The objective of the study is to estimate demand for wine in Australia, based on both the systems approach and the single equation approach. Both approaches consider demand for three categories of alcoholic drinks (beer, wine and spirits) in a seemingly unrelated regression framework to take account of cross-equation correlations. Time series data on retail price indexes and apparent per capita consumption of alcoholic beverages for Australia for the period 1975/76 to 1998/99 are used for econometric estimation. The results show that over the short run, beer and wine are necessities; however, over the long run, wine becomes a luxury good. Beer and wine are complements. Demand for all three beverages is price inelastic. The study also found that the behaviour of wine consumers reflect past consumption patterns, indicating that wine is more addictive than either beer or spirits. A structural change in consumer preferences away from cheaper cask wines to more expensive bottled table wines has a significant impact on the volume of wine consumption. Finally, wine consumption has increased over time. The study re-confirms the importance of developing a model that considers the impacts of both economic and non-economic variables on wine consumption.
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Paper provided by University of New England, School of Economics in its series Working Papers with number
12923.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
John Freebairn & Bill Griffiths, 2006.
"Introduction,"
The Economic Record,
The Economic Society of Australia, vol. 82(s1), pages S1-S1, 09.
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