Working Paper: CEPR ID: DP5044
Authors: Kym Anderson; Danielle Wood
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 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.
Keywords: Hedonic pricing model; Investment under certainty; Wine quality
JEL Codes: C23; D12; D44; D80; G12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| age of the wine (L66) | price (D41) |
| average daily temperature during the growing season (Q10) | price (D41) |
| rainfall prior to harvest (Q54) | price (D41) |
| changes in winemaking techniques (L66) | price (D41) |