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Home
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Working Papers
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Predicting the Quality and Prices of Bordeaux Wines

Working Paper No. 4

Published: 2007
Category:
Unkategorized

Predicting the Quality and Prices of Bordeaux Wines

Orley Ashenfelter
Full Text PDF
Abstract
Bordeaux is a region of France and red Bordeaux wines have been produced in the same place, and in much the same way, for hundreds of years. Yet, there are differences in quality and price from year to year that can sometimes be quite large. Until very recently, these quality differences have been considered a great mystery. In this paper I show that the factors that affect fluctuations in wine vintage quality can be explained in a simple quantitative way. In short, I show that a simple statistical analysis predicts the quality of a vintage, and hence its price, from the weather during its growing season. Along the way, I show how the aging of wine affects its price, and under what circumstances it pays to buy wines before they are at their best for drinking. Since this procedure for predicting wine quality has now been in use for over a decade, I also provide an appraisal of its successes (and failures), and a discussion of the role this information has played in the evolution of the wine trade. When a red Bordeaux wine is young it is astringent and most people will find it unpleasant to drink. As a wine ages it loses its astringency. Because Bordeaux wines taste better when they are older, there is an obvious incentive to store them until they have come of age. As a result, there is an active market for both younger and older wines. Traditionally, what has not been so obvious is exactly how good a wine will be when it matures. This ambiguity leaves room for speculation, and as a result, the price of the wine when it is first offered in its youth will often not match the price of the wine when it matures. The goal in this paper is to study how the price of mature wines may be predicted from data available when the grapes are picked, and then to explore the effect that this has on the initial and final prices of the wines.

Submission

Please send your papers as PDF files to the editor, Victor Ginsburgh, at vginsbur@ulb.ac.be
Papers will be quickly reviewed, prior to potential posting on the website. Decision will be to post or not, possibly with short comments, but without referee reports. The decision will be based primarily on the suitability of the paper’s topic to the aims of the Association.
Such decisions are independent of publication decisions for the Journal of Wine Economics.

Working Paper publication requires that at least one author
is a regular member of AAWE.

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