“It’s the economy, stupid”, so this week we interviewed Karl Storchmann, a professor of economics from New York University who is also the managing editor of the Journal of Wine Economics and is a member of the American Association for Wine Economics.

Professor Karl Storchmann has authored several academic articles on wine market prices and investments so it’s a real opportunity for us to disucss some wine economics 101 with him as it relates to the secondary sell your wine market.

Early on he debunked my precevied notion that wine is a Veblen good aka Snob good (a very special good that gets higher demand the more expensive it is). According to Prof. Storchmann fine wine “prices are high because they’re produced in minuscule quantities”.

Sell Wine Guide: What are the economical factors that contribute to the extremely high appreciation of collectible grade wines?

Karl Storchmann: I am not sure whether the appreciation of collectible wine grades is EXTREMELY high. Over the last 5 years, all wine indices lost in value. Wine’s role as an alternative asset has risen due to increasing incomes, particularly in China.

Sell Wine Guide: In the abstract to your 2001 research into wine market prices and investments – you mention that “aging has a positive effect on Bordeaux wine pricing”, - What is more important for the increased demand factor, scarcity value or the subjective & expected quality appreciation?

Karl Storchmann: That depends on the market segment you are looking at. Essential both factors are equally important. But if a high-quality wine is scarce (interaction effect), that will trump all.

Sell Wine Guide: There was a trend a couple years ago (when fine markets peaked) to use wine as a legitimate investment channel, what’s your take on that?

Karl Storchmann: Wine is riskier that stock. I wrote an article about this.

Sell Wine Guide: As an economist and a wine enthusiast, what are some of the tips you can give to a person who wants to sell his or hers wine collection? 

Karl Storchmann: Aside from quality and storage conditions, given the rise of counterfeiting, provenance has become one of the most important features of a wine collection. Be ready to show where your wine is from (hopefully not from eBay).