Stock markets have tanked. Credit markets are tight. But there is one market that is still bubbling along - champagne.
Why, two bottles of bubbly alone could be worth the price of a luxury saloon car, judging by the prices they have recently fetched at wine auctions.
While wines by now make up a portion of many a savvy investor's portfolio, the sparkling golden variety can be said to be an asset glass of its own.
According to the London International Vintners Exchange, its Liv-ex Champagne 25 Index, which tracks the price of 25 of the world's most sought-after vintages, is up 27 per cent in the 12 months ended June.
In contrast, stock indexes fell flat, with the FTSE 100 down 14.9 per cent, the S&P 500 down 14.8 per cent, and the Nikkei down 25.7 per cent, over the same period.
Since 2004, the Liv-ex Champagne 25 Index has bubbled up a total of 138 per cent, and has even outperformed the Liv-ex 100, a fine wine exchange, which is currently up 8.5 per cent year on year.
In New York in April, two bottles of Dom Perignon Rose Vintage 1959 sold for US$84,700 (S$115,948).
And in Hong Kong in May, a set of three magnums of Dom Perignon OEnotheque 1966, 1973 and 1976, went for a whopping HK$726,200 (S$127,426).
Champagne investment, as with all wine investment - and, indeed, stocks - requires that one stick to the 'blue chips'.
In this case, the world's most sought-after vintages include Krug, Louis Roederer Cristal and Dom Perignon.
As the favourite tipple of every hip-hop star and footballer's wife, demand for Cristal in particular has been extraordinary over the last few years. Yet, only about 25,000 cases of Cristal are made each year.
Meanwhile, demand for champagne has exploded from 50 million bottles in the 1970s to just under 300 million today, says Liv-ex.
So while champagnes are coveted partly due to their bling factor, the real cause of the outperformance is that demand is fast outstripping supply.
Heavy drinkers need not apply, though. Bubbly is worth more if you keep it corked.
Mr Seiichi Fukuyama, Asia vice-chairman of investment firm BlackRock, says: 'I bought quite a lot of 1990 Vintage Krug, which turned out to be a great one. Unfortunately, I have already consumed quite a lot.'
Got the stomach and liquidity to get started in champagne and wine investment?
The Sunday Times sought the help of oenophiles, bubbly investors, private bankers and fund managers to tell you what you should know.
What makes champagne 'investible'?
Champagne is rarer than wine, ages as well as wine and does not go flat if corked properly, says Mr David Coleman, director of Asian wine distributor Rubicon Reserve Wines and Wine I, a wine investment company.
'The demand and rising future demand for champagne and its currently limited supply are what make champagne more investible,' he says.
That said, it is not a major investment category, Ms Serena Sutcliffe, a famed wine expert and the head of Sotheby's international wine department, tells The Sunday Times. She says: 'It's a small niche market for real connoisseurs who love acquiring older vintages.'
So what makes a good champagne?
First, only champagnes produced in the region of Champagne in France gets the title of 'champagne', say experts. Sparkling wine made in other countries will be termed just that, 'sparkling wine'.
Next, consider the grapes.
White or Brut is a combination of Chardonnay, Pinot Noir or Pinot Meunier grapes. Rose is the same but with some still Pinot Noir added to the blend.
Blanc de Blanc is exclusively made from white Chardonnay grapes, and is also termed as the Golden Cuvee.
The latter is the most expensive, says Mr Coleman.
Last, vintage counts. So remember the names Cristal, Krug, Dom Perignon and the years 1985, 1989, 1990 and 1996.
These are the only champagnes that have appreciated in value beyond what those in the trade call the 'restaurant yield curve', says risk trader and champagne investor Gideon Kraus.
The restaurant yield curve is the consumption curve of wine in restaurants, which buy only wine of a certain maturity to serve customers.
What is the average rate of return of champagne investment?
Around 10 to 15 per cent or more, says Mr Coleman, adding that 'champagne outperforms normal wine depending on its pedigree - every stock does something different'.
If you have deep pockets, consider the Louis Roederer Cristal 1990, 2000 Methuselah (6l) edition. When it was released in 2000, each bottle was worth £4,000 (S$10,800); today, it is worth almost £14,000 a pop.
'What makes the value increase is that unlike looking at a picture, the quantities available become less over time. Vintages of the early 1980s and the 1990s are now all collectors' items because a lot of them would have already been drunk,' says Ms Sutcliffe.
How does one buy champagne or wine for investment?
One should buy wine in bottles and champagne in cases, since champagne is usually packed in sixes.
'A minimum is a case, usually a dozen,' says Mr Kraus, who adds that the difference is because with wines, one bottle of a very rare wine is itself very valuable.
As for valuation, it is easy to search past auction prices on the websites of auction houses such as Sotheby's.
The top prices fetched by champagne at recent Sotheby wine auctions in London include the Louis Roederer Cristal 1990, for between £8,500 and £13,225, some Dom Perignon from the 1970s for about £4,000 and magnums of Krug 1982 for about £3,500.
How does a wine fund work?
It works just like any other investment process. The client decides the sum which he wants to invest and/or the allocation of wines he is interested in purchasing.
The client gets an allocation, and the wine stock is monitored just as any other type of stock or asset. Wine funds act as the broker for the client's stock, finding buyers and sellers.
Basically, one does not actually own bottles, one owns shares.
The advantage behind this is ease of transmission. Investors may decide to have the shares held in a structure for the long term.
How much starting capital do you need and what returns can you get?
Mr Coleman says the initial sum of investment in Wine I can be 'as little as $5,000' while the return is 'some 10 to 15 per cent annually, sometimes higher'.
But for SG Trust (Asia)'s Ultimate Wine Fund, a minimum of US$300,000 per investor is recommended, says Mr Luke Peng, SG Trust's chief executive officer.
Net asset value returns of The Ultimate Wine Fund are in excess of 12 per cent per annum. For example, a 2005 vintage of Chateau Angelus has seen a 40 per cent increase in value since it was bought under the fund, says Mr Peng.
In the medium term, investors can expect between 8 and 10 per cent per annum returns on their investments.
If you prefer owning bottles, try the bespoke service collector programme at BNP Paribas. The minimum amount is 300,000 euros (S$639,000).
One of BNP Paribas' clients has enjoyed a return of more than 30 per cent within the last year, says Mr Eric Morin, deputy chief executive of BNP Paribas Private Bank.
What are the biggest risks involved in investing in wines or wine funds?
It is not something you can hold for the short term if you really want to see profit, or turn around to make a quick buck, says Mr Coleman.
Remember that wines, like stocks, are subjected to market forces and their prices are affected by demand and supply, as well as the perception of their quality as they mature, adds Mr Peng.
But, unlike stocks, there is not one international official benchmark. It is not a transparent market and prices can vary significantly from one source to another, says Mr Morin.
Ultimately, wine investment is something that can only appreciate as long as you have the, well, liquidity to remain with the investment.
Who is a likely candidate for a champagne or wine investor?
Experts observe that as the number of high net-worth individuals in India and China grows, so too does the interest in alternative lifestyle investments such as art, wine and luxury funds.
The Ultimate Wine Fund is worth in excess of US$40 million, says Mr Peng.
And while some are institutional investors, others are the 'New Asians' - university-educated, lifestyle-oriented and looking for a more lifestyle approach to investments.
Mr Coleman says the likely investor is the one who has the liquidity to buy the wine now to enjoy it in 10 years' time.
He adds that the number of wine investors in Singapore has grown 20 to 30 per cent per annum since Wine I started in 2006.
