Jack HibberdHead 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).

2004 2005 2006 2007 2008 2009 20100

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Glo

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ark

et t

urn

ove

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)

The fine wine market

Merchants

Auctions

Other

Hong Kong

US$3.6b

US$408m

US$245m

US$163m

• Merchants account for 90% of trade.• New markets have led to strong growth.

“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

2006 2007 2008 2009 2010 20110

1

2

3

4

Champagne: Average monthly share of trade on Liv-ex

% o

f tra

de

on

Liv

-ex

source: liv-ex.com

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 VintnersHarpers, 10th February, 2012

Yet, prices remain firm

De

c-0

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ar-

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Jun

-04

Se

p-0

4D

ec-

04

Ma

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5Ju

n-0

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ep

-05

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Jun

-06

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Ma

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ep

-07

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08

Jun

-08

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p-0

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08

Ma

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9Ju

n-0

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ep

-09

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ar-

10

Jun

-10

Se

p-1

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10

Ma

r-1

1Ju

n-1

1S

ep

-11

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c-1

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80

100

120

140

160

180

200

220

240

260

280

300The Liv-ex 25 Champagne Index

Ind

ex

leve

l

Krug outperforms

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

Dec

-07

Mar

-08

Jun-

08

Sep

-08

Dec

-08

Mar

-09

Jun-

09

Sep

-09

Dec

-09

Mar

-10

Jun-

10

Sep

-10

Dec

-10

Mar

-11

Jun-

11

Sep

-11

Dec

-11

80

100

120

140

160

180

200

220

240

260

280

300

320The Liv-ex 25 Champagne Index by brand

Dom Perignon Krug Louis Roederer Cristal

Ind

ex

leve

l

source: liv-ex.com

Champagne v Bordeaux

Dec-0

3

Apr-0

4

Aug-0

4

Dec-0

4

Apr-0

5

Aug-0

5

Dec-0

5

Apr-0

6

Aug-0

6

Dec-0

6

Apr-0

7

Aug-0

7

Dec-0

7

Apr-0

8

Aug-0

8

Dec-0

8

Apr-0

9

Aug-0

9

Dec-0

9

Apr-1

0

Aug-1

0

Dec-1

0

Apr-1

1

Aug-1

1

Dec-1

150

100

150

200

250

300

350

400

450

500

Liv-ex Champagne 25 v. The First Growths ( 2004-2012)

Liv-ex Champagne 25 Liv-ex Fine Wine 50

Inde

x le

vel (

31 D

ec 2

003

= 1

00)

source: liv-ex.com

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.

Burgundy leads the way

Jan

-11

Fe

b-1

1

Ma

r-1

1

Ap

r-1

1

Ma

y-1

1

Jun

-11

Jul-

11

Au

g-1

1

Se

p-1

1

Oct

-11

No

v-1

1

De

c-1

1

Jan

-12

0

1

2

3

4

5

6

7

8

9

Burgundy: Share of trade on Liv-ex

% s

ha

re o

f tra

de

source: liv-ex.com

Champagne to follow?

Gu

iga

l E

La

fite

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thsc

hild

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ue

m

Kru

g

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ut B

rio

n

Sa

lon

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art

on

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ych

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80

82

84

86

88

90

92

94

96

98

100

Average score of leading fine wines across last five re-leases

Avg

RP

sco

re (

last

five

vin

tag

es)

source: liv-ex.com

Exploiting the opportunity

• Laissez-faire worksRelease some control and get the market behind you. Exclusivity doesn’t mean scarcity.

• Build a profile on the secondary marketLiv-ex, merchants and auctions can help build a fine wine brand.

• Act like a fine wine, not a luxury brandLeave something on the table for the consumer.

www.liv-ex.com