The demand for Turkish wine: estimates of the wine price elasticities

Abstract

This article examines the impacts of the recent high taxation policy on Anatolian wine demand and wine price elasticities. This article uses quarterly data between 1997 and 2013 to estimate key elasticities of the Turkish demand for wine. No prior study has estimated specific elasticities for wine consumption and the results also indicate that the high taxation policy is significantly reducing the wine demand and production in Turkey.

Keywords:

• wine taxes
• Turkey
• demand elasticity

JEL Classification:

• L66
• D4
• E62
• M2

Notes

¹ For a detailed review, see Gumus and Gumus (2008).

² Advertising wine also became strictly forbidden by law.

³ Computationally, for Equations 1 and 2, the statistical software environment R (R Core Team, 2013) was used to fit the data. The estimation method implemented was maximum likelihood. SEs were cross-checked by using bootstrapping to make sure reliable results were obtained.

⁴ Unlike McGuinness (1980) and Tomlinson and Branston (2014) real advertising expenditures are not included because alcoholic beverage advertisement is forbidden by law in Turkey. There is also no reliable available data on alcohol licences.

⁵ A standard least-squares estimation was carried out for quarterly data between 1997 and 2013.

⁶ Turkish policymakers are introducing a simultaneous tax increase on all alcoholic beverages.

⁷ Although the international wine trade started in the recent years, the volume of this trade is very small.