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

  • Anderson, Kym
  • Wood, Danielle

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 hedonic 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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5044.

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Date of creation: May 2005
Date of revision:
Handle: RePEc:cpr:ceprdp:5044
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  1. Landon, Stuart & Smith, Constance, 1998. "Quality expectations, reputation, and price," MPRA Paper 9774, University Library of Munich, Germany.
  2. A. Golan & H. Shalit, 1993. "Wine Quality Differentials In Hedonic Grape Pricing," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(2), pages 311-321.
  3. Victor Ginsburgh & Olivier Gergaud, 2008. "Endowments, production technologies and the quality of wines in Bordeaux: does terroir matter?," ULB Institutional Repository 2013/13398, ULB -- Universite Libre de Bruxelles.
  4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  5. 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.
  6. Arguea, Nestor M. & Hsiao, Cheng, 1993. "Econometric issues of estimating hedonic price functions : With an application to the U.S. market for automobiles," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 243-267, March.
  7. Combris, Pierre & Lecocq, Sebastien & Visser, Michael, 1997. "Estimation for a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?," Economic Journal, Royal Economic Society, vol. 107(441), pages 390-402, March.
  8. G¸nter Schamel & Kym Anderson, 2003. "Wine Quality and Varietal, Regional and Winery Reputations: Hedonic Prices for Australia and New Zealand," The Economic Record, The Economic Society of Australia, vol. 79(246), pages 357-369, 09.
  9. Oczkowski, Edward, 2001. "Hedonic Wine Price Functions and Measurement Error," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 374-82, December.
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