Wine consumption in the Czech Republic and the prices of alcohol

Abstract

Consumption of wine in the Czech Republic has a growing tendency, representing 15.4 litres per capita in 1995 and 20.0 litres per capita in 2012. The goal of this paper is an analysis of the development of consumer demand for wine in the Czech Republic based on the estimation of elasticity coefficients derived from the constructed dynamic model. The overall development in the period 1948–2012 is demonstrated through the linear trend: QCW<sub>T</sub> = –340.77 + 0.1788×T + u<sub>T</sub>. The growing consumption of wine was examined in relation to the development of the prices of wine, beer, and rum in the period 1991–2012. The achieved negative values of the own price elasticity coefficients (ranging from –0.2957 to –0.1624) suggest, that there worked normal price reactions. Cross price elasticity coefficients of the gross demand for wine showed complementarity between the consumption of wine and beer or wine and rum. The cross price elasticity of the gross demand for wine related to the price of 10° beer was –0.2757 in average, and –0.2074 in the case of rum.