THE NEW BORDEAUX: SEARCHING FOR A NEW CLASS OF INVESTMENT GRADE WINE

Open Access
Author:
Goodall, Edward T
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • J. Randall Woolridge, Thesis Supervisor
  • Brian Davis, Honors Advisor
Keywords:
  • Wine
  • Investments
  • France
  • Bordeaux
  • Return
  • Risk
Abstract:
This paper seeks to examine whether there are geographic regions that rival Bordeaux, France when it comes to investment-grade wine. Bordeaux is widely regarded as the top region in the world for investment grade wine, as an extremely high percentage of all wine purchased for investment originates in vineyards of the region. This study focuses on four factors of the wines: historic price appreciation, liquidity, terroir, and taste ratings. Wines from six different regions of the world, including Bordeaux, were examined according to these qualities via either quantitative or qualitative means. Historic auction data was pulled from an online database in order to calculate the average annual return for each vintage being sold in an auction, and a similar database was used to compile average tasting scores from the world’s top critics in order to analyze the average score of each region. Terroir and liquidity were examined from a qualitative standpoint, with the study highlighting the unique characteristics that each region possesses with regards to these two attributes. It was concluded that in the current day and age, none of the five wine regions have investment characteristics that rival those of Bordeaux. Bordeaux has the highest average historic price appreciation of any region, while boasting a strong average tasting score from top critics. Combined with a terroir that encompasses the heavy tradition and an environment conducive for growing grapes, Bordeaux wines have unparalleled investment attributes that make it the best region in the world for wine investment. However, with some of these investment factors being dynamic, rather than static, other regions in the study do have the potential to emerge as more ideal investment regions for wine.