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What Determines the Future Value of an Icon Wine? New Evidence from Australia

In: The International Economics of Wine

Author

Listed:
  • Danielle Wood
  • Kym Anderson

Abstract

To what extent can the future price of icon wines be anticipated from information available at the time of their initial sale by wineries? Using a seemingly unrelated regression model we show that weather variables and changes in production techniques, along with the age of the wine, have significant power in explaining the secondary market price variation across different vintages of each of three icon Australian red wines. The results have implications for winemakers in determining the prices they pay for grapes and charge for their wines, and for consumers/wine investors as a guide to the prospective quality of immature icon wines.

Suggested Citation

  • Danielle Wood & Kym Anderson, 2019. "What Determines the Future Value of an Icon Wine? New Evidence from Australia," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 11, pages 255-282, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811202094_0011
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    2. Omamuyovwi Gbejewoh & Saskia Keesstra & Erna Blancquaert, 2021. "The 3Ps (Profit, Planet, and People) of Sustainability amidst Climate Change: A South African Grape and Wine Perspective," Sustainability, MDPI, vol. 13(5), pages 1-23, March.
    3. Ashenfelter, Orley, 2010. "Predicting the Quality and Prices of Bordeaux Wine," Journal of Wine Economics, Cambridge University Press, vol. 5(1), pages 40-52, April.
    4. Mert Hakan Hekimoğlu & Burak Kazaz & Scott Webster, 2017. "Wine Analytics: Fine Wine Pricing and Selection Under Weather and Market Uncertainty," Manufacturing & Service Operations Management, INFORMS, vol. 19(2), pages 202-215, May.
    5. Amogh Prakasha Kumar & Richard Watt & Laura Meriluoto, 2021. "New Evidence on Using Expert Ratings to Proxy for Wine Quality in Climate Change Research," Working Papers in Economics 21/10, University of Canterbury, Department of Economics and Finance.
    6. Limor Dina Gonen & Tchai Tavor & Uriel Spiegel, 2021. "The Positive Effect of Aging in the Case of Wine," Mathematics, MDPI, vol. 9(9), pages 1-16, April.
    7. Mert Hakan Hekimoğlu & Burak Kazaz, 2020. "Analytics for Wine Futures: Realistic Prices," Production and Operations Management, Production and Operations Management Society, vol. 29(9), pages 2096-2120, September.
    8. Jacobo Núñez & David Martín‐Barroso & Francisco J. Velázquez, 2024. "The hedonic price model for the wine market: A systematic and comparative review of the literature," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 247-264, March.
    9. Samitas, Aristeidis & Papathanasiou, Spyros & Koutsokostas, Drosos & Kampouris, Elias, 2022. "Volatility spillovers between fine wine and major global markets during COVID-19: A portfolio hedging strategy for investors," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 629-642.
    10. Ashenfelter, Orley & Storchmann, Karl, 2014. "Wine and Climate Change," Working Papers 164854, American Association of Wine Economists.
    11. 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.
    12. Emanuela Tria & Francesco Di Cosola & Francesco Bozzo & Arturo Casieri & Ervin Zeka & Alessandro Petrontino, 2025. "Sustainability and Quality in Wine Pricing: Insights from the Primitivo E-Commerce Market," Sustainability, MDPI, vol. 17(18), pages 1-21, September.
    13. San Martin, Guillermo S. & Brümmer, Bernhard & Troncoso, Javier L., 2008. "Determinants Of Argentinean Wine Prices In The U.S. Market," Working Papers 37327, American Association of Wine Economists.
    14. repec:ags:ijag24:347275 is not listed on IDEAS
    15. Anderson, Kym, 2009. "Terroir rising? Varietal and quality distinctiveness of Australia’s wine regions," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48050, Australian Agricultural and Resource Economics Society.
    16. Fur, Eric Le, 2021. "Fine Wines in a Diversified Portfolio of Collectibles," 2021 Conference, August 17-31, 2021, Virtual 315852, International Association of Agricultural Economists.
    17. Storchmann, K., 2011. "Wine Economics: Emergence, Developments, Topics," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 50(3), September.

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    Keywords

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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