Sustained wine business as reflected by the international alcohol policy

Abstract

PurposeAfter a period of 20 years of successful growth in sales in the international wine business, the upcoming International Alcohol Policy is endangering the economic sustainability of the wine business. To reduce alcohol‐caused hazards and harm, the International Alcohol Policy favours taxes and minimum prices for all alcoholic beverages. This policy is based on a large number of empirical studies on the price elasticity of alcoholic beverages. The purpose of this paper is to ask whether higher taxes on alcoholic beverages can solve the problems caused by excessive alcohol consumption or whether they are largely ineffective while producing other sustained damage at the same time.Design/methodology/approachThe paper evaluates the results of studies on the price elasticity of alcoholic beverages by using the available results of studies on consumer decision making, focusing in particular on the relevance of price elasticity in comparison to the relevance of individually available budgets and prefer ences. In that case the contrast between alcoholics (consumer segment causing alcoholism) and average consumers is analysed using knowledge of the great differences in preferences between consumer segments.FindingsWine is highly affected by this alcohol policy due to the expectation of a decrease in overall consumption and the very high costs of alcohol content‐related taxes paid by all wine consumers. The price elasticity of demand for wine is analysed to be much higher than for beer and wine consumers are far away from alcoholism.Social implicationsThe big social problem of alcoholism has to be underlined here. This problem and its spread internationally demands an examination of the effectiveness of this alcohol policy on prices and the development of and checks on new instruments for the direct control of alcoholics.Originality/valueThe international alcohol policy is an important field which needs to be analysed scientifically in more depth and in the framework of sustainability, with a focus on harmonizing social, economic and environmental aims. The paper shows that the current instruments used internationally in the alcohol policy cause large economic problems for wine consumers, as well as for wine producers and merchants, without solving the social problems of alcohol‐related hazards and harm.