THE ECONOMIC DETERMINANTS OF ALCOHOL CONSUMPTION*

In this paper is presented an analysis of the consumption patterns of beer, wine and spirits for Australia using data for the period 1955/56-1985/86. The validity of the demand theory hypotheses demand homogeneity and Slutsky symmetry has been tested using recently developed distribution? free procedures. The findings were that (i) beer and wine were necessities and spirits a strong luxury; (ii) beer and spirits are specific complements; and (iii) the homogeneity and symmetry hypotheses are acceptable. Preference for wine consumption seems to be independent of preference for beer and spirits.     

Evolving from a rum state: Australia's alcohol consumption

Europeans settlers in the Australian colonies had a reputation of being heavy drinkers. Rum dominated during the first few decades, followed by beer. It took until the 1970s before Australia's annual per capita consumption of wine exceeded 10 L, and even then, wine represented only one‐fifth of national alcohol consumption. But over the next two decades, per capita wine consumption nearly trebled and beer consumption shrunk – the opposite of what happened to global alcohol consumption shares. This paper draws on newly compiled data sets to (i) reveal that Australia was not much more alcoholic than Britain or southern Europe during the nineteenth century and (ii) help explain why it took so long for a consumer interest in wine to emerge in Australia.     

Disaggregated econometric estimation of consumer demand response by alcoholic beverage types

The paper presents estimates of price elasticities of demand for 12 disaggregated alcoholic beverages in Australia: premium beer, full strength beer, low alcohol beer and mid‐strength beer; red bottled wine, white bottled wine, sparkling wine, cask wine; dark and light ready‐to‐drink (RTD); and dark and light spirits. These disaggregated categories correspond closely to the commodities of interest to public policymakers with respect to taxation and health policies. The system of demand equations is estimated with Nielsen's data using a semiflexible Almost Ideal Demand System model in order to impose negative semi‐definiteness on the demand parameters. Results indicate elastic own‐price elasticities for virtually all commodities. Cross‐price elasticities suggest that beverages most linked with negative externalities, namely full strength beer, dark RTD and dark spirits, may need to be taxed jointly. Any proposed tax increase to cask wine may also result in consumers shifting demand to more undesirable beverages. The elasticity estimates are used to illustrate the effect of a hypothetical change towards taxation equalisation based on alcohol content. These elasticities offer crucially needed inputs for analysing any tax change policies.     

Economic Growth,Globalisation and Beer Consumption

We analyse the evolution of beer consumption between countries and over time. Historically, there have been major changes in beer consumption in the world. In recent times, per capita consumption has decreased in traditional beer drinking countries while it increased strongly in emerging economies. Recently, China has overtaken the US as the largest beer economy. A quantitative empirical analysis studies the relationships among economic growth, globalisation and beer consumption. The relationship between income and beer consumption has an inverse U‐shape. Beer consumption initially increases with rising incomes; but at higher levels of income beer consumption falls. Increased globalisation has contributed to a convergence in alcohol consumption patterns across countries. In countries that were originally beer drinking countries, the share of beer in total alcohol consumption reduced, while this is not the case in countries which traditionally drank mostly wine or spirits.     

Advertising Expenditures and the Consumption of Alcoholic Beverages

The theory of consumer behavior is applied to the estimation of a demand svstem. Monthly data on alcoholic beverages (beer, wine, liquor, soft dhnks) from the province of Ontario in Canada are analyzed. Before estimating the linear approximate almost ideal demand system (LA/AIDS), unit root and cointegration tests are implemented. Budget shares, per capita advertising expenditures, real total expenditure, prices and per capita consumption are found to be non-stationary. The budget share, the advertising expenditures, the prices and the real total expenditure are cointegrated for each beverage. Own and cross-price elasticities, income elasticities and own and cross-advertising elasticities are calculated from the estimated or the demand system. Based on own-price elasticities and income elasticities, alcohol consumption is consistent with the law of demand and the products analyzed are normal goods. The estimation of income and advertising effects is important for analyzing the need for, and the effectiveness of, potential control policies. The advertising elasticities are small but statistically significant. This suggests that advertising may promote alcoholic beverage consumption. The estimated inelastic demands for beer and wine suggest that the primary purpose of high excise taxes levied by the Federal and Provincial governments is to raise government revenues and not to discourage consumption.     

Pseudo panel data estimation technique and rational addiction model: an analysis of cigarette,alcohol and coffee demands

We use a pseudo‐panel data approach to analyze the relationship between the consumptions of cigarettes, alcohol, and coffee in a rational addiction framework. We find that while cigarette and coffee demands fit well with the rational addiction model, alcohol demand conforms to a model with inventory effects. The results suggest that alcohol consumption increases the marginal utility derived from consumption of cigarettes. Increasing alcohol prices would decrease not only the consumption of alcohol, but also the consumption of cigarettes. On the other hand, increasing cigarette prices do not have the same effect on consumption of alcohol. The cross‐price elasticity of coffee with respect to cigarette price is positive and significant which suggests that coffee substitutes for cigarettes when cigarette prices increase. The cross‐price elasticity of alcohol with respect to coffee price is found to be negative and significant. On the other hand, Morishima elasticities of substitution indicate that cigarette, alcohol and coffee substitute each other along the indifference curve when relative prices change.     

Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market

The U.S. wine market experienced rapid growth in all facets—production, consumption, exports, and imports—over the past decade. Red wine imports more than tripled while consumption of domestically produced red wines doubled. This research estimates demand elasticities of U.S. red wine imports from five countries accounting for over 90% of imports—Italy, France, Spain, Australia, and Chile—using the first-difference version of the almost ideal demand system (AIDS). These elasticities are compared with those for domestically produced red wine. Results for conditional expenditure elasticities indicate that the U.S. red wine industry gains over imports when U.S. consumers' total expenditures on red wine increase. However, comparing own- and cross-price elasticities reveals an increase in the price of U.S. red wine results in a decline in quantity demanded six times greater than for French and Italian red wines and over 20 times greater than other import countries, thus harming the U.S. red wine industry. Empirical results suggest that U.S. red-wine producers could increase their total revenue by decreasing prices, while Italian and French producers can increase total revenues by increasing them.     

The Importance of Intrinsic and Extrinsic Sparkling Wine Characteristics and Behavior of Sparkling Wine Consumers in Croatia

ABSTRACT

Sparkling wines accounted for 7.7% of the total wine consumption in 2011 in the world. Even though sparkling wine remains a long way behind still wine in total volume of production, world consumption of sparkling wine is expected to grow at a faster rate with an 8.5% increase by 2016. Although Croatia is a country with a high residual per capita consumption, the share of sparkling wine consumption compared with total wine consumption amounts only 1.3%. To collect data on Croatian sparkling wine consumers’ behavior and attitudes, we performed online research with 273 consumers. The research confirmed the low frequency of sparkling wine consumption. The most important characteristics of sparkling wines for Croatian consumers are their intrinsic characteristics (taste, smell) together with price:quality ratio, while visual appearance, expert reviews, or wine prizes are less important. Consumption of sparkling wines is generally associated with specific celebrations. Due to such perception of exclusive wine use, there is a need to break down this prejudice by better sparkling wine promotion through wine-tasting events, seminars, and gastronomy offers, especially for younger consumers.     

The evolution of foreign wine demand in China

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.     

Demand for Domestic and Imported Table Wine in British Columbia: A Source-differentiated Almost Ideal Demand System Approach

The premium quality wine market in British Columbia has grown substantively over the past decade. However, few empirical studies exist to quantify how consumers have responded to these wines. This paper employs a source-differentiated almost ideal demand system (AIDS) model with time-varying parameters to estimate the demand for premium quality wines using scanner sales data from the British Columbia wine market. The empirical findings reveal that consumers' response to foreign-produced wines differs from that for wine produced locally. It is evident that the expenditure elasticities for British Columbia, European and Rest-of-the-World white wines are larger than those for red wines. The high expenditure elasticities associated with British Columbia white wines may suggest that these wines are associated with higher quality. We reject the hypotheses of block separability and product aggregation. There is no evidence of structural change from the tests employed in this paper.     

Drinking cheaply: the demand for basic wine in Italy

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.     

Subtherapeutic Antibiotics and Productivity in U.S. Hog Production

Antimicrobial drugs are fed to hogs at subtherapeutic levels to prevent disease and promote growth. However, there is concern that the presence of antimicrobial drugs in hog feed is a factor promoting the development of antimicrobial drug-resistant bacteria. This study uses a treatment-effects sample-selection model to examine the impact that feeding antibiotics has on the productivity of U.S. hog operations. No relationship was found between productivity and antibiotics fed during finishing, but productivity was significantly improved when antibiotics were fed to nursery pigs. Restrictions on feeding antimicrobial drugs during the nursery phase would likely impose significant economic costs on U.S. hog producers.     

An Occasion-Based Segmentation Approach to the Wine Market in Denmark

Abstract

This paper presents the results of a survey on wine consumption in the town of Odense in Denmark that is representative of wine consumption trends in northern Europe. The analysis was carried out using an occasion-based approach applied to six different consumption occasions during meals and outside mealtimes. The survey was carried on a representative sample of 207 families. The paper highlights the most relevant segmentation factors for each consumption occasion and defines multi-occasion consumption profiles from which three marketing strategies levels can be derived.     

Factors Affecting the Extent to which Consumers Incorporate Functional Ingredients into their Diets

This study considers the factors that explain the consumption of food and beverages with functional ingredients to avert or offset health problems. We use an instrumental variables Poisson regression model to deal with the endogeneity of perceived health status in functional ingredient use. The first stage results indicate that perceived health status is associated with attitude towards functional foods, food consumption motives and information seeking and being female. The second stage results suggest that individuals who consume more functional ingredients tend to have a positive attitude towards functional foods, are novelty‐seeking, female and older. As expected, consumption of functional ingredients is more likely when consumers’ self‐reports indicate that they are aware of functional foods’ nutritional value and the link with their own health. Consistent with previous research, most of the socio‐demographics are poor predictors of functional ingredient consumption.     

Chinese animal product consumption in the 1990s

Chinese animal product consumption behaviour was analysed for both urban and rural households using a complete regional consumption dataset that was augmented to include away-from-home consumption. Seven animal product expenditure share equations were estimated with an extended Almost Ideal Demand System model. The results suggest that Chinese consumers will continue to increase their consumption of animal products, but that consumption patterns have changed in the 1990s. A large percentage of household animal product expenditure is still on pork. However, the shares for aquatic and poultry products consumption will increase substantially. As a consequence, the pork expenditure share will be gradually reduced as incomes grow and diet preferences change in both urban and rural households. There are significant differences in animal product consumption preferences across regions of China. As a result, studies that omit regional dummy variables in their demand systems can produce different expenditure and price parameters. The present paper also found that many of the estimates of elasticities and marginal expenditure shares would be rather different if the data ignored consumption away from home.     

Domestic or Imported Beer Brands? Analysis and Assessment of Brand Equity in the Spanish Market

The Spanish brewing industry is a main economic sector and a major activity in the agrifood area; however, there are few studies regarding the analysis of brand equity in this product. This study aims to analyze brand equity for both a domestic beer brand—Estrella Galicia—and an imported beer brand—Carlsberg. For this purpose a quantitative study is carried out among consumers in order to assess the sources or dimensions of brand equity and its consequences, comparing the 2 brands present in the Spanish market. Results obtained suggest a better evaluation of the domestic brand and reveal that brand loyalty and perceived quality are the dimensions with a higher relevance in beer brand equity.     

基于MaxEnt模型评估赤霞珠在川西横断山河谷的适生空间分布

［目的］川西横断山河谷是我国乃至世界高山酿酒葡萄的新兴产区,赤霞珠是该区域主栽品种之一。复杂的地理条件使得该区域与其他酿酒葡萄主产区的自然环境差异显著。科学评估川西横断山河谷区赤霞珠适宜空间分布,可促进该区域酿酒葡萄可持续发展。［方法］文章综合运用MaxEnt模型和GIS技术,构建了赤霞珠适宜分布与环境变量的关系模型,筛选出主导环境变量,利用存在概率划分适宜等级,预测了赤霞珠在川西横断山河谷的适宜分布。［结果］赤霞珠适宜分布与环境变量的关系模型准确度非常好（AUC>090）。在川西横断山河谷,主导环境变量依次为最热月平均气温、海拔、pH、秋季降雨量、年日照时数、年温差、全氮。川西横断山河谷大部分地区为不适宜区,低适宜区约为2 2752km2,中适宜区约1 29608km2。高适宜区面积为1 16428km2,且集中分布在丹巴县、小金县、金川县、九寨沟县和巴塘县。［结论］MaxEnt模型通过存在概率进行作物分布模拟和预测,对作物适宜区划具有较强应用价值和指导意义。对于不同区域和作物应注意环境变量,空间尺度,物种采样位置等问题,提高作物适宜区划精度。最后应加快该区域生产空间调整,在丹巴县、九寨沟县、金川县、小金县、巴塘县赤霞珠还有很大潜力空间,在黑水县、马尔康市、松潘县、白玉县、德荣县、康定县需适度发展,在汶川县、理县、茂县、稻城县、乡城县,应加强生产管理,减少不利环境影响。仁和区不宜再进行规模扩张。     

A HEDONIC PRICE FUNCTION FOR AUSTRALIAN PREMIUM TABLE WINE*

A hedonic price function, relating the price of Australian wine to its attributes, is estimated. Six attribute groups are found to be statistically important in explaining deviations from average wine prices, i.e., quality, cellaring potential, grape variety/style, grape region, grape vintage and producer size. Various interaction terms between these variables and the impact of the year of marketing are also modelled. The consequent marketing implications for producers and consumers are discussed.     

The dynamics of household beef consumption in Cameroon

Recent changes in economic conditions have introduced notable changes in household beef consumption patterns in Cameroon. While consumers are concerned about the short- and long-run effects of these factors on beef consumption habits, policy makers are more worried about the appropriate period necessary for households to make complete adjustments in consumption since this information is vital for planning production. Static and dynamic demand frameworks involving the Nerlovian partial adjustment (PA) model are used to capture the dynamic nature of beef consumption parameters. Maximum likelihood estimates of the PA model reveal that the conditioning variables explain 79% of the variation in beef consumption. Income, previous consumption, own-price and prices of fish and pork are jointly important in explaining beef consumption habits. Beef is a normal good with pork and fish as substitutes and chicken as a complement. Long-run price and income elasticities are greater than but not significantly different from their short-run values, suggesting that adjustment in consumption is fast with about 80% of the difference between actual and ‘desired’ consumption being completed in about 2 years. Projections show that demand for beef will reach 109620 t by the year 2000. giving an incremental total and per capita demand of 31 730 tons and 1.84 kg, respectively.     

Consumer sorting and hedonic valuation of wine attributes: exploiting data from a field experiment

This article uses a novel experimental approach to measure consumer willingness to pay (WTP) for wine attributes. We invited customers of a local supermarket who had selected a bottle of wine to purchase to participate in a valuation experiment. Integrating their original wine choice into the experiment, each participant evaluated six alternative wines, generating a rich set of data on willingness to pay and consumer characteristics. The data from the experiment allow us to compare standard shelf price‐based wine attribute valuation estimates with estimates using WTP data and an increasing amount of information about individual consumers. The full model employs individual fixed effects to estimate WTP parameters without bias from consumer sorting or supply side influences. Our WTP estimates for wine attributes differ markedly from previous attribute value estimates. Consumers in our sample display clear and stable preferences for wine varieties, but less clear preferences for appellations. Our results suggest caution is needed in using market prices to estimate parameters of the consumer valuation function for product attributes.