In this paper, we explore the order book dynamics on the Liv-ex fine wine exchange. More specifically, by using the order book data, we examine new buy and sell order submissions and cancellations and various factors that may have an effect on the intensity of the trade process on both sides of the market. Our findings indicate the existence of significant relationships between the expected number of bids, offers, or order withdrawals and wine producers, contract type, bottle format, case size, weekday, and age. In particular, the wine age positively affects the buy and sell order submissions, but only up to a certain point, after which the number of orders starts to decrease. (JEL Classifications: D40, G12, G14, L66)

By analyzing more than 1,400 expert tasting notes, we assess the so-called gender profile of Bordeaux wines. We identify 329 gender-related wine descriptors, with a good balance between masculine and feminine descriptors. Some wines and vintages are described as more feminine than others, but no clear trend over time emerges. Our regression analysis further reveals that more feminine wines receive similar ratings and sell at similar prices as their more masculine counterparts, but they are perceived as having a much more limited aging potential.

In this paper, we use three different goodness-of-fit tests for log-normality in conjunction with kernel nonparametric density estimation methods to examine both the size distribution of California North Coast wineries over time and by age. Our kernel density estimates indicate that the size distribution of wineries has changed from positively skewed to bimodal. These results are inconsistent with those in other industries, but are consistent with recent empirical research in the wine industry, which finds that smaller firms are comprising a larger component of market share. In terms of the distribution of firm size by age, our results indicate that as wineries age, the size distribution of firms becomes less skewed and more bimodal, which is also inconsistent with the research on other industries which finds that as firms age, the size distribution becomes more normal. Our results indicate that unlike other industries, where entry is very difficult, small firms can enter the wine industry and survive. (JEL Classifications: L11, L22, L25)

Using a canonical model of signaling, we show that if the cost of organic viticulture is strictly increasing in the quality dimension, then the use of eco-labels as a signal for quality cannot possibly occur as an equilibrium outcome. Conditions for the existence of such a signalling equilibrium as well as some general properties regarding its configuration are herein characterized. (JEL Classification: L15, L66, M3)

Most of the previous research examined the demand for alcohol consumed at the off-trade (consumed at home). However, some consumers might prefer to consume alcohol on-trade (away from home) or switch between on-trade and off-trade consumption as a reaction to price or income change. We estimate the Quadratic Almost Ideal Demand System consisting of three broad alcohol categories, consumed on-trade and off-trade, to derive own-price, cross-price, and income elasticities. Selectivity due to the high censoring is treated, and special attention is paid to quality-adjusted price. Beer consumption is the most responsive to income as well as own price changes, while spirits are the least responsive. The own-price elasticity of wine is –0.66 and –1.00 at on-trade and off-trade, respectively. Beer is more price responsive, spirits are less price responsive, and consumption reacts weaker in the off-trade market. Own-price elasticities of demand range between –1.20 and –0.41 at the off-trade and between –1.51 and –0.63 at the on-trade alcohol market. Increasing the price of wine in one market decreases wine consumption in another one. Between the two markets, wine and spirits are complementary, and wine and beer are substitutes in both markets.

This paper uses data from the 2021 Swiss edition of the Gault&Millau food guide to analyze the probability with which restaurant owners decide to share their wine list with the public. This is an important question relating to the amount of information circulating in markets characterized by information asymmetry in the context of experience and credence goods. We find that restaurant owners are more willing to share wine lists with others if competition is limited or their wine list does not contain idiosyncratic information that competitors may use strategically. Interviews indicate the challenge for restaurants to balance the risk of sharing information with competitors and the opportunity to attract wine lovers by revealing an appealing wine list. We also show that this decision depends on cultural considerations.

As in the 17 years leading up to 2005, as shown in Gokcekus and Fargnoli (2007), there was no change in quality between 2006 and 2012. There was more variety and, perhaps most importantly, the average real price of wines on Wine Spectator's Top 100 List declined even faster. However, rather than wines from the New-New World and Non-incumbent countries, it was wines from Italy, Spain, and Portugal—New-Old World—that were primarily responsible for these beneficial changes (greater variety and more affordable wines in the Top 100 List) for American wine drinkers. (JEL Classifications: F120, F140, C200)

As the market for fine-wine investing matures, basic questions of portfolio strategy remain unexplored. I evaluate how adding fine wine from the superstar châteaux of Bordeaux's Right Bank might complement the traditional focus on the five first-growths of Bordeaux's Left Bank. Fundamentals for the Right Bank's superstars are attractive: they produce roughly an order of magnitude less, face different production conditions, and receive equally impressive critical reviews. However, they receive far less attention than their Left Bank counterparts. To examine returns over the long run, I hand-collected 10,885 prices for eight wines from an archive of 391 Sherry-Lehmann catalogs, a New York City retailer, which began at the end of Prohibition. Using these historical price records, I compare the real returns from investing in the five Premier Cru to a portfolio that adds three superstar châteaux from the Right Bank: Ausone, Cheval Blanc, and Petrus. I find the geometric-average annual return was 6.78% in real terms from 1938 to 2017 for the joint portfolio, less than 0.01% different, but with better risk-reward as measured by the Sharpe ratio. Additionally, I find the life cycle of aging is substantially different across the two Banks, which could provide further diversification benefits for the strategic investor.

The Texas wine industry of the United States has experienced substantial growth in recent years and yet is constrained by a significant lack of supply of Texas grown grapes. Using a real options framework we examine the role that wine grape price uncertainty plays on the financial decision to invest in vineyard operations in the state of Texas. Given reasonable estimates of required rates of returns, investment and operating costs for typical Texas vineyards, it is found that grape price uncertainty results in a delay in investment and subsequently a lack of grape supply. This delay in investment, known as hysteresis, is often found in situations involving large fixed investments combined with uncertain returns. In general the results indicate that average prices for Texas grapes would have to increase by 30 to 40 percent in order for a significant expansion in Texas vineyards to take place. (JEL Classification: Q120, Q140, G310, D920)

Much research shows that the ratings that judges assign to the same wine are uncertain. And while the ratings may be independent, research also shows that they are not identically distributed. Thus, an acute difficulty in ratings-related research and in calculating consensus among judges is that each rating is one observation drawn from a latent distribution that is wine- and judge-specific. What can be deduced about the shape of a latent distribution from one observation? A simple maximum entropy estimator is proposed to describe the distribution of a rating observed. The estimator can express the implications of zero, one, a few blind replicates, and many observations. Several tests of the estimator show that results are consistent with the results of experiments with blind replicates and that results are more accurate than results based on observed ratings alone.

In this article, medium-run cycles in wine production in South Africa are extracted and related to similar cycles in real GDP per capita during the same period. In addition to removing noise in the historical data, smoothing out short-run fluctuations also eliminates the short-run impact on agricultural production due to idiosyncratic shocks such as weather events, wars, and vine diseases. By isolating the medium-run cycles, it is possible to verify the timing and duration of each cycle, matching it with the historical narrative. In this regard, a 300-year annual data series of South African wine production explains the evolution not only of one of the largest agricultural sectors, but of the South African economy in general. (JEL Classifications: C10, N57, Q10).

The objective of this research is to devise a reliable and accurate scoring algorithm for awarding medals at a major U.S. wine competition that was described earlier by Hodgson (2008). The new algorithm is comprised of a two-tiered method that considers an award on the basis of a total medal score averaged across four judges per each evaluated wine; and a reliability algorithm that grades the degree of inter-judge reliability according to the following criteria: <70% = Poor or Unacceptable; 70%–79% = Fair; 80%–89% = Good; and 90%–100% = Excellent agreement (Cicchetti, 2001). The method has advantages over a previous scoring method that based its decision upon incorrect estimates of majority opinion; and unacceptable levels of inter-judge agreement. (JEL Classification: C1, L15, Q13)