50 Pages Posted: 7 Sep 2013 Last revised: 19 Mar 2016
Date Written: June 4, 2015
Using historical price records for Bordeaux Premiers Crus, 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.
Keywords: wine prices; alternative investments; price indexes; psychic return; bubbles
JEL Classification: C43, D44, G11, G12, Q11, Z11
Suggested Citation: Suggested Citation
Dimson, Elroy and Rousseau, Peter L. and Spaenjers, Christophe, The Price of Wine (June 4, 2015). Journal of Financial Economics (JFE), Vol. 118, No. 2, 2015, pages 431–449. Available at SSRN: https://ssrn.com/abstract=2321573 or http://dx.doi.org/10.2139/ssrn.2321573
By Andrew Ang