Wine Investing : Identification of macro and microeconomic factors impacting fine wines return

Details

Supervisors

Knaepen, Denis

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

This thesis aims to identify the macro and microeconomic drivers behind the fluctuations of fine wine returns. The first part of the research focuses on the influence of the overall economic conditions on the Liv-Ex 100 Index, representing the benchmark for the fine wine market. Variables such as the GDP, the exports of wine, the state of the stock and bond markets are leveraged to explain the fluctuations. The second part targets the inherent characteristics of 468 Bordeaux bottles and aims to highlight the determinants variables between the Growths, age, vintage, expert’s scores, quality category and release price that will impact returns. To reach the objectives, Multiple Linear Regressions are realized to verify the statistical relevance of all factors. The results outline the significance of the traditional wine-drinking countries’ economies, the S&P500, the 2008 financial crisis and the 2009-2010 China stimulus on the Liv-Ex 100. From the microeconomic perspective, the vintage appears as the key factor to explain the expected return, followed by the Growth. The Parker score, category and release price have a rather limited impact.