Investing in Burgundy, Cognac and Champagne
With investments in Bordeaux wines widely accepted as an alternative investment, how about investing in Burgundy, Cognac and Champagne? With many bottles and cases being sold and auctioned off for colossal amounts, is it time to classify these as investments?
Why Burgundy, Cognac and Champagne?
In this day and age, Burgundy wines, cognacs and champagnes are rated as luxury items. The production of these goods is also strictly regulated by the French authorities (AOCs), leading to a capped supply and consistent demand. Similar to Bordeaux wines, there are certain Burgundy wines, just like cognacs and champagnes of course, that are sold for exorbitant sums of money. For example, a case (12 bottles) of Domaine de la Romanee Conti 2005 (DRC) is currently worth around € 142,000! (Current market valuation: Feb. 2013).
With such stunning amounts of money being paid for liquid in a bottle, savvy investors cannot help but take interest in this highly lucrative opportunity.
Burgundy wines, often referred to as “Burgundies” are produced in the Eastern region of France. Burgundy has the highest number of Appellations d’Origin Controlee (AOCs) than any other region in France and both red and white Burgundies are carefully cultivated here. The most commonly used grapes are the Pinot Noir, Gamay, Chardonnay, Aligote and Sauvignon Blanc. The bottle shape of Burgundy wine bottles is unlike the Bordeaux red wine bottle, with a rounded shoulder blending into the neck. Famous Burgundy wines include DRC’s – Domaine de la Romanee Conti, Emmanuel Rouget, Henri Jayer and Cros Parantoux.
Cognac is a type of brandy named after the town of Cognac in France. Cognac is produced in the wineries surrounding the village, and is controlled by the regional AOC. After fermentation, double distillation, ageing, maturing and blending, the final beverage is about 40% in alcoholic content and usually brownish/gold in hue. The cognac is assigned an official quality grade; most commonly VS – very special, VSOP – very superior old pale or XO – extra old. Among the elite producers of cognac are Hennessy, Remy Martin, Courvoisier and Martell.
Champagne is a sparkling wine produced specifically from the grapes grown in the Champagne region of France. Generic sparkling wine is often mislabeled as champagne; officially the term is reserved for sparkling wine exclusively from that particular region and appellation. The grape selection consists of Pinot Noir, Chardonnay and Pinot Meunier and there are 4 distinct styles of champagne: Brut (aka. Cuvee), Blanc de Noirs, Blanc de Blancs and Rose. Notable producers of champagne include Krug, Cristal, Dom Perignon and Salon.
Is there Investment Potential in Cognac, Champagne and Burgundy?
The simple answer is yes. There are certain stocks and vintages that show a huge potential for capital growth. There are countless examples of Champagne, Cognac and Burgundy stocks selling at auctions and to private collectors for hundreds of thousands of Euros. Most importantly, like with Bordeaux wines, stock selection is absolutely crucial. Only a select few stocks of specific vintages will appreciate in value over time, and therein lays our specialty; picking the right stocks at the right time.
Naturally, there are also rarities and collectibles like antique bottles. Unlike contemporary stocks which can be consumed and enjoyed, collectors’ items are valued due to their age and “antique status” rather than their future potential for appreciation.
Is there a Market for these?
Many of our clients are concerned about the global demand for cognacs, champagnes and burgundy wine. Admittedly, the secondary market for champagnes, cognacs and burgundy wine is not as active as for Bordeaux wine. However, with the right connections in the wine industry, alongside a pool of private investors, auction houses and collectors, there is usually always a buyer at hand. The bottom line remains; there will always be a demand for luxury goods, especially of the alcoholic variety. As supply of these high quality alcoholic beverages is carefully regulated by the AOCs, over time consumption will diminish the available stock. As a consequence, these assets can only appreciate in value as the stocks become harder and harder to find.
And whether in times of happiness or despair, fact remains; the investor is in possession of a highly valued tangible asset that can be enjoyed exactly like it was meant to be.
Bordeaux Traders - The Fine Wine Investment Brokerage GmbH
Mooslackengasse 17, 1190 Vienna
Phone: +43 676 490 51 19