A new report published by researchers M. Hakan Hekimoğlu of Rensselaer Polytechnic Institute and Burak Kazaz of Syracuse University’s Whitman School of Management outlines a new approach to predicting wine release prices using weather information and the Liv-ex 100 index. According to their models, we can expect slight price rises this year on average.
Hakan Hekimoğlu, Ph.D., is an assistant professor of supply chain management at the Lally School of Management at Rensselaer Polytechnic Institute. His publications on wine analytics are considered to be highly influential by wine distributors.
Burak Kazaz, Ph.D., is the Steven R. Becker Professor of Supply Chain Management and the Laura J. and L. Douglas Meredith Professor of Teaching Excellence, and serves as the Whitman Research Fellow at the Whitman School of Management at Syracuse University.
Economists have long examined the impact of weather on the price of aged wines. Princeton economist Professor Orley Ashenfelter and his co-authors provided remarkable insights regarding the impact of weather on aged Bordeaux wines in his canonical publications in Ashenfelter et al. (1995) and Ashenfelter (2008). These scholars, as well as authors of similar publications, admit that their studies fail to explain and/or predict young wine prices using weather information.
“Our goal in this report is to provide insights regarding the impact of weather and market fluctuations in young wine prices and explain how analytical models can be used to determine and/or predict the release prices,” said Hekimoğlu.
Working with data from the London International Vintners Exchange (Liv-ex), an exchange for investment wine based in London, the report, titled “Wine Analytics: The Impact of Weather and Liv-ex 100 Index on En Primeur Prices,” predicts a 2.02 percent rise for the first growths and a 1.47 percent increase for left bank producers.
The researchers are planning to continue their research by studying growers in California and in New York. Their work could have implications for wine investors in the U.S.
To read a blog post by the authors, go to https://www.liv-ex.com/2018/04/new-study-estimates-en-primeur-prices/. To view the full report, go to https://www.liv-ex.com/wp-content/uploads/2018/04/Liv-ex-report-20180420.pdf.