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Australian beer wars and pub demand: how vertical restraints improved the drinking experience

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  • Ryan Donnar
  • Keith Jakee

Abstract

Recently, Australia's two largest brewers, Carlton and United Breweries and Lion Nathan, have been aggressively competing for market share in the state of Victoria. Among other strategies, the two breweries have implemented vertical restraints in the form of 'extensive' agreements with retailers and the outright purchase of pubs. A key outcome of these purchases and agreements is the renovation of many pubs as brewers attempt to attract increasingly sophisticated drinkers. This paper attempts to quantify the value of these renovations and measure their associated impact on consumers, relying on insights from the hedonic literature. A simple, but novel approach, is used to estimate the implicit price of the pub environment and the effects of renovations on that price.

Suggested Citation

  • Ryan Donnar & Keith Jakee, 2004. "Australian beer wars and pub demand: how vertical restraints improved the drinking experience," Applied Economics, Taylor & Francis Journals, vol. 36(14), pages 1613-1622.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:14:p:1613-1622
    DOI: 10.1080/0003684042000191877
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    References listed on IDEAS

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    1. David Blake & Angelika Nied, 1997. "The demand for alcohol in the United Kingdom," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1655-1672.
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