The Price of Wine
London Business School; University of Cambridge - Judge Business School
Peter L. Rousseau
Vanderbilt University - Department of Economics
HEC Paris - Finance Department
January 22, 2014
HEC Paris Research Paper No. FIN-2013-1019
Using long-term price records for Premiers Crus Bordeaux, we examine the impact of aging on wine prices and the long-term investment performance of fine wine. As well as time effects, our model identifies the impacts of age, château, vintage, and transaction type. Young high-quality wines, that are still maturing, provide the highest financial return, while famous wines deliver a quantifiable non-pecuniary benefit to owners. Using an arithmetic repeat-sales regression over 1900-2012, we estimate a real financial return to wine investment of 4.1%, which exceeds government bonds, art, and investment-quality stamps. Wine appreciation is positively correlated with stock market returns.
Number of Pages in PDF File: 45
Keywords: alternative investments; luxury goods; price indexes; psychic return; wine
JEL Classification: C43, D44, G11, G12, Q11, Z11working papers series
Date posted: September 7, 2013 ; Last revised: January 22, 2014
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