IDEAS home Printed from https://ideas.repec.org/a/ags/aareaj/262414.html
   My bibliography  Save this article

Drinking cheaply: the demand for basic wine in Italy

Author

Listed:
  • Cembalo, Luigi
  • Caracciolo, Francesco
  • Pomarici, Eugenio

Abstract

The wine market has evolved dramatically over the last three decades. The premium wine segment has expanded significantly to the detriment of basic wines. Nevertheless, in traditional wine producing and consuming countries, inexpensive wines still account for a large market share, both in volume and value. Marketing strategies for such wines are changing in an attempt to tap this increasingly crowded market segment. Despite its importance, the basic wine segment has not been studied in-depth and is often assumed to have no product differentiation. This paper tried to ascertain the existence of a possible degree of heterogeneity within nonpremium wines and to measure, by means of elasticity computation, the relationships among categories of wines aggregated with criteria that go beyond price. A demand system (censored QUAIDS) was estimated, using a statistically representative panel of 6,773 Italian households, to see to what extent, if any, substitution occurs in home consumption of basic wines, which is the main channel of distribution of inexpensive wines in Italy. Although price is an important lever in supply policies, our results also suggest the importance of packaging, such as carton as an alternative to glass.

Suggested Citation

  • Cembalo, Luigi & Caracciolo, Francesco & Pomarici, Eugenio, 2014. "Drinking cheaply: the demand for basic wine in Italy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), July.
    • Handle: RePEc:ags:aareaj:262414
    DOI: 10.22004/ag.econ.262414
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/262414/files/ajar12059.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/262414/files/ajar12059.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.262414?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steven T. Yen & Biing-Hwan Lin, 2006. "A Sample Selection Approach to Censored Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 742-749.
    2. Fraser, Iain, 2005. "Microeconometric analysis of wine grape supply contracts in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 1-24.
    3. Labys, Walter C. & Cohen, Bruce C., 2006. "Trends versus cycles in global wine export shares," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(4), pages 1-11, December.
    4. Francesco Caracciolo & Luigi Cembalo & Alessia Lombardi & Gary Thompson, 2014. "Distributional Effects of Maize Price Increases in Malawi," Journal of Development Studies, Taylor & Francis Journals, vol. 50(2), pages 258-275, February.
    5. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
    6. Timothy R. Davis & Fredoun Z. Ahmadi-Esfahani & Susana Iranzo, 2008. "Demand under product differentiation: an empirical analysis of the US wine market ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(4), pages 401-417, December.
    7. Heien, Dale & Wessells, Cathy Roheim, 1990. "Demand Systems Estimation with Microdata: A Censored Regression Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 365-371, July.
    8. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    9. Andreas C. Drichoutis & Stathis Klonaris & Panagiotis Lazaridis & Rodolfo M. Nayga, 2008. "Household food consumption in Turkey: a comment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(1), pages 93-98, March.
    10. Harald Tauchmann, 2005. "Efficiency of two-step estimators for censored systems of equations: Shonkwiler and Yen reconsidered," Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 367-374.
    11. James Fogarty, 2010. "The Demand For Beer, Wine And Spirits: A Survey Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 428-478, July.
    12. Ana Gil & José Molina, 2009. "Alcohol demand among young people in Spain: an addictive QUAIDS," Empirical Economics, Springer, vol. 36(3), pages 515-530, June.
    13. Craig A. Gallet, 2007. "The demand for alcohol: a meta-analysis of elasticities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 121-135, June.
    14. Francesco Torrisi & Gianluca Stefani & Chiara Seghieri, 2006. "Use of scanner data to analyze the table wine demand in the Italian major retailing trade," Agribusiness, John Wiley & Sons, Ltd., vol. 22(3), pages 391-403.
    15. Walter C. Labys & Bruce C. Cohen, 2006. "Trends versus cycles in global wine export shares," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(4), pages 527-537, December.
    16. Angus Deaton & Salman Zaidi, 2002. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," World Bank Publications, The World Bank, number 14101, April.
    17. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    18. Steven Yen & Kamhon Kan & Shew-Jiuan Su, 2002. "Household demand for fats and oils: two-step estimation of a censored demand system," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1799-1806.
    19. Federico Perali & Jean-Paul Chavas, 2000. "Estimation of Censored Demand Equations from Large Cross-Section Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1022-1037.
    20. Cuma Akbay & Ismet Boz & Wen S. Chern, 2007. "Household food consumption in Turkey," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 34(2), pages 209-231, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eugenio Pomarici & Alessandro Corsi & Simonetta Mazzarino & Roberta Sardone, 2021. "The Italian Wine Sector: Evolution, Structure, Competitiveness and Future Challenges of an Enduring Leader," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(2), pages 259-295, July.
    2. Anna Carbone & Federica Demaria & Roberto Henke, 2021. "The Sophistication of International Wine Trade: A New Import Measure," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(2), pages 199-218, July.
    3. Caracciolo, Francesco & D’Amico, Mario & Di Vita, Giuseppe & Pomarici, Eugenio & Dal Bianco, Andrea & Cembalo, Luigi, 2016. "Private vs. Collective Wine Reputation," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(3), pages 1-20, August.
    4. Mohammed, Rezgar & Murova, Olga & Chidmi, Benaissa, 2018. "Examining Demand Elasticities for Differentiated Yogurt," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266417, Southern Agricultural Economics Association.
    5. Balogh, Jeremiás Máté, 2016. "A földrajzi távolság, a kulturális hasonlóság és a szabadkereskedelem hatása a borkereskedelemre [Effects on the global wine trade of geographical distance, cultural and linguistic similarity, and ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 858-881.
    6. Rezgar Mohammed & Olga Murova, 2019. "Examining Demand Elasticities in the U.S. Differentiated Yogurt Market," Applied Economics and Finance, Redfame publishing, vol. 6(6), pages 69-79, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hasan Tekgüç, 2012. "Separability between own food production and consumption in Turkey," Review of Economics of the Household, Springer, vol. 10(3), pages 423-439, September.
    2. Fadhuile, Adelaide & Lemarie, Stephane & Pirotte, Alain, 2011. "Pesticides Uses in Crop Production: What Can We Learn from French Farmers Practices?," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103654, Agricultural and Applied Economics Association.
    3. Fabrizio balli & Silvia Tiezzi, 2008. "Households Consumption Patterns and Equivalence Scales in Italy: 1997-2004," Department of Economics University of Siena 535, Department of Economics, University of Siena.
    4. Ole Boysen, 2016. "Food Demand Characteristics in Uganda: Estimation and Policy Relevance," South African Journal of Economics, Economic Society of South Africa, vol. 84(2), pages 260-293, June.
    5. Vardges Hovhannisyan & Hayk Khachatryan, 2017. "Ornamental Plants in the United States: An Econometric Analysis of a Household‐Level Demand System," Agribusiness, John Wiley & Sons, Ltd., vol. 33(2), pages 226-241, April.
    6. Julia Bronnmann & Stefan Guettler & Jens-Peter Loy, 2019. "Efficiency of correction for sample selection in QUAIDS models: an example for the fish demand in Germany," Empirical Economics, Springer, vol. 57(4), pages 1469-1493, October.
    7. Fabrizio Balli & Silvia Tiezzi, 2010. "Equivalence scales, the cost of children and household consumption patterns in Italy," Review of Economics of the Household, Springer, vol. 8(4), pages 527-549, December.
    8. Adélaïde Fadhuile & Stéphane Lemarié & Alain Pirotte, 2016. "Disaggregating the Demand for Pesticides: Does it Matter?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(2), pages 223-252, June.
    9. Mikkel Barslund, 2011. "Censored Demand System Estimation with Endogenous Expenditures in clustered samples: an application to food demand in urban Mozambique," LICOS Discussion Papers 28011, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    10. Madan Mohan Dey & Yolanda T. Garcia & Kumar Praduman & Somying Piumsombun & Muhammad Sirajul Haque & Luping Li & Alias Radam & Athula Senaratne & Nguyen Tri Khiem & Sonny Koeshendrajana, 2008. "Demand for fish in Asia: a cross-country analysis ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 321-338, September.
    11. Silvia Tiezzi & Stefano F. Verde, 2019. "The signaling effect of gasoline taxes and its distributional implications," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 145-169, June.
    12. Hongbo Liu & Kevin A. Parton & Zhang-Yue Zhou & Rod Cox, 2009. "At-home meat consumption in China: an empirical study ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 485-501, October.
    13. Liu, Hongbo & Parton, Kevin A. & Zhou, Zhang-Yue & Cox, Rod, 2009. "At-home meat consumption in China: an empirical study," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 1-17.
    14. Andrej Cupák & Peter Tóth, 2017. "Measuring the Efficiency of VAT reforms: Evidence from Slovakia," Working and Discussion Papers WP 6/2017, Research Department, National Bank of Slovakia.
    15. Peter Tóth & Andrej Cupák & Marian Rizov, 2021. "Measuring the efficiency of VAT reforms: a demand system simulation approach," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1218-1243.
    16. Tiezzi, Silvia & Verde, Stefano F., 2016. "Differential demand response to gasoline taxes and gasoline prices in the U.S," Resource and Energy Economics, Elsevier, vol. 44(C), pages 71-91.
    17. Femenia, Fabienne, 2019. "A Meta-Analysis of the Price and Income Elasticities of Food Demand," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 68(2), June.
    18. Javier García-Enríquez & Cruz A. Echevarría, 2018. "Demand for culture in Spain and the 2012 VAT rise," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(3), pages 469-506, August.
    19. Tim Pawlowski & Christoph Breuer, 2012. "Expenditure elasticities of the demand for leisure services," Applied Economics, Taylor & Francis Journals, vol. 44(26), pages 3461-3477, September.
    20. Astrid Jonas & Jutta Roosen, 2008. "Demand for milk labels in Germany: organic milk, conventional brands, and retail labels," Agribusiness, John Wiley & Sons, Ltd., vol. 24(2), pages 192-206.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aareaj:262414. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.