Published online by Cambridge University Press: 09 September 2015
The price of wine is a key topic among market participants interested in valuing their stock, including dealers and restaurants, and consumers who may be interested in optimizing their purchases. A closely related issue, revaluation is the need to regularly update the value of a stock. This need is especially acute in the growing industry of wine as an investment. In this case, fair-value measurement is compulsory by law. We briefly review methods available to funds and introduce a new quantitative method aimed at achieving compliance with IFRS (International Financial Reporting Standard) 13 for fair valuation. Using auction data on 26,640 lots, we apply this method to compute the current fair value of a basket of 232 different wines. (JEL Classifications: C14, C43, Z11)
Financial support from the contract Projet d'Actions de Recherche Concertées “Stochastic Modelling of Dependence” granted by the Académie universitaire Louvain, is gratefully acknowledged. We thank Christophe Spaenjers for helpful discussions and comments. We are grateful for helpful comments from Karl Storchmann and an anonymous referee.