly specific plots and subplots (climats), whose precise position can have a significant impact on the quality, and price, of the wine. Burgundy investment is best known for the legendary Domaine de la Roman.e-Conti, a single bottle of whose top wine can set an investor back well in excess of $10,000. There are many opportunities for investment outside these two dominant regions, and one of the most interesting is Champagne. Champagne is known for producing the world’s finest sparkling wines. Legendary houses such as Louis Roederer, Mo.t & Chandon and Taittinger produce superb examples, worthy of a place in any diversified fine wine investment portfolio.
The region does not declare a vintage every year, and it is those special years in which a vintage is declared that should interest wine investors. Some of the truly excellent vintages in recent memory include 1990, 1996, 2002 and 2006. Wines from such vintages, with their high critics’ scores, are very attractive for investors. Production levels tend to be higher for vintage Champagne than for the top Bordeaux and Burgundy estates. As a result, the finest Champagne is usually quite affordable by comparison, and investors may get more bang (or fizz) for their money, particularly if that investor actually intends to drink some of his or her investment when the time comes! While not to the extent of a Bordeaux or a Burgundy, fine Champagne is capable of considerable aging, and may give enjoyment for 20 to 30 years. As the wines enter their optimal drinking window and start to be consumed, demand can spike in the secondary market. Though small when compared to Bordeaux and Burgundy, the scale of investment in Champagne is not inconsiderable. The Liv-Ex Fine Wine 100 index, the leading industry benchmark for fine wine investment, counts no fewer than five Champagnes on its list of the world’s 100 most sought-after wines. These wines, Cristal 2004 and 2007, Dom P.rignon 2002 and 2004, and Taittinger Comtes de Champagne 2004, exemplify the significance of Champagne as a worthwhile alternative region for fine wine investors. As with any asset class, fine wine investment presents considerable risk. One distinct advantage that investors in wine have, however, is their ability to open, drink and enjoy their wine should the investment not perform exactly as planned. Champagne investors have the best of both worlds, as popping the cork of a vintage Champagne, or better still, sabering your bottle, is truly one of life’s great pleasures.