Wine investors raise a toast to a successful 2022

Prices rise in 2022, contrasting with a gloomy year for global equity markets.

Investors in top-end champagne and burgundy wine are toasting a year of big gains, but some of the buzz is draining out of the market as the global economic outlook worsens.

Bordeaux prices jumped 27.4% in the first 11 months of this year, according to the Liv-ex wine exchange’s Burgundy 150 index, while the Champagne 50 index jumped 21.6%.

In part, this reflects activation by wealthier consumers who have returned to restaurants since the pandemic ended. In addition, the supply of high-end vintages is limited. For wine investors, however, this niche market has provided protection from rising inflation and falling financial markets.

2022 was a phenomenal year for the Champagne and Burgundy vintages, according to Gregory Swartberg, CEO of London-based wine investment company Cru Wine, which manages around £30m of client assets. In vintage Champagne, there simply isn’t enough of it being made to meet demand, with record demand from investors over the past four months.

Climate change is a major factor in reducing Burgundy’s supply. Unusually warm spells in early spring last year led to a strong crop, but April’s cold snap hit production hard. Hail in June caused further damage. Volumes from the 2021 Burgundy vintage, which is on the market now and which starts bottling from next summer, are down by around 50%, with some producers losing up to 85% of their harvest. Champagne houses, which age wines for years before releasing them, are meanwhile more likely to hold bottles to cover years of bad vintages.

Among the best-represented Burgundian wines this year were Domaine Leflaive’s BâtardMontrachet 2014, a Chardonnay, which jumped 122% to £13,952 for a 12-bottle case. Renowned producer Domaine Romanée Conti’s exceptional Burgundy, Grands Échézeaux 2008, doubled in price to £43,792 a case.

Among Champagnes, Perrier Jouët’s Belle Époque 2012 rose 68% to £1,821, while Salon’s Le Mesnil, one of the most sought-after Champagnes, posted strong gains across several vintages. Its price for the 2007 vintage. jumped 67% to £12,200.

Beyond such grandes marques, there is also a growing demand for so-called ‘grower Champagnes’ – artisanal wines produced by the same person who grows the grapes. Cédric Bouchard’s 2012 La Bolorée, an unusual 100 per cent Pinot Blanc Champagne, is trading at £360 a bottle, up 80 per cent on the year, according to the Fine Wine Merchants’ Bordeaux Index. Vintage from 2002. from Jacques Selosse has jumped 63% this year to £1,750 a bottle.

The strong earnings are in stark contrast to a dismal year for traditional markets. Equity markets have tumbled nearly 20% for the year, led by a selloff in tech stocks as central banks hiked interest rates, while Liv-ex’s Fine Wine 100 index is up 7.1% this year.

Yet the darkening global economic outlook is beginning to dampen sentiment in the luxury wine sector. Prices for Burgundy fell 0.9% last month and Champagne fell 2.5%, while the ratio of buyers to sellers of both wines has fallen sharply this year.