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Fair Revaluation of Wine as an Investment*

Published online by Cambridge University Press:  09 September 2015

Fabian Y.R.P. Bocart  and
Christian M. Hafner
Fabian Y.R.P. Bocart
Affiliation:
Institute of Statistics, Biostatistics, and Actuarial Sciences (ISBA), Université Catholique de Louvain, Voie du Roman Pays, 20, 1348 Louvain-la-Neuve, Belgium; e-mail: fabian.bocart@gmail.com.
Christian M. Hafner*
Affiliation:
Institute of Statistics, Biostatistics, and Actuarial Sciences (ISBA) and CORE, Université Catholique de Louvain, Voie du Roman Pays, 20, 1348 Louvain-la-Neuve, Belgium
*
e-mail: christian.hafner@uclouvain.be (corresponding author).
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Abstract

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)

Keywords

Fair valuationIFRS regulationwine investment funds
Type
Articles
Information
Journal of Wine Economics , Volume 10 , Issue 2 , November 2015 , pp. 190 - 203
Copyright
Copyright © American Association of Wine Economists 2015 

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Footnotes

*

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.

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