sales & marketing There’s gold in wine auctions – if it pans out US-based researchers Ginette McManus, Rajneesh Sharma and Ahmet Tezel have found there is money to be made in the wine auction business – as much as 20-30 per cent in as little as a few months. Provided you know what you are doing. ARE THERE ANY prof itable t rading Bottling, strategies for wine buyers and sellers at labelling & wine auctions? We think packaging so based on our findings of price reversals for wine auctions held by The Chicago Wine Company published in November 2013 in the Journal of Wine Economics (which graciously gave us permission to write this condensed version of our article). Using monthly wine price changes over the 1998-2008 time period, we find wines with strong declining prices experience significant price reversals in subsequent months. The strongest reversals of 35-50 per cent occur after a decline of 30 per cent or more in wine auction prices over the previous month.
February 2014 – Issue 601
Weaker price reversals of about 10-12 per cent follow an increase in wine prices of 30 per cent or more over the previous two months. Thus wine price declines after strong price increases are not, in general, as significant as wine price increases after strong price declines.
WINE AUCTIONS We obtain wine auction prices from The Chicago Wine Company (TCWC) web site. TCWC follows the English auction model which is commonly used to sell wine and art (Ashenfelter, 1989). An English auction, also known as an ascending price auction, starts with a low price for the item for sale (wines are sold in lots ranging from a single bottle to several cases) which is successively raised (either by the auctioneer or by the
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At a glance: • Using monthly wine price changes over a 10-year period, wines with strong declining prices experience significant price reversals in subsequent months. • A market anomaly has been shown when identical lots of wine are sold sequentially in a single auction; prices are more likely to decrease with later lots. • Results suggest the most successful investment strategy in wine auctions is to bid at prices at least 30 per cent below the previous month’s prices.
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