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Business & Economy

Novel Research Demonstrates Financial Benefit for Distributors Who Invest in Wine Futures

Monday, March 6, 2017, By Kerri D. Howell
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New supply chain research from the at shows a wine distributor can significantly improve its profits by investing in wine futures, in addition to bottled wine. The study鈥檚 numerical analysis demonstrates an approximate 21 percent profit improvement, a benefit that increases as the wine distributor鈥檚 degree of risk aversion increases.

In 鈥,鈥 , The Steven R. Becker Professor of Supply Chain Management and The Laura J. and L. Douglas Meredith Professor of Teaching Excellence at the Whitman School of Management, and his co-authors, Mert Hakan Hekimo臒lu (The Lally School of Management, Rensselaer Polytechnic Institute) and Scott Webster (WP Carey School of Business, Arizona State University), determine how best a wine distributor can allocate monies between bottled wine and wine futures, based on fluctuations in weather and market.

鈥淲ine distributors often carry bottled wines, and avoid making investments in wine futures due to the fact that they do not have intimate understanding of how wine prices evolve from the wine

Burak Kazaz

Burak Kazaz

futures stage to bottled wine prices,鈥 said Professor Kazaz. 鈥淏y explaining the movement in prices with weather and market fluctuations, our work demonstrates how a wine distributor can determine the selection of fine wines, and how the firm can adjust when new (additional) weather and market information becomes available.鈥

Professor Kazaz added that there鈥檚 no downside to a wine distributor investing in futures. It increases the expected profit in spite of being a riskier asset than bottled wine.

鈥淚t鈥檚 the first time we鈥檝e been able to quantify the financial benefit of wine distributors鈥 investment in wine futures,鈥 said Professor Kazaz. 鈥淲e anticipate that our work will likely change the common practice for wine distributors who can now make informed investments in wine futures with confidence, and allocate their budgets between futures and bottled wine.鈥

Steven Becker, executive vice president/treasurer and compliance of , the nation鈥檚 largest alcoholic beverage distributor, was intrigued by the results of the study.

鈥淲e appreciate the rigorous statistical analysis in this paper,鈥 said Becker. 鈥淭his work will be beneficial for those who are interested in advanced purchasing of fine wine.鈥

The study is forthcoming in听the INFORMS journal of听.

About the Martin J. Whitman School of Management听

The Martin J. Whitman School of Management at 黑料不打烊 educates students to become successful entrepreneurial leaders in a rapidly changing global economy. The Whitman School offers B.S., MBA, M.S. and Ph.D. programs, all accredited by the Association to Advance Collegiate Schools of Business (AACSB). The school鈥檚 faculty includes internationally known scholars and researchers, as well as successful entrepreneurs and business leaders. Whitman continues to be ranked among the nation鈥檚 top business schools by U.S. News & World Report and Bloomberg Businessweek. For more information about the Whitman School, visit and follow it on social media at .

For more information, contact:听Kerri D. Howell, 黑料不打烊鈥檚 Whitman School of Management,听(315) 443-3671 or听kdhowell@syr.edu

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