Our study is the first to examine the pricing of wines produced in the Province of Ontario, Canada. Using a sample of 337 Ontario dry red wines, we construct both parametric and semiparametric hedonic pricing models. We find that our semiparametric model yields a superior fit to its parametric counterpart. We also estimate separate hedonic price functions for higher and lower priced wines which indicate that the term “Reserve” on the label and the vintage year information are important for consumers of lower priced wines whereas these attributes are not important for consumers of higher priced wines. Unlike other studies, we include both environmental and quantity variables resulting in improved fits. Thus, our results suggest that future studies should consider semiparametric hedonic pricing models and include both the quantity and environmental variables in the analysis. Finally, our results indicate that Canadian consumers for the most part look for the same attributes in wine as their counterparts in other countries do but they also look at the viticulture techniques used in the cultivation of the grapes. La présente étude est la première du genre à se pencher sur l’établissement des prix des vins produits dans la province d’Ontario, au Canada. À partir d’un échantillon de 337 vins rouges secs ontariens, nous avons bâti des modèles paramétriques et semi‐paramétriques de fixation hédoniste des prix. Nos résultats ont montré que notre modèle semi‐paramétrique offrait une adéquation statistique supérieure à celle de notre modèle paramétrique. Nous avons également estimé des fonctions de prix hédonistes distinctes pour les vins chers et les vins abordables et selon les résultats, l’inscription du mot « Réserve » et du millésime sur les étiquettes revêt davantage d’importance pour les consommateurs de vins abordables que pour les consommateurs de vins chers. Contrairement à d’autres études, nous avons inclus des variables environnementales et quantitatives qui ont amélioré l’adéquation statistique. Nos résultats autorisent à penser que les futures études devraient envisager l’utilisation de modèles semi‐paramétriques de fixation hédoniste des prix et inclure des données environnementales et quantitatives. D’après nos résultats, la plupart des consommateurs de vin au Canada recherchent les mêmes attributs que les consommateurs de vin d’autres pays, en plus de s’intéresser aux techniques viticoles utilisées par les vignerons.

No abstract

The influence of the wine rater Robert Parker Jr. on Bordeaux wine extended over a 40-year period, with a particular impact on en primeur wine prices. Consequently, his announcement in 2015 that he would no longer rate en primeur wines creates some uncertainty for many chateaux that have purposely designed their production with his palate and preferences in mind. Although the wine rater Neal Martin was named by Parker to be his successor in terms of en primeur wine ratings, there are several other wine critics who have consistently rated en primeur wines over several years. Consequently, we employ copula function analysis to explore which wine critics’ ratings exhibit the closest linear and nonlinear relationship, for right bank en primeur wines, with those of Parker. The study employs data over the period of 2005 through 2012, during which time several wine critics, including Neal Martin for the period of 2010–2012, rated en primeur wines alongside Parker. Our results indicate that of the wine critics that continue to rate en primeur wines, the ratings of James Suckling exhibit the highest rank correlation and also bivariate upper tail dependence, identified through copula function analysis, with those of Parker. (JEL Classifications: C19, G13, L66)

This paper explores the nonlinearities of the bivariate distribution of Bordeaux en primeur, or wine futures, prices and Parker “barrel ratings” for the period of 2004 through 2010. In particular, copula-function methodology is introduced and employed to examine the nature of the bivariate distribution. Our results show a significant nonlinear relationship between Parker ratings and wine prices, characterized by significant positive tail dependence and higher correlation between high ratings and high prices. Marginal distributions for Parker ratings and wine prices are then identified and Monte Carlo simulation is employed to operationalize the relationship for risk-management purposes. (JEL Classifications: C19, G13, L66)

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) *The authors would like to thank the participants of the Bacchus Goes Green: 4th Interdisciplinary and International Wine Conference, for their helpful comments and suggestions and those of an anonymous referee. All remaining errors are solely the responsibility of the authors.