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Notable Wine Market News
WINE VS. THE WEATHER:
CAN ECONOMETRICS PIP THE PALATE?
Thomas Philips Department of Finance and Risk Engineering NYU Tandon School of Engineering Brooklyn, NY 11201
and
David Parker First Growth Technologies Vancouver, WA 98663
Introduction and overview
Wine lovers have long known that the quality of their favorite libation is variable: it depends on, among other things, the geography and geology of the vineyard, the type of grape and how it is grown and harvested, and the weather in the year of its harvest.
This variation in quality is reflected in auction prices, with good vintages commanding significantly higher prices than bad vintages. In fact, when Napoleon III asked wine brokers to classify Bordeaux wines in advance of the Exposition Universelle de Paris in 1855, price was the primary mechanism by which wines were classified from first to fifth growths (crus).
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Market Slumps Overall, but Strength Since July Changes Outlook
October 19, 2023
The second calendar quarter of 2023 was characterized by mixed results, if not a slightly downward market, across the majority of Wine Market Journal indices, leading to uncertainty heading into the summer months. Results from Q3 provide optimism, as our market indicators – aside from Grand Cru Red Burgundy – revealed renewed strength in August and September after weak performances in July.
The Wine Market Journal is delighted to report its findings for Q3 after compiling 99,508 results from 189 live and internet events worldwide.
Broad Market Indices Our two broad market indices, WMJ150 and TOP500, fell slightly in Q2 after modest gains in Q1. In Q3, market instability contributed to downward pressure with our blue-chip WMJ150 index dropping -3.37%, and our broad-market TOP500 index toppling -3.09%. More than half of this decline occurred in July, with these indices declining only -1.40% and -1.13% in the August-September timeframe, all driven by the decline in Grand Cru Burgundy.
Market conditions for High-Value wines (HIVAL) have generally been flat this year-to-date. In Q3, however, we observed a sharper decline of -5.67%. Again, most this decline occurred in July, with this index declining only -1.26% in August-September, again mostly driven by the decline in Grand Cru Burgundy. This indicates that high-value wines are encountering buying softness compared to moderately priced wines.
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