Evaluating the Investment Potential of Wines and Wineries

October 2002

Speaker:

Professor Simon Sheather, AGSM

According to Langewiesche (Atlantic Monthly, Dec. 2000), “The most influential critic in the world today happens to be a critic of wine. … His name is Robert Parker Jr., … and he has no formal training in wine. … … many people now believe that Robert Parker is single-handedly changing the history of wine. … A positive review and a score over 90, especially for a wine produced in small quantities, can ignite speculation that sends the price rocketing and clears the wine out of the stores”.

In this talk Professor Sheather considers the effect of Robert Parker's ratings on the auction prices for wine. He examines UK auction prices of eleven Bordeaux wines (including the five first growths) from the 1982, 1983, 1985, 1986, 1988, 1989 & 1990 vintages over the period from 1991 to 2001. He also considers both the points awarded by Robert Parker to each wine prior to 1991, or its release, and the size of any change in Parker’s ratings reported over time in ‘The Wine Advocate’ as compared to his original ratings. Modern statistical methods were used to show that a one point increase in Robert Parker’s rating of a wine increased the median auction prices by as much as 20%.

Simon Sheather is a Professor and head of the Statistics and Operations group at the Australian Graduate School of Management. He has won various awards for excellence in his subject area throughout his career to date and has been appointed by the federal minister of education to the Australian Research Council’s Expert Advisory Committee on Mathematics, Information and Communication Sciences.

Panelists:

Ian Cook, Owner/Operator, Five Ways Cellars, Paddington
Tony Ferguson, MD, Head Investment Banking NM Rothschild & Sons Ltd
Paul F Lockey, Chief Financial Officer, Lion Nathan Limited