IDEAS home Printed from https://ideas.repec.org/a/bla/ajarec/v58y2014i3p392-408.html
   My bibliography  Save this article

The evolution of foreign wine demand in China

Author

Listed:
  • Andrew Muhammad
  • Amanda M. Leister
  • Lihong McPhail
  • Wei Chen

Abstract

type="main" xml:id="ajar12029-abs-0001"> We estimate source-differentiated wine demand in China using the absolute price version of the Rotterdam demand system. Within the last decade, China has gone from obscurity to an important participant in global wine trade. The continual growth of Chinese wine imports suggests that a one-time structural shift approach may not fully capture how consumption patterns or demand preferences have changed over time. Thus, a rolling or moving regression procedure is used to account for continual adjustments in import demand patterns and to evaluate overall parameter instability. Our results confirm that Chinese consumers hold French wine in high regard and that French wine demand has consistently increased over the last decade, more than any other exporting source. Consumers in China have gone from allocating about 1/3 to over 1/2 of every dollar to French wine and the expenditure elasticity for French wine mostly increased while the market was expanding. Although Australian wine has a very solid standing in the Chinese market, results suggest that its market share will likely remain unchanged. Marginal budget share and expenditure elasticity estimates indicate that Australia will continue to account for about 20 per cent of the foreign wine market in China.

Suggested Citation

  • Andrew Muhammad & Amanda M. Leister & Lihong McPhail & Wei Chen, 2014. "The evolution of foreign wine demand in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), pages 392-408, July.
  • Handle: RePEc:bla:ajarec:v:58:y:2014:i:3:p:392-408
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/ajar.2014.58.issue-3
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Huang, Jikun & Rozelle, Scott, 1998. "Market development and food demand in rural China," China Economic Review, Elsevier, vol. 9(1), pages 25-45.
    2. James L. Seale & Mary A. Marchant & Alberto Basso, 2003. "Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 187-202.
    3. Michael Thorpe, 2009. "The globalisation of the wine industry: new world, old world and China," China Agricultural Economic Review, Emerald Group Publishing, vol. 1(3), pages 301-313, May.
    4. 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.
    5. Seale, James L., Jr. & Sparks, Amy L. & Buxton, Boyd M., 1992. "A Rotterdam Application To International Trade In Fresh Apples: A Differential Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(1), pages 1-12, July.
    6. Andrew Muhammad, 2011. "Wine demand in the United Kingdom and new world structural change: a source‐disaggregated analysis," Agribusiness, John Wiley & Sons, Ltd., vol. 27(1), pages 82-98, Winter.
    7. R. Carew & W. J. Florkowski & S. He, 2004. "Demand for Domestic and Imported Table Wine in British Columbia: A Source-differentiated Almost Ideal Demand System Approach," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(2), pages 183-199, July.
    8. Luca Zanin & Giampiero Marra, 2012. "Rolling Regression Versus Time‐Varying Coefficient Modelling: An Empirical Investigation Of The Okun'S Law In Some Euro Area Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 64(1), pages 91-108, January.
    9. I. A. Moosa & J. L. Baxter, 2002. "Modelling the trend and seasonals within an AIDS model of the demand for alcoholic beverages in the United Kingdom," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(2), pages 95-106.
    10. BARTEN, Anton P., 1969. "Maximum likelihood estimation of a complete system of demand equations," CORE Discussion Papers RP 34, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
    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. Dimson, Elroy & Rousseau, Peter L. & Spaenjers, Christophe, 2015. "The price of wine," Journal of Financial Economics, Elsevier, vol. 118(2), pages 431-449.
    2. Ye Yang & Angela Paladino, 2015. "The case of wine: understanding Chinese gift-giving behavior," Marketing Letters, Springer, vol. 26(3), pages 335-361, September.
    3. Ping Qing & Aiqin Xi & Wuyang Hu, 2015. "Self-Consumption, Gifting, and Chinese Wine Consumers," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(4), pages 601-620, December.
    4. Qing, Ping & Hu, Wuyang, 2016. "Chinese Consumer Preference for Red Wine Attributes," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235477, Agricultural and Applied Economics Association.

    More about this item

    Statistics

    Access and download statistics

    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:bla:ajarec:v:58:y:2014:i:3:p:392-408. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://edirc.repec.org/data/aaresea.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.