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Rethinking Wine Investment in the UK and Australia

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  • Fogarty, James Joseph

Abstract

This article presents three arguments as to why the value of wine as an investment good has typically been understated and argues that wine investment in the UK and Australia represents a value proposition. It is argued that general all vintage wine indexes understate the return the typical investor receives; that comparisons using pre-tax returns overstate the value of standard financial assets relative to wine; and that wine investment provides value in terms of allowing portfolio risk to be reduced.

Suggested Citation

  • Fogarty, James Joseph, 2007. "Rethinking Wine Investment in the UK and Australia," Working Papers 37312, American Association of Wine Economists.
    • Handle: RePEc:ags:aawewp:37312
    DOI: 10.22004/ag.econ.37312
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    File URL: https://ageconsearch.umn.edu/record/37312/files/AAWE_WP06.pdf
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    References listed on IDEAS

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    2. Ledoit, Olivier & Wolf, Michael, 2003. "Improved estimation of the covariance matrix of stock returns with an application to portfolio selection," Journal of Empirical Finance, Elsevier, vol. 10(5), pages 603-621, December.
    3. Burton, Benjamin J & Jacobsen, Joyce P, 2001. "The Rate of Return on Investment in Wine," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 337-350, July.
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    5. David R. Gallagher & Elvis Jarnecic, 2002. "The Performance of Active Australian Bond Funds," Australian Journal of Management, Australian School of Business, vol. 27(2), pages 163-185, December.
    6. Byron, R P & Ashenfelter, Orley, 1995. "Predicting the Quality of an Unborn Grange," The Economic Record, The Economic Society of Australia, vol. 71(212), pages 40-53, March.
    7. Krasker, William S, 1979. "The Rate of Return to Storing Wines," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1363-1367, December.
    8. Seth Armitage, 2004. "Returns after personal tax on UK equity and gilts, 1919-1998," The European Journal of Finance, Taylor & Francis Journals, vol. 10(1), pages 23-43.
    9. James Joseph Fogarty, 2006. "The return to Australian fine wine," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 33(4), pages 542-561, December.
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    Cited by:

    1. Bouri, Elie & Gupta, Rangan & Wong, Wing-Keung & Zhu, Zhenzhen, 2018. "Is wine a good choice for investment?," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 171-183.
    2. Eric Le Fur & Jean-François Outreville, 2019. "Fine wine returns: a review of the literature," Journal of Asset Management, Palgrave Macmillan, vol. 20(3), pages 196-214, May.
    3. Masset, Philippe & Weisskopf, Jean-Philippe & Faye, Benoît & Le Fur, Eric, 2016. "Red obsession: The ascent of fine wine in China," Emerging Markets Review, Elsevier, vol. 29(C), pages 200-225.
    4. Ormos, Mihály & Erdős, Péter, 2011. "Borok mint alternatív befektetési lehetőségek [Wines as an alternative investment]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 158-172.
    5. Maumbe, Blessing M. & Brown, Cheryl, 2013. "Entrepreneurial and Buyer-Driven Local Wine Supply Chains: Case Study of Acres of Land Winery in Kentucky," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 16(1), pages 1-23, February.
    6. Elie Bouri & Tsangyao Chang & Rangan Gupta, 2016. "Testing the Efficiency of the Wine Market using Unit Root Tests with Sharp and Smooth Breaks," Working Papers 201664, University of Pretoria, Department of Economics.
    7. Bargain, Olivier & Cardebat, Jean-Marie & Vignolles, Alexandra, 2016. "Crowdfunding in Wine," Working Papers 234638, American Association of Wine Economists.

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