Seasonal U.S. beer demand: socio-economic determinants and relation with other products

ABSTRACT

This article employs quarterly U.S. state-level data from 2009 to 2015 to estimate the demand for beer. Other contributions of this work involve the incorporation of demographic factors and wine prices. Results show beer demand to be inelastic, and beer and wine to be substitutes. Further, males, whites, and blacks were, ceteris paribus, likely to have greater beer demand. The income effects, however, were mixed, showing some support for beer being a normal good.

KEYWORDS:

• Beer demand
• demographic effects
• economic prosperity
• elasticity
• wine

JEL CLASSIFICATION:

• D12
• L66

Acknowledgements

We are grateful to Michael Uhrich from the Beer Institute for providing us the data on beer sales and to Jim Payne for useful comments. Goel thanks Sapienza – Università di Roma for hospitality during a research visit. However, the views expressed are solely our own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ http://www.nber.org/cycles.html

² Freeman (2011) has found U.S. beer demand to be procyclical, and beer, being a normal good, is also supported by Lee and Tremblay (1992) and Toro-González, McCluskey, and Mittelhammer (2014).

³ Goel and Zhang (2013) consider gender differences in smoking in Japan.

⁴ We use the 1 year lag of beer price as opposed to the one quarter lag because lagging one quarter might not be enough to purge potential endogeneity.

⁵ While all control states do not uniformly control the sale of the three alcoholic beverages (meaning some control one or two of the three), we considered a state as a control state if it controlled any alcoholic beverage.

⁶ There are a total of 18 control states: Alabama, Idaho, Iowa, Maine, Maryland, Michigan, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, West Virginia and Wyoming.