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.

1. Jack Hibberd
Head of Data & Marketing
Liv-ex.com
Tuesday 28th February 2012
“The „fine‟ Champagne market – increasing the fizz”
Harpers Champagne Summit

2. 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

3. 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.

4. The fine wine market
• The fine wine market is worth US$4billion
annually (up from US$1bn in 2004).
4.5
Global market turnover (Billion USD)
4
3.5
3
2.5
2
1.5
1
0.5
0
2004 2005 2006 2007 2008 2009 2010

5. The fine wine market
• Merchants account for 90% of trade.
• New markets have led to strong growth.
US$3.6b
US$245m
US$408m
US$163m
Merchants
Auctions
Hong Kong
Other

6. “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.)

7. A declining share
Champagne: Average monthly share of trade on Liv-ex
4
source: liv-ex.com
% of trade on Liv-ex
3
2
1
0
2006 2007 2008 2009 2010 2011

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 Vintners
Harpers, 10th February, 2012
8

9. Index level
100
120
140
160
180
200
220
240
280
300
80
260
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
The Liv-ex 25 Champagne Index
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Yet, prices remain firm
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11

10. Index level
100
120
140
160
180
200
220
240
260
280
300
320
80
Dec-03
Mar-04
Jun-04
Sep-04
Dec-04
Mar-05
Jun-05
Sep-05
Dec-05
Mar-06
Jun-06
Dom Perignon
Sep-06
Dec-06
Mar-07
Jun-07
Krug
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
The Liv-ex 25 Champagne Index by brand
Mar-09
Krug outperforms
Jun-09
Sep-09
Dec-09
Louis Roederer Cristal
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
source: liv-ex.com

11. Index level (31 Dec 2003 = 100)
50
100
150
200
250
300
350
400
450
500
source: liv-ex.com
Dec-03
Apr-04
Aug-04
Dec-04
Apr-05
Aug-05
Dec-05
Apr-06
Aug-06
Dec-06
Liv-ex Champagne 25
Apr-07
Aug-07
Dec-07
Apr-08
Aug-08
Dec-08
Apr-09
Aug-09
Dec-09
Liv-ex Fine Wine 50
Apr-10
Aug-10
Dec-10
Champagne v Bordeaux
Apr-11
Liv-ex Champagne 25 v. The First Growths ( 2004-2012)
Aug-11
Dec-11

12. 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.

13. % share of trade
0
2
3
4
5
6
7
8
9
1
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Burgundy: Share of trade on Liv-ex
Oct-11
Nov-11
Burgundy leads the way
Dec-11
source: liv-ex.com
Jan-12

14. Avg RP score (last five vintages)
80
82
84
86
88
90
92
94
96
98
100
Guigal E
Lafite
Rothschild
Yquem
Krug
Haut Brion
Salon Mesnil
Ornellaia
DRC
Sassicaia
Leflaive
Pin
Dom Perignon
Champagne to follow?
Cristal
Average score of leading fine wines across last five releases
Leoville Barton
Beychevelle
source: liv-ex.com

15. Exploiting the opportunity
• Laissez-faire works
Release some control and get the market
behind you. Exclusivity doesn‟t mean scarcity.
• Build a profile on the secondary market
Liv-ex, merchants and auctions can help build
a fine wine brand.
• Act like a fine wine, not a luxury brand
Leave something on the table for the
consumer.

16. www.liv-ex.com