The Highly Profitable World of Champagne Investing

It was one of the most profitable drinks I’ve ever had…

This was the mid-2000s, somewhere in Manhattan’s East Village. I was sitting in a restaurant I don’t recall, celebrating the achievements of a writer I don’t remember. What I do remember, however, is the Champagne they were serving.

It had hints of ginger, melon, and maybe some lemon… was drier than a sunbleached bone… and effervescent to the point that it was threatening to float right out of the flute.

I found the bartender and asked him what it was. In the world of high-end Champagnes, pretty much everyone knows the big boys: Dom Pérignon, Cristal, and Veuve Clicquot. But I’d wager not many people have heard of Domaine José Dhondt. I certainly hadn’t.

That’s because Domaine José Dhondt is something different, something even more exclusive… what’s known as a “grower Champagne.”

After that one glass, I went home and ordered a case of José Dhondt from one of the few U.S.-based wine merchants stocking the stuff. Over the subsequent years, I drank a few bottles but kept the rest. Then a decade or so later, I sold my 10 remaining bottles at a wine auction in New York… for a more than 200% gain.

Grower Champagnes are now one of the fastest-growing segments of the wine investing space, and you can make even greater returns from trading these wines today.

But I’ve gotten ahead of myself. Let’s step back and look at what grower Champagnes are…

More Exclusive Than Dom Pérignon

Almost all of the Champagne you buy—even big names like Dom Pérignon—is made from a blended mix of grapes purchased from vineyards across the Champagne region of France. Depending on who’s counting, Champagne has between 16,000 and 19,000 growers of Champagne grapes. Most of them sell their entire harvest to the various Champagne houses in the region.

The grapes go to producers you know, such as Moët & Chandon and its prestige cuvée Dom Pérignon, or Louis Roederer and its famous Cristal brand… along with a plentitude of lesser names.

Those houses will amalgamate grapes from numerous growers into a single flavor profile, so their product remains consistent from one year to the next. This creates a “non-vintage,” or NV, champagne—one that has no date stamped on it.

Dom Pérignon and Cristal are somewhat different in that they each use the best that a single vintage of grapes has to offer. That’s why they carry dates on their label when most Champagnes simply post an NV. Cristal, in fact, only shows up in years when Louis Roederer’s vintners determine the harvest to be exceptional.

Even at that, though, the world’s ultra-premium Champagne brands, including Dom Pérignon and Cristal, are still mutts—a mixed breed made from an amalgamation of grapes sourced from various growers in the Champagne region. That’s not to imply they’re inferior. I use the term mutt only to note that in relation to traditional Champagne, grower Champagnes are purebreds.

Only about 5,000 growers keep some portion of their grapes to produce and bottle their own brands. These are the grower Champagnes, and they’re very different from traditional varieties.

Their flavor profile echoes the plot of land on which they were grown… the microclimate that nourished the grapes… and the cultivation techniques employed by a particular vintner. As such, grower Champagnes are a lot like traditional vintage wines. They each reflect the environment in a specific location during a specific year.

In essence, then, this is artisanal Champagne, for which every year is an expression of a particular growing season. And they tend to be produced in much smaller quantities. Dom Pérignon, for instance, produces 5 million bottles per year, whereas grower Champagnes are often released in batches of a few thousand bottles or less.

This rarity and exclusivity mean grower Champagnes can be good investments… if you spend the time hunting them down.

The Investment Case for Vino

I’ve written to you before about non-typical investment options, such as whisky, but I know this still hits some people as weird. Who “invests” in a product you drink?

Well, lots of people. Wine, in particular, has a multi-century history as a solid investment.

Variations in climate mean that each year creates a different wine, even if the grapes come from the same plot of land. Millions of wine collectors around the world want to experience the variations that happen from year to year, particularly with top-class wines. Moreover, millions of restaurants around the world cater to wine aficionados who seek only the best.

But high-end wine needs time to age, typically 10 years, and restaurants don’t have the space to buy cases of wine every year and then allow them to sit for a decade before they’re sold. Instead, they rely on collectors and wine investment funds (yep, that’s a thing) to buy young wine, store it properly, and then sell it to them at auction when the bottles are approaching their 10th birthday.

Restaurants pay a premium to buy aged wine… and that premium goes to the wine funds and collectors selling vintages at auction.

You might buy a six-bottle case of, say, 2022 Chateau Brane-Cantenac—a well-regarded Bordeaux—for $280 a bottle, with the expectation that a decade from now they’ll each sell at auction for $1,000 or more. That return, which equates to about 15% per year, is fairly typical for highly ranked vintages.

Similar math and opportunities exist with grower Champagnes.

Because Champagne carries an aura of “wealth” and “the good life,” demand for the product is global… and unquenchable. Data from Liv-Ex, a global marketplace for fine wines, makes it clear that prices for quality, vintage Champagnes are surging.

The Liv-Ex Champagne 50 tracks the world’s most traded Champagne vintages. Over the last five years, prices are up nearly 79%. By comparison, the Liv-Ex Bordeaux 500, which tracks the world’s most widely traded Bordeaux wines, is up just 15%. (This means we should expect to see a nice run on Bordeaux over the next five years to keep pace with its typical long-term annualized gains of 15%.)

While the Liv-Ex Champagne 50 once included only the grand dames of the industry, it now features grower Champagnes as well because of rising demand and the recognition that they are their own sub-asset of Champagne.

Moreover, grower Champagnes are far outpacing their big-brand brethren in terms of returns. One example of many: the 2012 Cédric Bouchard Les Ursules Blanc de Noirs—a star in the grower Champagne universe—has increased in value by more than 330% in the last five years alone.

How to Profit From Grower Champagnes

The most sought-after grower Champagnes come from only a select few winemakers.

Let’s start with José Dhondt. Most of its bottlings are non-vintage, denoted by that “NV” on the label. No doubt they’re excellent, but for investment purposes the bottles you really want are the ones labeled “Mes Vieilles Vignes,” or My Old Vines.

The 2011 vintage is highly rated, as is 2014 and 2015. If you can find them, they cost about $60 to $75 per bottle right now.

Cédric Bouchard has only been producing Champagne since 2000, but has already attracted a cult following in the wine investment universe. You can pick up a bottle of the Roses de Jeanne Blanc de Noirs Côte de Val Vilaine in the $100 range. Bouchard Champagne has a solid history of rising in value.

Domaine Jacques Selosse has been making Champagne since the 1950s and is a legendary name in grower Champagne. Prices for these bottles reflect that. Selosse produces different bottlings, including single-vineyard wines from six different villages. You can expect to pay several hundred dollars to well over $1,000 per bottle.

Pierre Péters is another name to know. Its Champagnes regularly fetch hundreds of dollars, but you can find the 2014 Réserve Oubliée Grand Cru Blanc de Blancs Brut for around $150. It’s a high-quality vintage, and the name Pierre Péters holds a lot of value for auction buyers.

While names like Bouchard, Selosse, and Péters are the entrenched, go-to brands, there are several up-and-coming vineyards to be aware of, too. You can get into these for $150 per bottle or less. The risk, of course, is that they never gain the same kind of traction as, say, Selosse. But if they do capture the imagination of Champagne investors, then the prices could pop substantially at auction.

Here I’m talking about growers such as Domaine Vincey and its Le Grand Jardin, a single-vineyard Champagne. The 2015 vintage fetches about $110 to $120, and because only 2,024 bottles were produced, the wine retailers that stock it will often limit purchases to a single bottle.

Gaspard Brochet Lion Tome has become a legendary Champagne among aficionados, and it’s only had three bottlings. All are tough to find, but if you locate Lion Tome III, the most recent vintage, you can grab them in the $100 or so range.

And, you’re not going to go wrong with any of the Champagnes that come out of Jacques Lassaigne. But if you can find the Millésime series, grab a few. They’re cellared for at least eight years before public release. The 2013 Millesime is in the $150 range.

It should be noted, you’ll need to keep these wines in investment-grade condition. That means proper storage—in the dark, at about 55 degrees, with 60% to 75% humidity.

If you don’t have a cellar, lots of wine-storage facilities have popped up across the U.S. in the last 20 years, and they’ll properly store your wine for a per-case fee. You can even have your wine shipped directly from the merchant to your storage facility so you don’t even need to take possession of your asset. I’ve previously used a facility called All Ways Cool in California.

Be sure to keep all of your paperwork proving when and where you bought the bottles. Provenance is hugely important in this industry.

As I like to remind people: Wine—and grower Champagne—is one of few win-win investments. Because even if you can’t sell the wine for a profit, you can always drink your losses.