Climate-related news can meaningfully influence the prices people are willing to pay for fine wine, according to research by University of Auckland finance academic Dr Gertjan Verdickt.
Climate Concerns Prompt Price Reductions in High-End Wines
“I ask the question, if you see more climate-related news, are you willing to pay more or less for foreign wine? And my analysis shows it’s less,” he said. The study found that “a one-standard-deviation increase in climate attention is associated with a 3.58 per cent drop in the price of a bottle.” For a US$480 Bordeaux Premier Cru, that equates to approximately US$17 less.
Understanding the Phenomenon of ‘Climate Extrapolation’
Verdickt terms the effect “climate extrapolation,” where investors project local climate concerns onto unrelated assets. “I compare the price of these wines abroad relative to their price in France; I used France as my benchmark. In theory, the ratio should be one… When that ratio changes, I look to understand why.”
The price decline is most pronounced during the summer months, when climate impacts are more visible.
Rigorous Dataset and Methodology
The study analysed more than 70,000 Bordeaux Premier Cru wine transactions from 222 auction houses across 18 countries, including Australia and New Zealand. Wines from five producers—Haut-Brion, Lafite Rothschild, Latour, Margaux, and Mouton Rothschild—were included, all considered “investment-grade” and forming part of the Liv-Ex Fine Wine Index.
To measure climate sentiment, Verdickt developed a “Climate Attention Index” using over 23 million newspaper tweets, comparing their content to authoritative climate texts to generate country-specific measures.
Implications for Wine Investors and Collectors
The findings are particularly relevant for collectors and investment funds, as heightened climate awareness can reduce demand for high-value assets. “Personal experiences influence financial decision-making, and climate news and events are no exception,” Verdickt said.