Investing in the Wine Market

This chapter focuses on wine, a commodity of growing importance not only in European countries, that have historically dominated this market, but also in the so-called ‘New World Countries', e.g. China, South Africa, Chile, that have registered astonishing rates of growth, at times with extraordinary speed, entering not only the lower-quality segment, but also the medium–high segment, once the exclusive domain of traditional long-established producers. It analyses the long-run relationship between wine share price indexes and general stock market indexes, and examines their different speeds of adjustment to the long-run equilibrium. The chapter provides the traders with signals of information inefficiency that could be exploited to make profitable investment strategies. It describes the theoretical framework, presents the dataset used for the purpose and also provides a brief analysis of index performance. The chapter proposes the econometric methodology and develops the empirical results.