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Champagne Offers Investors Sparkling Performance In 2021

Champagne Offers Investors Sparkling Performance In 2021

Central banks will never admit they’ve sparked the largest asset bubble in history. Stocks, bonds, Bitcoin, real estate, automobiles, artwork, fine wine, and even coveted bottles of champagne have soared in value. 

Online platforms that trade champagne and desirable wines, much like stocks, currencies, and even crypto, have seen surging activity and record upward price moves this year due to asset price hyperinflation spurred by easy-money policies from central banks and the onset of a global shortage of bubbly.

Data from the “Bordeaux Index” showed champagne was one of the hottest investments on the platform this year, accounting for 15 of the 20 top price increases on the platform in 2021.

Blue-chip champagnes such as Salon 2002 vintage jumped more than 80% on the platform and currently trades around $15,700 per bottle. The price-performance on the year outperformed all major global equity indexes, Bitcoin, and even the NYFANG+TM stocks index. 

Taittinger Comtes de Champagne 2006 and Krug 2002 surged more than 70%, while the Krug 2000, Pérignon P2 2002, Bollinger La Grande Année 2007, and Cristal Rosé 2008 rose more than 50%. 

Highly desirable wine, champagne, and spirit vintages are seen as an alternative asset class where consumption creates an increasing natural supply-demand imbalance and a low correlation with other asset classes. There has been a steady upward movement in the space as investors seek physical assets instead of holding onto stocks, bonds and or fiat. 

LiveTrade CEO Matthew O’Connell, who manages the Bordeaux Index, told Reuters several factors fueled the boom into wine, champagne, and spirit investing this year, including “low-interest rates and high levels of savings accumulated by the wealthy during numerous global lockdowns, to a growing focus on hard assets in the face of rising inflationary pressures.” 

Experts believe the prices of champagne as a whole, no matter the vintage, could be moving higher due to a shortage of bubbly. 

“There actually is a shortage of champagne, it’s kind of crazy,” Ray Isle, Food & Wine Magazine executive wine editor, recently told CNBC. 

The dynamics at play is that demand continues to soar as supply remains tight, following adverse weather conditions in France earlier this year.   

“You may see prices rise for champagne,” Isle said. “Where you are seeing shortages are in the big names of the most popular brands,” he said, adding that tight supply will drive up prices. 

So if it’s bubbly from rare vintages and investors want to hoard it as an alternative asset outside the financial system to escape volatility or new vintages that people just want to consume – the theme for champagne is price increases are here. 

Tyler Durden
Wed, 12/29/2021 – 05:45

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