How weather and climate impact the price of wine
The wine industry is a large and complex machine, containing a delicate ecosystem that balances the contributions of a multitude of actors, from the growers all the way to the sommelier – who just conveniently suggested you buy the most expensive wine on the menu. In short, this industry is a little more complicated than just making wine for consumers to buy, which is why wine distributors look to researchers such as M. Hakan Hekimoglu of Rensselaer Polytechnic Institute (RPI) to determine how to price their wines.
Hekimoglu is an assistant professor of supply chain management at the Lally School of Management at RPI, and his publications on wine analytics are revered as highly influential by wine distributors. Along with Burak Kazaz of the Whitman School of Management at Syracuse University, he recently published a report outlining a new approach to predicting the release prices of Bordeaux wines (known as En Primeur prices). This approach uses weather information and the Liv-ex 100 index, and predicts a slight price increase this year for the 2017 vintage wines.
“Our goal in this report is to provide insights regarding the impact of weather and market fluctuations in the release prices of fine wines and explain how analytical models can be used to determine and/or predict those prices,” says Hekimoglu.
The authors believe that this research will increase transparency in price dynamics, and help winemakers make important decisions on determining what prices to charge. This report should also assist buyers in knowing whether or not the En Primeur prices are appropriate.
The report used data from the London International Vintners Exchange (Liv-ex), which is an international exchange for fine wine trade based in London. It predicts a 2.02 percent increase for the First Growth and a 1.47 percent increase for the Left Bank winemakers in Bordeaux — who are undoubtedly happy with this news. So if you’re looking to invest in some Bordeaux wines, it might make sense to do it sooner rather than later.