Wine demand in the United Kingdom and new world structural change: a source-disaggregated analysis

Abstract

This study examines bottled wine demand in the United Kingdom (UK) by exporting country and assesses the structural adjustment in demand as indicated by the decline in imports since 2004. When comparing the two periods, 1995-2003 and 2005-2009, UK wine imports from Australia became more responsive to changes in aggregate wine expenditures (in real terms) in the latter period. The demand for French wines became more price inelastic in the latter period while the demand for other European wines became price elastic. If the UK government is concerned with decreasing alcohol consumption, an increase in the wine excise tax would lead to a relatively larger decrease in imports from Italy, Portugal, and Spain. The tax on French wines would lead to greater revenue, but a smaller decrease in French wine consumption. [EconLit citations: F14; Q11; Q17]. r

In Vino ‘No’ Veritas: impacts of fraud on wine imports in China

“…Following Seale et al (), Carew et al (), Muhammad () and Muhammad et al (), we model foreign wine demand assuming differentiation by source where Australian wine, French wine, etc., are treated as individual products. To limit the analysis to foreign or imported wine, we assume a multistage budgeting process where total expenditures are first allocated across all product groups and then group expenditures are allocated across the goods within each product group.…”

The evolution of foreign wine demand in China

“…A search of the literature resulted in only three studies that considered source differentiation when estimating wine demand. These include Seale et al (2003), Carew et al (2004) and Muhammad (2011). These studies focused on the United States, Canada and United Kingdom, respectively, which are well-established markets with fairly consistent imports.…”

“…China is unique in that it has gone from obscurity to an important participant in global wine trade within a relatively shorttime period. Seale et al (2003) examined US wine demand during a period (1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999) when imports grew by 129 per cent, and Muhammad (2011) examined UK wine demand during a period (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)) when imports grew 113 per cent. While these increases are by no means trivial, wine imports in China have increased by over 26,000 per cent during the period 2000-2011, which cannot be explained by prices and income alone and suggest a fundamental change in attitudes and demand for wine.…”

“…While these increases are by no means trivial, wine imports in China have increased by over 26,000 per cent during the period 2000-2011, which cannot be explained by prices and income alone and suggest a fundamental change in attitudes and demand for wine. Muhammad (2011) is the only study to consider structural change and parameter instability; however, the focus of his analysis was a discrete structural shift due to an increasing share of New World imports in the United Kingdom. The continual growth of Chinese wine imports suggests that a one-time structural shift approach may not fully capture how demand has changed over the last decade.…”

“…Following Muhammad (2011), the absolute price version of the Rotterdam demand system is used in estimating foreign wine demand in China. We assume that wine is differentiated by exporting source where French wine, Australian wine, U.S. wine, etc., are treated as individual products that make up the product group wine.…”