Market potential for low alcohol wine before and after excise tax increase
Purpose: The study examines the market potential for low and very low alcohol wine products under two different tax regimes. The penetration and market share of low alcohol wine are estimated under both tax conditions. Consumers’ alcoholic beverage purchase portfolios are analysed and those products identified, which are jointly purchased with low alcohol wines. The effect of a tax increase on substitution patterns between alcoholic beverages is examined. Methodology: In a discrete choice experiment, based on their last purchase, consumers select one or several different alcoholic beverages into a purchase basket. An experimental design controlled the beverages’ price variation. Applying an intra-individual research design, respondents’ purchases were simulated under current and increased taxes. Findings: A market potential for low and very low wine products of up to ten percent of the wine market volume is estimated under the current tax regime. Between six to eight percent of consumers are expected to adopt low alcohol wine alternatives as part of their alcoholic beverage portfolio. Consumers of cask wine and light beer are more likely and consumers of medium-full strength beer and spirits are less likely to buy low alcohol wine. Although the absolute number of items per purchase of low alcohol wine decreases under higher taxes, its relative market share rises. Practical implications: The study provides the wine industry with estimates on the expected demand potential for low alcohol wine and identifies those alcoholic beverage consumers, who are most likely to adopt them. Thereby it contributes towards the wine industry’s required response to the WHO reduction in alcohol consumption strategy, demanding the development and marketing of lower alcohol strength beverages to prevent stronger industry regulation.
Proceedings: 6th International Academy of Wine Business Research Conference, 2011
Low alcohol wine; Penetration,; Duplication of purchase; DCE; Market share
Main Research Area:
6th International Academy of Wine Business Research Conference, 2011