Hostname: page-component-78c5997874-lj6df Total loading time: 0 Render date: 2024-11-13T01:47:01.551Z Has data issue: false hasContentIssue false
  • English
  • Français

Wine Economics*

Published online by Cambridge University Press:  31 July 2012

Karl Storchmann
Karl Storchmann
Affiliation:
Economics Department, New York University, 19 West Fourth Street, New York, NY 10012. email: karl.storchmann@nyu.edu.
Get access Rights & Permissions [Opens in a new window]

Abstract

Fine wine has a few characteristics that differentiate it from other agricultural commodities and beverages, rendering it an interesting topic for economists. Fine wine can regularly fetch bottle prices that exceed several thousand dollars. It can be stored a long time and can increase in value with age. Fine-wine quality and prices are extraordinarily sensitive to fluctuations in the weather the year in which the grapes were grown. Wine is an experience good, that is, its quality cannot be ascertained before consumption. As a result, consumers often rely on “expert opinion” regarding quality and maturation prospects. This article describes the emergence and the unparalleled rise of wine economics from the 1980s to the present and sheds light on its three main topics: finance, climate change, and the role of expert opinion. (JEL Classification: Q1, G11, Q54, L15)

Type
Research Article
Information
Journal of Wine Economics , Volume 7 , Issue 1 , May 2012 , pp. 1 - 33
Copyright
Copyright © American Association of Wine Economists 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Amerine, M., and Winkler, M. (1944). Composition and quality of musts and wines of California grapes. Hilgardia, 15, 493–675.CrossRefGoogle Scholar
Ashenfelter, O. (1986). Why we do it. Liquid Assets, 1, 1–7.Google Scholar
Ashenfelter, O. (1987a). Fine wine trading tips: California Cabernet wine-aging mutual find. Liquid Assets, 2, 11–14.Google Scholar
Ashenfelter, O. (1987b). How to sell your wines easily and legally in the U.S. (Why didn't anybody tell us this before?). Liquid Assets, 3, 1–7.Google Scholar
Ashenfelter, O. (1987c). Objective vintage charts: Red Bordeaux and California Cabernet Sauvignon. Liquid Assets, 3, 8–13.Google Scholar
Ashenfelter, O. (1987d). Vintage advice: Is 1986 another outstanding Bordeaux vintage? (No! And you heard it here first). Liquid Assets, 2, 1–7.Google Scholar
Ashenfelter, O. (1988). A new objective ranking of the chateaux of Bordeaux (Based on auction prices, of course!). Liquid Assets, 5, 1–6.Google Scholar
Ashenfelter, O. (1990). Just how good are wine writers’ predictions? (Surprise! The recent vintages are rated highest!). Liquid Assets, 7, 1–9.Google Scholar
Ashenfelter, O. (1991). Restaurants: New York and suburbs, things are changing. (The best restaurants where you can bring your own wine—No. 2 of a series). Liquid Assets, 8, 1–11.Google Scholar
Ashenfelter, O. (1992). Critiquing the wine critics: Broadbent versus Parker (A review of two most influential books on Bordeaux wines). Liquid Assets, 9, 1–11.Google Scholar
Ashenfelter, O. (1997). A new objective ranking of the chateaux of Bordeaux. Liquid Assets, 13, 1–6.Google Scholar
Ashenfelter, O. (2008). Predicting the prices and quality of Bordeaux wines. Economic Journal, 118, 40–53.CrossRefGoogle Scholar
Ashenfelter, O., and Jones, G. (2012). The demand for expert opinion: Bordeaux wine. Journal of Wine Economics, forthcoming.Google Scholar
Ashenfelter, O., and Storchmann, K. (2010a). Measuring the economic effect of global warming on viticulture using auction, retail and wholesale prices. Review of Industrial Organization, 37, 51–64.CrossRefGoogle Scholar
Ashenfelter, O., and Storchmann, K. (2010b). Using a hedonic model of solar radiation to assess the economic effect of climate change: the case of Mosel valley vineyards. Review of Economics and Statistics, 92(2), 333–349.CrossRefGoogle Scholar
Ashenfelter, O., Ashmore, D., and Lalonde, R. (1995). Bordeaux wine vintage quality and the weather. Chance, 8, 7–13.CrossRefGoogle Scholar
Ashenfelter, O., Goldstein, R., and Riddell, C. (2011). Do expert ratings measure quality? The case of restaurant wine lists. Paper presented at the 4th Annual AAWE Conference at the University of California at Davis, June 2010.Google Scholar
Association of Magazine Media. (2011). Facts and figures. http://magazine.org/consumer_marketing/circ_trends/index.aspx (accessed June 20, 2011).Google Scholar
Ayres, I. (2007). Super Crunchers: Why thinking–by–numbers is the new way to be smart. New York: Bantam Books.Google Scholar
Beck, O. (1869). Der Weinbau an der Mosel und Saar. Nebst einer vom königlichen Katasterinspekteur Steuerrath Clotten zu Trier angefertigten Weinbaukarte. Trier: Selbstverlag der königlichen Regierung zu Trier.Google Scholar
Brázdil, R., Pfister, C., Wanner, H., Storch, H. von., and Luterbacher, J. (2005). Historical climatology in Europe: state of the art. Climatic Change, 70(3), 363–430.CrossRefGoogle Scholar
Burton, B.J., and Jacobsen, J.P. (2001). The rate of return on investment in wine. Economic Inquiry, 39, 337–350.CrossRefGoogle Scholar
Byron, R.P., and Ashenfelter, O. (1995). Predicting the quality of an unborn Grange. Economic Record, 71, 40–53.CrossRefGoogle Scholar
Chaikind, S. (2010). The role of viticulture and enology in the development of economic thought. How wine contributed to modern economic theory. American Association of Wine Economists AAWE, Working Paper, No. 74.Google Scholar
Chevet, J.-M., Lecocq, S., and Visser, M. (2011). Climate, grapevine phenology, wine production, and prices: Pauillac (1800–2009). American Economic Review: Papers and Proceedings, 101, 142–146.CrossRefGoogle Scholar
Costanigro, M., McCluskey, J.J., and Goemans, C. (2010). The economics of nested names: name specificity, reputations, and price premia. American Journal of Agricultural Economics, 92, 1339–1350.CrossRefGoogle Scholar
Cross, R., Plantinga, A.J., and Stavins, R.N. (2011). What is the value of terroir? American Economic Review: Papers and Proceedings, 101, 152–156.CrossRefGoogle Scholar
Di Vittorio, A., and Ginsburgh, V. (1996). Pricing red wines of Medoc vintages from 1949 to 1989 at Christie's auctions. Journal de la Société Statistique de Paris, 137, 19–49.Google Scholar
European Commission (2009). Regions 2020. The climate change challenge for European regions. Directorate General for Regional Policy. Background document to commission staff working document SEC (2008) 2868 Final, Brussels: European Commission.Google Scholar
Federal Reserve Bank (2011). Selected interest rates: historical data. www.federalreserve.gov/releases/h15/data.htm (accessed June 20, 2011).Google Scholar
Fogarty, J.J. (2010). Wine investment and portfolio diversification gains. Journal of Wine Economics, 5(1), 119–131.CrossRefGoogle Scholar
Frankfurt, H.G. (2005). On Bullshit. Princeton: Princeton University Press.CrossRefGoogle Scholar
Frick, B., Eggert, A., and Hogreve, A. (2011). The returns to reputation: empirical evidence from German wine auctions. Paper presented at the 4th Annual AAWE Conference at the University of California at Davis, June 2010.Google Scholar
Garcia de Cortázar-Atauri, I., Daux, V., Garnier, E., Yiou, P., Viovy, N., Seguin, B., Boursiquot, J.M., Parker, A.K., Van Leeuwen, C., and Chuine, I. (2010). Climate reconstructions from grape harvest dates: Methodology and uncertainties. The Holocene, 20, 599–608.CrossRefGoogle Scholar
Gladstones, J. (1992). Viticulture and environment. Adelaide, South Australia: Winetitles.Google Scholar
Goldberg, H.G. (1987). Wine talk. New York Times, October 28.Google Scholar
Gokcekus, O., and Nottebaum, D. (2012). Public finance, special interests, and direct wine shipping laws in the United States. Journal of Wine Economics, 7(1), this issue.CrossRefGoogle Scholar
Goldstein, R. (2008). What does it take to get a Wine Spectator Award of Excellence? Blindtaste, August 15. http://blindtaste.com/2008/08/15/what-does-it-take-to-get-a-wine-spectator-award-of-excellence/ (accessed June 20, 2011).Google Scholar
Hadj Ali, H., and Nauges, C. (2007). Reputation and quality effects in the pricing of experience goods: the case of en primeur wine. American Journal of Agricultural Economics, 89, 91–103.Google Scholar
Hadj Ali, H., Lecocq, S., and Visser, M. (2008). The impact of gurus: Parker grades and en primeur wine prices. Economic Journal, 118, F158–173.Google Scholar
Haeger, J.W., and Storchmann, K. (2006). Prices of American pinot noir wines: climate, craftsmanship, critics. Agricultural Economics, 35, 67–78.CrossRefGoogle Scholar
Hodgson, R.T. (2008). An examination of judge reliability at a major U.S. wine competition. Journal of Wine Economics, 3, 105–113.CrossRefGoogle Scholar
Hodgson, R.T. (2009). An analysis of the concordance among 13 U.S. wine competitions. Journal of Wine Economics, 4, 1–9.CrossRefGoogle Scholar
Hotelling, H. (1931). The economics of exhaustible resources. Journal of Political Economy, 39, 137–175.CrossRefGoogle Scholar
Intergovernmental Panel on Climate Change (IPCC) (2007). Climatic change 2007: impacts, adaptation and vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, edited by M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden, and C.E. Hanson. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Jaeger, D.A., and Storchmann, K. (2011). Wine retail price dispersion in the United States: searching for expensive wines? American Economic Review: Papers and Proceedings, 101(3), 136–141.CrossRefGoogle Scholar
Jaeger, E. (1981). To save or savor: the rate of return to storing wine. Journal of Political Economy, 89(3), 584–592.CrossRefGoogle Scholar
Jones, G.V., and Storchmann, K. (2001). Wine market prices and investment under uncertainty: An econometric model for Bordeaux crus classés. Agricultural Economics, 26(2), 115–133.CrossRefGoogle Scholar
Jones, G.V., White, M.A., Cooper, O.R., and Storchmann, K. (2005). Climate change and global wine quality. Climatic Change, 73(3), 319–343.CrossRefGoogle Scholar
Jovanovic, B. (2008). Bubbles in the prices of exhaustible resources. American Association of Wine Economists, AAWE Working Paper No. 32.Google Scholar
Koninklijk Nederlands Meteorologisch Instituut (2011). KNMI Climate Explorer. De Bilt, Netherlands. http://climexp.knmi.nl/start.cgi?someone@somewhere/ (accessed June 20, 2011).Google Scholar
Krasker, W.S. (1979). The rate of return to storing wines. Journal of Political Economy, 87(6), 1363–1367.CrossRefGoogle Scholar
Landon, S., and Smith, C.E. (1998). Quality expectations, reputation, and price. Southern Economic Journal, 64(3), 628–647.Google Scholar
Lawless, H. (1984). Flavor description of white wine by “expert” and nonexpert wine consumers. Journal of Food Science, 49(1), 120–123.CrossRefGoogle Scholar
Lecocq, S., and Visser, M. (2006). Spatial variations in weather conditions and wine prices in Bordeaux. Journal of Wine Economics, 1(2), 114–124.CrossRefGoogle Scholar
Lehrer, A. (1975). Talking about wine. Language, 51(4), 901–923.CrossRefGoogle Scholar
Liv-ex (2012). www.liv–ex.com (accessed April 13, 2012).Google Scholar
Marx, K. (1843). Rechtfertigung des ++–Korrespondenten von der Mosel. Rheinische Zeitung, No. 15, 17, 18, 19 and 20 (of January 15, 17, 18, 19, and 20, 1843). (English translation: Justification of the Correspondent from the Mosel. www.marxists.org/archive/marx/works/1843/01/15.htm (accessed June 20, 2011).Google Scholar
Masset, P., and Henderson, C. (2010). Wine as an alternative asset class. Journal of Wine Economics, 5(1), 87–118.CrossRefGoogle Scholar
Masset, P., and Weisskopf, J.-P. (2010). Raise your glass: wine investment and the financial crisis. American Association of Wine Economists, AAWE Working Paper No. 57.CrossRefGoogle Scholar
Parker, R. (2011). A glossary of wine terms. https://www.erobertparker.com/info/glossary.asp (accessed June 20, 2011).Google Scholar
Passell, P. (1990a). Economic scene; more great wine before its time. New York Times, December 12.Google Scholar
Passell, P. (1990b). Wine equation puts some noses out of joint. New York Times, March 4.Google Scholar
Pitcher, S. (2003). A critical survey of major wine review publications. www.winepros.org/aftertaste/pub-survey.htm (accessed June 20, 2011).Google Scholar
Pliny the Elder (77/2007). Pliny's Natural History in Thirty–Seven Books. Whitefish, MT: Kessinger.Google Scholar
Prial, F. (1990). Wine talk. New York Times, May 23.Google Scholar
Quandt, R.E. (2007). On wine bullshit: some new software. Journal of Wine Economics, 2(2), 129–135.CrossRefGoogle Scholar
Ramirez, C. (2010). Do tasting notes add value? Evidence from Napa wines. Journal of Wine Economics, 5(1), 143–163.CrossRefGoogle Scholar
Reuter, J. (2009). Does advertising bias product reviews? An analysis of wine ratings. Journal of Wine Economics, 4(2), 125–151.CrossRefGoogle Scholar
Rhee, J., and Ross, B. (2010). Terror group gets ‘A’ rating from Better Business Bureau. ABC News, November 12. http://abcnews.go.com/Blotter/business–bureau–best–ratings–money–buy/story?id=12123843/ (accessed June 20, 2011).Google Scholar
Riekhof, G.M., and Sykuta, M.E. (2005). Politics, economics, and the regulation of direct interstate shipment in the wine industry. American Journal of Agricultural Economics, 87(2), 439–452.CrossRefGoogle Scholar
Roberts, P.W., Khaire, M., and Rider, C. (2011). Isolating the symbolic implications of employee mobility: price increases after hiring winemakers from prominent wineries. American Economic Review: Papers and Proceedings, 101(3), 147–151.CrossRefGoogle Scholar
Robinson, J. (2006). The Oxford Companion to Wine. 2nd ed. Oxford: Oxford University Press.Google Scholar
Sanning, L.W., Shaffer, S., and Sharratt, J.M. (2008). Bordeaux wine as a financial investment. Journal of Wine Economics, 3(1), 51–71.CrossRefGoogle Scholar
Schamel, G. (2009). Dynamic analysis of brand and regional reputation: the case of wine. Journal of Wine Economics, 4(1), 62–80.CrossRefGoogle Scholar
Schnabel, H. and Storchmann, K. (2010). Prices as quality signals: evidence from the wine market. Journal of Agricultural and Food Industrial Organization 8, Article 2.CrossRefGoogle Scholar
Sharma, R. (2010). Stock market reaction to court decisions related to differential treatment of in–state and out–of–state internet wine sales. Journal of Wine Economics, 5(1), 69–86.CrossRefGoogle Scholar
Sokolin, W. (1998). The Complete Wine Investor. Collecting Wine for Pleasure and Profit. Rocklin, CA: Prima.Google Scholar
Storchmann, K. (2005). English weather and Rhine wine quality: An ordered probit model. Journal of Wine Research, 16(2), 105–119.CrossRefGoogle Scholar
Storchmann, K. (2011). Wine Economics: emergence, developments, topics. Agrekon, 50(3), 1–28.CrossRefGoogle Scholar
Unwin, T. (1991). Wine and the Vine. A Historical Geography of Viticulture and the Wine Trade. London and New York: Routledge.Google Scholar
Weil, R. (1993). Do not invest in wine, at least in the U.S., unless you plan to drink it, and maybe not even then. Or: as an investment wine is a no corker. Mimeo, University of Chicago.Google Scholar
Weil, R. (2007). Debunking critics’ wine words: can amateurs distinguish the smell of asphalt from the taste of cherries? Journal of Wine Economics, 2(2), 136–144.CrossRefGoogle Scholar
Wiseman, A.E., and Ellig, J. (2004). Market and nonmarket barriers to internet wine sales: the case of Virginia. Business and Politics, 6(2), Article 4.CrossRefGoogle Scholar
Wiseman, A.E., and Ellig, J. (2007). The politics of wine: trade barriers, interest groups, and the Commerce Clause. Journal of Politics, 69(3), 859–875.CrossRefGoogle Scholar
Wood, D., and Anderson, K. (2006). What determines the future value of an icon wine? New evidence from Australia. Journal of Wine Economics, 1(2), 141–161.CrossRefGoogle Scholar