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Champagne outperforms gold during Covid

Published:  29 September, 2022

Globally, we may have not been swinging from the chandeliers much over the past two years. When it comes to the secondary market however, Champagne has undergone a period of intense transformation to become one of the most attractive propositions for fine wine investors.

According to a new report from Liv-ex, Champagne: The growing secondary market for luxury, Champagne has been ruling the roost on the secondary market over the last 48 months.

The ultimate must-have, luxury item, it has even outperformed gold.

This is in stark contrast to how the category was performing back in 2002, when Champagne accounted for just 2% of the total secondary market trade. As of September 2022, its trade share now sits at 12.4%, making it the third most traded fine wine region after Bordeaux and Burgundy. Once a relatively modest price performer, the average trade price of a 9-litre case is up 76.7%, from £1,885 in 2019 to £3,331 in 2022.

Liv-ex’s Champagne 50 index has also had an impressive run over the last two years. The category has risen 72.7% in that time to outperform gold and major equities such as the FTSE 100 and the S&P 500.

All of this has happened during a period of great uncertainty, from the Covid-19 pandemic, through to the war in Ukraine, rising inflation and a looming UK recession. However, the Liv-ex report noted that luxury goods fared particularly well during this period, as the sector was able to raise prices without killing demand.

For example, LVMH, owners of Moet & Chandon, Dom Perignon, Veuve Cliquot and Krug, reported 28% growth in revenue for the first half of the year.

However, analysts caution that this growth could soon slow.

The unique circumstances of the pandemic seem to have accelerated demand. Five years ago, ‘the steady but successful future for change seemed assured’, the Liv-ex report notes.

As prices have risen however, warehouses have filled and the value Champagne offers relative to other fine wines has narrowed.

According to Liv-ex’s deputy chairman and exchange director Justin Gibbs, “A series of strong vintages and market leading returns has put Champagne in sharp focus in recent years, drawing interest from an ever-growing audience of buyers – both drinkers and investors. But as prices rise and the core dynamics driving the market continue to evolve, there are signs that returns may soon begin to slow.”

Although the secondary market for Champagne remains robust – and continues to interest investors – it seems there is caution in the air, as records are broken at rapid speed.