Wine prices and weather: Are cult wines different?

Abstract

Abstract In this article, we examine how weather variables affect markets for U.S. high-end wines, both luxury wines and wines from the same region that are still high-end but not in the very limited highest category. Specifically, we compare so-called “cult wines” with “non-cult wines” from the same subregions that are known for their high-quality wines. We investigate associations between weather conditions and prices, price gaps (the difference between the secondary market price and release price), the number of cases produced, and wine scores assigned for both cult and non-cult wines. We further examine whether associations with weather differ across wine regions. Implementing a fixed-effects methodology, cult and non-cult wines from three U.S. regions were studied: both Napa and Sonoma in California, and Walla Walla on the border of Washington State and Oregon. Overall, the analysis suggests that weather is associated with various characteristics of wine markets, including prices, price gaps for cult wines, wine scores, and cases produced. The nature of the associations depends on the type of wine (cult or non-cult, red or white) and timing of weather conditions throughout the year and growing region.

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