The price of wine

Elroy Dimson*, Peter L. Rousseau, Christophe Spaenjers

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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 chateaus 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. Crown Copyright (C) 2015 Published by Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)431-449
JournalJournal of Financial Economics
Volume118
Issue number2
DOIs
Publication statusPublished - Nov 2015
Externally publishedYes

Keywords

  • Wine prices
  • Alternative investments
  • Price indexes
  • Psychic return
  • Bubbles

Cite this

Dimson, E., Rousseau, P. L., & Spaenjers, C. (2015). The price of wine. Journal of Financial Economics, 118(2), 431-449. https://doi.org/10.1016/j.jfineco.2015.08.005
Dimson, Elroy ; Rousseau, Peter L. ; Spaenjers, Christophe. / The price of wine. In: Journal of Financial Economics. 2015 ; Vol. 118, No. 2. pp. 431-449.
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Dimson, E, Rousseau, PL & Spaenjers, C 2015, 'The price of wine', Journal of Financial Economics, vol. 118, no. 2, pp. 431-449. https://doi.org/10.1016/j.jfineco.2015.08.005

The price of wine. / Dimson, Elroy; Rousseau, Peter L.; Spaenjers, Christophe.

In: Journal of Financial Economics, Vol. 118, No. 2, 11.2015, p. 431-449.

Research output: Contribution to journalArticleScientificpeer-review

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AB - 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 chateaus 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. Crown Copyright (C) 2015 Published by Elsevier B.V. All rights reserved.

KW - Wine prices

KW - Alternative investments

KW - Price indexes

KW - Psychic return

KW - Bubbles

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Dimson E, Rousseau PL, Spaenjers C. The price of wine. Journal of Financial Economics. 2015 Nov;118(2):431-449. https://doi.org/10.1016/j.jfineco.2015.08.005