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The Demand for Wine and Beer

Author

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  • Tsolakis, Dimitris
  • Riethmuller, Paul C.
  • Watts, Geof

Abstract

In this paper annual data series covering 1955-56 to 1978-79 are used to estimate the elasticity of demand for both wine and beer. These are first estimated using a flexible functional form. The habit formation hypothesis and the role of social and demographic factors are also examined. The demand for wine in aggregate is estimated to be relatively price inelastic in the short run, while in the long run it is relatively price elastic. With respect to income, the demand for wine is shown to be relatively highly elastic. For beer, demand with respect to price and income is found to be relatively inelastic in the short run as well as in the long run. These results can be used to evaluate the impact of changes in patterns of consumption and of government taxation policies on the industry.

Suggested Citation

  • Tsolakis, Dimitris & Riethmuller, Paul C. & Watts, Geof, 1983. "The Demand for Wine and Beer," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 51(02), August.
  • Handle: RePEc:ags:remaae:12456
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    References listed on IDEAS

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    1. Hogarty, Thomas F & Elzinga, Kenneth G, 1972. "The Demand for Beer," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 195-198, May.
    2. Brown, Alan & Deaton, Angus S, 1972. "Surveys in Applied Economics: Models of Consumer Behaviour," Economic Journal, Royal Economic Society, vol. 82(328), pages 1145-1236, December.
    3. Clements, Kenneth W & Johnson, Lester W, 1983. "The Demand for Beer, Wine, and Spirits: A Systemwide Analysis," The Journal of Business, University of Chicago Press, vol. 56(3), pages 273-304, July.
    4. Labys, Walter C., 1976. "An International Comparison Of Price And Income Elasticities For Wine Consumption," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 20(01), April.
    5. Savin, N. E. & White, Kenneth J., 1978. "Estimation and testing for functional form and autocorrelation : A simultaneous approach," Journal of Econometrics, Elsevier, vol. 8(1), pages 1-12, August.
    6. Michael K. Wohlgenant & William F. Hahn, 1982. "Dynamic Adjustment in Monthly Consumer Demands for Meats," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(3), pages 553-557.
    7. Podder, N, 1971. "Patterns of Household Consumption Expenditures in Australia," The Economic Record, The Economic Society of Australia, vol. 47(119), pages 379-398, September.
    8. Johnson, James A & Oksanen, Ernest H, 1977. "Estimation of Demand for Alcoholic Beverages in Canada from Pooled Time Series and Cross Sections," The Review of Economics and Statistics, MIT Press, vol. 59(1), pages 113-118, February.
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    Cited by:

    1. Lariviere, Eric & Larue, Bruno & Chalfant, Jim, 2000. "Modeling the demand for alcoholic beverages and advertising specifications," Agricultural Economics, Blackwell, vol. 22(2), pages 147-162, March.
    2. P. Goldschmidt, 1990. "Economic Aspects of Alcohol Consumption in Australia: Part 2," Economics Discussion / Working Papers 90-17, The University of Western Australia, Department of Economics.
    3. Chang, Hui-Shung & Griffith, Garry & Bettington, Nicholas, 2002. "The Demand for Wine in Australia Using a Systems Approach: Industry Implications," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 10.
    4. Lariviere, Eric & Larue, Bruno & Chalfant, Jim, 2000. "Modeling the demand for alcoholic beverages and advertising specifications," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 22(2), March.

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    Keywords

    Consumer/Household Economics;

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