Vintage champagne: an effervescent asset

SPONSORED CONTENT – Amidst the financial stresses and strains of various global financial crises, canny investors have identified vintage champagne as a capital gains tax free asset that seems to continue its resilient, inexorable rise.

Sensible investors have long diversified their holdings across a range of alternative assets, with Burgundy and Bordeaux the go-to names for those looking to invest in the liquid gold of the fine wine market. In the background, however, a dark horse has emerged in the form of vintage champagne, that most bubbly of assets that impresses with both low volatility and consistent, annualised returns. Noble Rot Fine Wine looks at the reasons for investors’ fascination with fizz.

Consistent growth and a hedge against market downturns

Champagne has performed admirably over the past 16 years, delivering compound annual growth of over 9%, whilst remaining largely unaffected by major market events which have at times caused the wider financial markets to rise and fall. This has burnished vintage champagne’s credentials as an excellent additional hedge to add to a fully diversified fine wine portfolio during events like the current Covid-19 pandemic.

Outperforming the wider market

Fine wine is a consistently high performer in the annual Knight Frank Wealth Report (which shows fine wine market growth of 120% over 10 years). The Liv-ex 100 index has outperformed the FTSE 100 over the past five years and in the same period the Champagne 50 index has risen an impressive 43%.

Definitive inverse supply curve

Vintage champagne has a huge potential market, but limited supply. The inverse supply curve that drives fine wine investment is particularly key here, with vintages declared relatively rarely. Some Grandes Marques only make as few as 5,000 cases of each vintage declared. Anticipation grows as vintage champagne is often aged for 10 years or more before release, and is then immediately suitable for drinking, which directly drives demand.

Substantial and varied worldwide demand

Champagne is a drink for all occasions, so demand for vintage champagne is seemingly insatiable, for bottles of all sizes and vintages. As with other fine wine assets, if bought judiciously it can be traded readily as there is a liquid market and defined exit, for instance via Liv-ex, the live Fine Wine trading platform, in contrast with assets such as art or classic cars.

Tax-efficient form of investing

Because of its status as a wasting chattel, like all fine wines, vintage champagne is considered exempt from capital gains tax.

The best of the best shine through

At Noble Rot Fine Wine, vintage champagnes are judged against several key criteria to determine suitability for investment. These include but are not limited to:

  • The best producers – Salon, Dom Perignon, Cristal and Krug lead the way here
  • The best vintages – 1996, 2002, 2004 and 2008
  • High critical ratings – increases in rating also positively affect a wine’s value
  • Outperforming peer group – certain champagnes outpace the Champagne 50 index

Investors in vintage champagne have seen handsome returns. For example, Salon’s 2002 and 2004 vintages have appreciated by 24% and 14% respectively over the past 18 months alone (source: Liv-ex.com).

To explore diversifying your investments into Fine Wine, access our full champagne report or to receive a free valuation and appraisal of any existing fine wine holding, please get in touch with us via noblerot.org. We’d be delighted to hear from you.

Please download our complementary Champagne Report via: noblerot.org

Recommended

The simple way to invest in iconic classic cars
Advertisement Feature

The simple way to invest in iconic classic cars

Alternative and passion investing are areas that have seen considerable growth in recent years, but some asset classes have priced investors out. Now,…
25 Nov 2022
The fast-growing success of Britain’s wine industry
Wine

The fast-growing success of Britain’s wine industry

Hotter summers are great for the nation’s winemakers, says Chris Carter. But land for vineyards is selling at a premium – expect to pay up to £25,000 …
25 Aug 2022
Are we heading for a commercial property crash?
Alternative investments

Are we heading for a commercial property crash?

The pandemic has reduced the demand for office spaces and permanently changed the office environment. But John Stepek says rising interest rates are a…
1 Aug 2022
Collecting rare whisky: a £16m tipple served with froth
Alternative investments

Collecting rare whisky: a £16m tipple served with froth

The market in rare whisky is looking very bubbly, says Chris Carter, with a 1975 cask of recently selling for £16m.
26 Jul 2022

Most Popular

Wood-burning stove vs central heating ‒ which is cheapest?
Personal finance

Wood-burning stove vs central heating ‒ which is cheapest?

Demand for wood-burning stoves has surged as households try to reduce their heating costs this winter. But how does a wood burner compare with central…
21 Nov 2022
Fan heater vs oil heater – which is cheaper?
Personal finance

Fan heater vs oil heater – which is cheaper?

Sales of portable heaters have soared, as households look to cut their energy costs. But which is better: a fan heater or an oil heater? We put them t…
21 Nov 2022
Best savings accounts – November 2022
Savings

Best savings accounts – November 2022

Interest rates on cash savings are making a comeback. We look at the best savings accounts on the market now
28 Nov 2022