UCL School of Management is delighted to welcome Professor Burak Kazaz, Syracuse University, to host a research seminar discussing ‘Wine Analytics’.
Wine analytics is a new field of study that develops analytical methods for enterprises in wine supply chains. In this talk, we present the state-of-the-art predictive and prescriptive analytical methods that are used at winemakers, distributors/importers and the financial markets.
Wine production is a risky business because of the long aging process (often 18 to 24 months aging in barrels for Bordeaux-style wines). Climatic conditions influence the production and quality of these wines. Consumers follow tasting reviews and scores – this information impacts the value and trade of these fine wines. Investors track a collection of this information in order to optimize their portfolios.
The talk focuses on wine futures known as en primeur in French. Winemakers sell their wine while it is aging in barrels in the form of futures contracts in order to mitigate their risks and to recuperate their cash investment. We begin with predictive methods that estimate the value of such futures contracts in financial markets – this is coined as realistic prices by the financial exchange executives. Next, we show prescriptive models employed by winemakers (suppliers in the financial markets) to determine the quantity of wine to be sold as futures and the price of wine futures. Then, we develop portfolio optimization models for distributors/importers (buyers in the financial markets) – they are extremely beneficial for risk-averse firms with limited budgets. Finally, we will present new analytical methods, e.g., robo-advising, for financial markets, investors and consumers.