Predicting the quality and prices of Bordeaux wine

Abstract: Bordeaux wines have been made in much the same way for centuries. This paper shows that the variability in the quality and prices of Bordeaux vintages is predicted by the weather that created the grapes. The fitted price equation provides a measure of the real rate of return to holding wines (about 3 % per annum), and implies far greater variability in the early or “en primeur ” prices of the wines than is observed. The analysis provides a useful basis for assessing arket inefficiency, the effect of climate change on the wine industry, and the role of expert opinion in the determination of wine prices