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Jack Hibberd, Head of Data and Marketing at Liv-ex, explores Champagne's place in the fine wine market and ways in which the region can take advantage of new opportunities.
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Jack HibberdHead of Data & Marketing Liv-ex.com
Tuesday 28th February 2012“The ‘fine’ Champagne market – increasing the fizz”Harpers Champagne Summit
What is Liv-ex?
Established in 1999, Liv-ex is the global exchange for fine wine merchants:
• More than £100m of wine was bought and sold on the platform in 2011
• Sunday Times Fast Track 100 three times in the last five years
• 400+ members in 33 countries
• Online marketplace
• Price data, info and analysis
• Storage & transport
• Setter of standards
What is fine wine?
A wine with:
• Secondary market trade
• Ability to improve in bottle
• Long track record
• Critical acclaim
A recognised secondary market price and a liquid trading environment are the crucial factors.
The fine wine market
• The fine wine market is worth US$4billion annually (up from US$1bn in 2004).
2004 2005 2006 2007 2008 2009 20100
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Glo
ba
l m
ark
et t
urn
ove
r (B
illio
n U
SD
)
The fine wine market
Merchants
Auctions
Other
Hong Kong
US$3.6b
US$408m
US$245m
US$163m
• Merchants account for 90% of trade.• New markets have led to strong growth.
“Fine” Champagne
Although Liv-ex traded 23 different Champagne brands last year, the vast majority of trade (90%+ by value) was in three key products:
•Dom Perignon
•Louis Roederer Cristal
•Krug Vintage
Average bottle price in 2011 was £130. (In comparison, AC Nielsen off-trade average was £18 for NV and £23 for vintage.)
A declining share
2006 2007 2008 2009 2010 20110
1
2
3
4
Champagne: Average monthly share of trade on Liv-ex
% o
f tra
de
on
Liv
-ex
source: liv-ex.com
8
“As for Champagne it’s [2.4%] percent of our business. In the good times of three years ago it made up 10% of our business.”
Stephen Browett, Farr VintnersHarpers, 10th February, 2012
Yet, prices remain firm
De
c-0
3M
ar-
04
Jun
-04
Se
p-0
4D
ec-
04
Ma
r-0
5Ju
n-0
5S
ep
-05
De
c-0
5M
ar-
06
Jun
-06
Se
p-0
6D
ec-
06
Ma
r-0
7Ju
n-0
7S
ep
-07
De
c-0
7M
ar-
08
Jun
-08
Se
p-0
8D
ec-
08
Ma
r-0
9Ju
n-0
9S
ep
-09
De
c-0
9M
ar-
10
Jun
-10
Se
p-1
0D
ec-
10
Ma
r-1
1Ju
n-1
1S
ep
-11
De
c-1
1
80
100
120
140
160
180
200
220
240
260
280
300The Liv-ex 25 Champagne Index
Ind
ex
leve
l
Krug outperforms
Dec
-03
Mar
-04
Jun-
04
Sep
-04
Dec
-04
Mar
-05
Jun-
05
Sep
-05
Dec
-05
Mar
-06
Jun-
06
Sep
-06
Dec
-06
Mar
-07
Jun-
07
Sep
-07
Dec
-07
Mar
-08
Jun-
08
Sep
-08
Dec
-08
Mar
-09
Jun-
09
Sep
-09
Dec
-09
Mar
-10
Jun-
10
Sep
-10
Dec
-10
Mar
-11
Jun-
11
Sep
-11
Dec
-11
80
100
120
140
160
180
200
220
240
260
280
300
320The Liv-ex 25 Champagne Index by brand
Dom Perignon Krug Louis Roederer Cristal
Ind
ex
leve
l
source: liv-ex.com
Champagne v Bordeaux
Dec-0
3
Apr-0
4
Aug-0
4
Dec-0
4
Apr-0
5
Aug-0
5
Dec-0
5
Apr-0
6
Aug-0
6
Dec-0
6
Apr-0
7
Aug-0
7
Dec-0
7
Apr-0
8
Aug-0
8
Dec-0
8
Apr-0
9
Aug-0
9
Dec-0
9
Apr-1
0
Aug-1
0
Dec-1
0
Apr-1
1
Aug-1
1
Dec-1
150
100
150
200
250
300
350
400
450
500
Liv-ex Champagne 25 v. The First Growths ( 2004-2012)
Liv-ex Champagne 25 Liv-ex Fine Wine 50
Inde
x le
vel (
31 D
ec 2
003
= 1
00)
source: liv-ex.com
An opportunity?
If not Bordeaux...
• Collectors looking for something new?
• A defensive stock for investors?
• Asian opportunity?
Historically strong in the on-trade and retail, Champagne now has an opportunity to build sales amongst highly-involved private clients and wine investors.
Burgundy leads the way
Jan
-11
Fe
b-1
1
Ma
r-1
1
Ap
r-1
1
Ma
y-1
1
Jun
-11
Jul-
11
Au
g-1
1
Se
p-1
1
Oct
-11
No
v-1
1
De
c-1
1
Jan
-12
0
1
2
3
4
5
6
7
8
9
Burgundy: Share of trade on Liv-ex
% s
ha
re o
f tra
de
source: liv-ex.com
Champagne to follow?
Gu
iga
l E
La
fite
Ro
thsc
hild
Yq
ue
m
Kru
g
Ha
ut B
rio
n
Sa
lon
Me
snil
Orn
ella
ia
DR
C
Sa
ssic
aia
Le
flaiv
e
Pin
Do
m P
eri
gn
on
Cri
sta
l
Le
ovi
lle B
art
on
Be
ych
eve
lle
80
82
84
86
88
90
92
94
96
98
100
Average score of leading fine wines across last five re-leases
Avg
RP
sco
re (
last
five
vin
tag
es)
source: liv-ex.com
Exploiting the opportunity
• Laissez-faire worksRelease some control and get the market behind you. Exclusivity doesn’t mean scarcity.
• Build a profile on the secondary marketLiv-ex, merchants and auctions can help build a fine wine brand.
• Act like a fine wine, not a luxury brandLeave something on the table for the consumer.
www.liv-ex.com