Champagne, renowned for its effervescence and prestige, has long been a focal point for investors seeking to diversify their portfolios.
Traditionally, the secondary market for Champagne has been dominated by vintage varieties, prized for their aging potential and the allure of increasing value over time. However, a recent report by Wine Cap sheds light on a burgeoning trend: the rising investment potential of non-vintage (NV) Champagne.
NV Champagne constitutes the backbone of the region's production in terms of volume. Yet, it's the "vintage premium" attached to vintage Champagne that historically attracted investors, with values appreciating as the wine matures. Nevertheless, the landscape is shifting. Wine Cap's report suggests that NV Champagne is increasingly becoming a lucrative option for investors, signaling a potential paradigm shift in the Champagne investment market.
Key Champagne brands, which had experienced a downward trend six months ago, showed promising signs of resurgence during Q1, with modest gains indicating a potential reversal of the region's declining performance since its peak in October 2022. This upward trajectory hints at a renewed interest in the Champagne market, setting the stage for the exploration of new investment avenues.
One significant catalyst for the growing appeal of NV Champagne lies in the strategic moves made by luxury producers. Notably, brands like Krug have begun adding edition numbers to their top-tier NV Champagnes, providing consumers and collectors with detailed information such as disgorgement dates, harvest conditions, and assemblage. This increased transparency and differentiation between releases have stimulated activity in the secondary market, rendering NV Champagnes more attractive to investors.
According to the report, the share of NV Champagne on the secondary market has seen a notable rise, climbing from 5% to between 15% and 20%. Moreover, older releases, particularly Grand Cuvées, have exhibited significant potential for price appreciation, commanding premiums that reflect their rarity and quality.
Martin Pruszynski of Wine Cap underscores the transformative impact of differentiation in NV Champagne releases. The introduction of numbered editions, pioneered by earlier adopters like Jacquesson and Krug, has gained momentum with the participation of esteemed producers such as Laurent Perrier and Louis Roederer. For instance, Louis Roederer's inaugural NV cuvée, Collection 242, launched in 2021, exemplifies this shift towards increased individualization and market differentiation.
The success of initiatives like Krug 158 underscores the nascent but promising nature of this evolving market. As the 171st edition of Krug NV commands a significantly higher price than its predecessors, it demonstrates the potential for value appreciation within the NV Champagne segment.
While the process is still in its early stages, the heightened attention on Champagne in the secondary market, particularly peaking in October 2022, has catalyzed interest among investors, consumers, and merchants. The shift in mentality towards NV Champagne, fueled by producers' efforts to enhance differentiation and transparency, suggests a paradigm shift in Champagne investment dynamics.
Despite the challenges in collating data due to the individual branding of NV Champagnes, the potential for creating a cohesive index to track their performance is undeniable. While vintage varieties have traditionally dominated indices like Liv-ex's Champagne 50 index, the evolving landscape necessitates a reevaluation of how NV Champagnes are assessed and valued in the secondary market.
In conclusion, the rising prominence of NV Champagne in the secondary market signifies a significant evolution in Champagne investment trends. With increasing differentiation and transparency, coupled with notable gains in value and market share, NV Champagnes are poised to emerge as a compelling option for investors seeking to capitalize on the dynamic world of wine investment.