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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), pages 1-23, August.
    • Handle: RePEc:ags:remaae:12456
    DOI: 10.22004/ag.econ.12456
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    References listed on IDEAS

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    2. 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(1), pages 1-4, April.
    3. 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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    5. 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.
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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. Lara Agnoli & J. François Outreville, 2021. "Wine Consumption and Culture: A Cross‐Country Analysis," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 1101-1124, September.
    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, Department of Agriculture and Food Systems, vol. 10, pages 1-12, September.
    4. 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.

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