The Price of Wine

Elroy Dimson

London Business School; University of Cambridge - Judge Business School

Peter L. Rousseau

Vanderbilt University - Department of Economics

Christophe Spaenjers

HEC Paris - Finance Department

October 20, 2014

HEC Paris Research Paper No. FIN-2013-1019

Using historical price records for Premiers Crus Bordeaux, we examine the impact of aging on wine prices and the long-term investment performance of fine wine. In line with the predictions of an illustrative model, young maturing wines from high-quality vintages provide the highest financial returns. Past maturity, famous châteaus deliver growing non-pecuniary benefits to their owners. Using an arithmetic repeat-sales regression over 1900–2012, we estimate a real financial return to wine investment (net of storage costs) of 4.1%, which exceeds bonds, art, and stamps. Returns to wine and equities are positively correlated. Finally, we find evidence of in-sample return predictability.

Number of Pages in PDF File: 51

Keywords: wine prices; alternative investments; price indexes; psychic return; bubbles

JEL Classification: C43, D44, G11, G12, Q11, Z11

working papers series

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Date posted: September 7, 2013 ; Last revised: October 21, 2014

Suggested Citation

Dimson, Elroy and Rousseau, Peter L. and Spaenjers, Christophe, The Price of Wine (October 20, 2014). HEC Paris Research Paper No. FIN-2013-1019. Available at SSRN: http://ssrn.com/abstract=2321573 or http://dx.doi.org/10.2139/ssrn.2321573

Contact Information

Elroy Dimson
London Business School ( email )
Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
44 20 7000 7000 (Phone)
44 700 607 7390 (Fax)
HOME PAGE: http://www.london.edu/faculty/edimson
University of Cambridge - Judge Business School
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
Peter L. Rousseau
Vanderbilt University - Department of Economics ( email )
Box 1819 Station B
Nashville, TN 37235
United States
615-343-2466 (Phone)
615-343-8495 (Fax)
HOME PAGE: http://www.vanderbilt.edu/econ/faculty/rousseau.html
Christophe Spaenjers (Contact Author)
HEC Paris (Groupe HEC) - Finance Department ( email )
1 rue de la Liberation
Jouy-en-Josas Cedex, 78351

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