Wine Investment Friday

This newsletter is designed to bridge the gap between trade and the investor. Each week we aim to help investors better understand the nuances of why some cases appreciate and some standstill. We will unpick the characteristics that construct financial potential to help your money work smarter. 
 


This week we are analysing a 3-litre bottle:

Louis Roederer, Cristal Medallion, 2002


We are looking at why special edition bottles may make for a fantastic item for the collection, but nearly always leave investors wishing they had left the weird and wonderful well alone. 


Beneath the Label: 

As far as Champagne investment goes, Cristal is a great one. With a long distinguished history and an incredible consistency of quality, you can be sure that in vintage years the contents of the bottle is going to be achingly gorgeous.

Critic Score: 96 Points – Parker
This is a top-scoring Cristal, the house rarely achieves higher making this vintage a top iteration.

Region Rating: Champagne – 95T 
For a Champagne region, this is one of the greatest modern vintages, extremely well thought of. 

Drinking Window: 2019 – 2059
Champagnes stored in a large format bottle will age even longer due to a low surface area to volume ratio and as such, this item will live for decades.

Production Volume: 200 bottles
Special edition bottles are always produced in small numbers, but by anyone’s standards, this is tiny. Perhaps owing to the extensive handcrafted metallic adornments on the bottle. 

Undeniably unique and with a 3L format it is certainly imposing.

Summary:
So far this bottle is ticking every box. It is of high quality, from a classic vintage and produced in minuscule volumes with the propensity to age for half a century. All of which combines to produce an item, at least from the quality perspective, that should begin to make for a really interesting investment. 


“The three most over-rated things in life are Champagne, Lobster and Picnics”


Money Matters:

Brand Power: 88/100, rank 24th in JF Tobias Brand Power Metric
Cristal is undoubtedly an enormous global brand with reach and demand spanning the globe. Perhaps something to consider is the polarising design. The gold is either elegant and regal or garish and unrefined. 

Liquidity: 10%
It is a unique individual who sees value in spending over £9K for a 3L special edition bottle, when you could buy 48 bottles of the same wine for the same price. 

Inter-Trade Price Volatility: n/a
A fault of Liv-Ex is their graphs always show the 9L market value. As such the graph below is not very helpful. However, it does still illustrate the continuing falling price, a requirement forced on sellers to complete a sale.

Price History: 

Summary:
The financial traits of this wine are where things start to unravel. Despite a strong brand power score, the liquidity rating is at the lowest possible level. This real lack of liquidity almost certainly holds a cyclic cause and effect relationship with the negative price history. 
The identification of this issue clearly does not require a masters degree when reviewed as it is in this section. However, at the time of buying many investors do not consider this vector, and perhaps some are not even aware of it. Unfortunately, it is not until an exit is on the horizon that the crashing reality hits and the advertised market price becomes more and more unobtainable. 


Position for Profit: 

All Show and No Go.

The investment world is obsessed with entries and entry prices, a successful one makes for an easy brag. The subsequent holding period of said asset, enjoying a sexy market price, is an even more lovely situation to be in. However, without the ability to exit successfully out of the asset, these first two successes are redundant.
This is the key issue with limited edition bottles and cases. They are sold as a special unique item, one that collectors will clamour for enticing inexperienced investors in. However, when it comes to exit, without access to these elusive collectors, investors will ultimately be selling these items to trade. Unfortunately, the trade know these items to be sticky, and as such are never going to give a seller anywhere near market value. Even with the stand out quality, beautiful design and finite numbers this is simply seen as an oddity that could sit on the books for too long. 

The Author

Avatar

Jake Leighton