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Demand for Wine in Australia: Systems Versus Single Equation Approach

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  • Chang, Hui-Shung (Christie)
  • Bettington, Nicholas

Abstract

The objective of the study is to estimate demand for wine in Australia, based on both the systems approach and the single equation approach. Both approaches consider demand for three categories of alcoholic drinks (beer, wine and spirits) in a seemingly unrelated regression framework to take account of cross-equation correlations. Time series data on retail price indexes and apparent per capita consumption of alcoholic beverages for Australia for the period 1975/76 to 1998/99 are used for econometric estimation. The results show that over the short run, beer and wine are necessities; however, over the long run, wine becomes a luxury good. Beer and wine are complements. Demand for all three beverages is price inelastic. The study also found that the behaviour of wine consumers reflect past consumption patterns, indicating that wine is more addictive than either beer or spirits. A structural change in consumer preferences away from cheaper cask wines to more expensive bottled table wines has a significant impact on the volume of wine consumption. Finally, wine consumption has increased over time. The study re-confirms the importance of developing a model that considers the impacts of both economic and non-economic variables on wine consumption.

Suggested Citation

  • Chang, Hui-Shung (Christie) & Bettington, Nicholas, 2001. "Demand for Wine in Australia: Systems Versus Single Equation Approach," Working Papers 12923, University of New England, School of Economics.
    • Handle: RePEc:ags:uneewp:12923
    DOI: 10.22004/ag.econ.12923
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    References listed on IDEAS

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    2. 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.
    3. Eric Giraud-Héraud & Yves Surry, 2001. "Les réponses de la recherche aux nouveaux enjeux de l’économie viti-vinicole," Post-Print hal-01200932, HAL.
    4. Giraud-Héraud, Eric & Surry, Yves, 2001. "Les réponses de la recherche aux nouveaux enjeux de l’économie viti-vinicole," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 60, pages 1-5.
    5. Giraud-Héraud Eric & Yves Surry, 2001. "Les réponses de la recherche aux nouveaux enjeux de l’économie viti-vinicole," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 60, pages 5-24.

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    Demand and Price Analysis;

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