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Jack Hibberd
Head 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).

                                       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
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
“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

                            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
“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
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
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
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
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.
% 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
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
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.
www.liv-ex.com

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The "fine" champagne market increasing the fizz

  • 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.