How wine is valued
Stock market investors often talk about the fair value of a stock.
It is estimated by considering relevant factors such as current and expected earnings of the company, industry outlook, economic conditions etc.
Similarly, certain factors are key to valuing fine wines.
1. Brand/producer reputation
If a wine chateau or estate has been producing excellent wine for many years, you know that they will continue to do so.
2. Critic score
Wine critics give scores to wines when they taste them. These scores set the tone for wine valuation as they hit the market.
3. Vintage quality
Vintage refers to the year the grapes were harvested. Despite best efforts and due to factors like weather, it is impossible to grow identical quality grapes each year.
Wines produced from certain vintages are priced higher than others just because the quality of harvest that year was excellent.
4. Age
As wine ages, its taste becomes enhanced. So, a 20-year-old wine will be valued higher than a 10-year-old wine, everything else equal.
5. Rarity
Some wines are rarer than others.
This maybe because wine estates may choose to produce only a limited number of bottles or bottles from a certain popular vintage are close to exhaustion.
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