Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-10T09:25:20.646Z Has data issue: false hasContentIssue false
  • English
  • Français

The Effects of Prices, Advertising, Expenditures, and Demographics on Demand for Nonalcoholic Beverages

Published online by Cambridge University Press:  15 September 2016

Abigail M. Okrent  and
Joanna P. MacEwan
Abigail M. Okrent*
Affiliation:
Food Economics Division of the U.S. Department of Agriculture Economic Research Service
Joanna P. MacEwan
Affiliation:
Precision Health Economics, LLC
*
Correspondence: Abigail Okrent ▪ Economic Research Service, USDA ▪ 1400 Independence Avenue SW, Mail Stop 1800 ▪ Washington, DC 20250 ▪ Phone 202.694.5206 ▪ Email aokrent@ers.usda.gov.
Get access

Abstract

We estimate a demand system for ten nonalcoholic beverages to disentangle effects of prices, expenditures, advertising, and demographics on demand for nonalcoholic beverages for 1999 through 2010. We find that changes in demographic composition of the population between 1999 and 2008 played a much bigger role in observed purchasing patterns for recently introduced beverages like soy, rice, and almond drinks, isotonic and energy drinks, and bottled water whereas changes in prices and advertising expenditures largely explained declining demand for milk, regular carbonated soft drinks, and coffee and tea. However, between 2008 and 2010, declining demand for most nonalcoholic beverages was largely driven by income-led decreases in expenditures.

Keywords

advertisingbeverage demandhabit formationpricessoda purchases
Type
Selected Papers
Information
Agricultural and Resource Economics Review , Volume 43 , Issue 1 , April 2014 , pp. 31 - 52
Copyright
Copyright © 2014 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Advertising Age. 2012. “One Hundred Leading National Advertisers 2012.” June 25.Google Scholar
Alston, J.M., Foster, K.A., and Green, R.D. 1994. “Estimating Elasticities with the Linear Approximate Almost Ideal Demand System: Some Monte Carlo Results.” Review of Economics and Statistics 76(2): 351–355.Google Scholar
Andreyeva, T., Kelly, I.R., and Harris, J.L. 2011. “Exposure to Food Advertising on Television: Associations with Children's Fast Food and Soft Drink Consumption and Obesity.” Economics and Human Biology 9(3): 221–233.Google Scholar
Avena, N.M., Rada, P., and Hoebel, B.G. 2008. “Evidence for Sugar Addiction: Behavioral and Neurochemical Effects of Intermittent, Excessive Sugar Intake.” Neuroscience and Biobehavioral Reviews 32(1): 20–39.Google Scholar
Barten, A.P. 1969. “Maximum Likelihood Estimate of a Complete System of Demand Equations.” European Economic Review 1(1): 7–73.Google Scholar
Baye, M.R., Jansen, D.W., and Lee, J-W. 1992. “Advertising Effects in Complete Demand Systems.” Applied Economics 24(10): 1087–1096.CrossRefGoogle Scholar
Berndt, E.R., and Savin, N.E. 1975. “Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances.” Econometrica 43(5): 937–958.CrossRefGoogle Scholar
Beverage Digest. 2013. “U.S. Beverage Results for 2012.” Beverage Digest 63(6). Available at www.beverage-digest.com/pdf/top-10_2013.pdf (accessed December 18, 2013).Google Scholar
Blanciforti, L.A., Green, R.D., and King, G.A. 1986. “U.S. Consumer Behavior over the Postwar Period: An Almost Ideal Demand System Analysis.” Monograph 40, Giannini Foundation of Agricultural Economics, Davis, CA.Google Scholar
Brester, G.W., and Schroeder, T.C. 1995. “Impacts of Brand and Generic Advertising on Meat Demand.” American Journal of Agricultural Economics 77(4): 969–979.Google Scholar
Bureau of Labor Statistics. 2013. “Producer Price Indexes.” Available at www.bls.gov/ppi (accessed December 18, 2013).Google Scholar
Clarke, D.G. 1976. “Econometric Measurement of the Duration of Advertising Effect on Sales.” Journal of Marketing Research 13(4): 345–357.Google Scholar
Deaton, A., and Muellbauer, J. 1980a. “An Almost Ideal Demand System.” The American Economic Review 70(3): 312–326.Google Scholar
Deaton, A., and Muellbauer, J. 1980b. Economics and Consumer Behavior. New York, NY: Cambridge University Press.Google Scholar
Dharmasena, S., and Capps, O. Jr. 2012. “Intended and Unintended Consequences of a Proposed National Tax on Sugar-Sweetened Beverages to Combat the U.S. Obesity Problem.” Health Economics 21(6): 669–694.Google Scholar
Duffey, K.J., and Popkin, B.M. 2007. “Shifts in Patterns and Consumption of Beverages between 1965 and 2002.” Obesity 15(11): 2739–2747.Google Scholar
Duffy, M. 2003. “Advertising and Food, Drink, and Tobacco Consumption in the United Kingdom: A Dynamic Demand System.” Agricultural Economics 28(1): 51–70.Google Scholar
Eales, J.S., and Unnevehr, L.J. 1988. “Demand for Beef and Chicken Products: Separability and Structural Change.” American Journal of Agricultural Economics 70(3): 521–532.Google Scholar
Economic Research Service, U.S. Department of Agriculture. 2012. “Food Availability Data System.” Available at www.ers.usda.gov/data-products/food-availability-(per-capita)-data-system.aspx (accessed December 18, 2013).Google Scholar
Federal Trade Commission. 2012. A Review of Food Marketing to Children and Adolescents. FTC, Washington, DC.Google Scholar
Forker, O.D., and Ward, R.W. 1993. “Commodity Checkoff Programs: A Self-Help Marketing Tool for Nation's Farmers?” Choices (Fourth Quarter): 21–25.Google Scholar
Green, R.D., Carman, H.F., and McManus, K. 1991. “Some Empirical Methods of Estimating Advertising Effects in Demand Systems: An Application to Dried Fruits.” Western Journal of Agricultural Economics 16(1): 63–71.Google Scholar
Harris, J.L., Bargh, J.A., and Brownell, K.D. 2009. “Priming Effects of Television Food Advertising on Eating Behavior.” Health Psychology 28(4): 404–413.Google Scholar
Holt, D.J., Ippolito, P.M., Desrochers, D.M., and Kelley, C.R. 2007. Children's Exposure to TV Advertising in 1977 and 2004: Information for the Obesity Debate. Bureau of Economics Staff Report, Federal Trade Commission, Washington, DC.Google Scholar
Kesavan, T., Hassan, Z.A., Jensen, H.H., and Johnson, S.R. 1993. “Dynamics and Long-Run Structure in U.S. Meat Demand.” Canadian Journal of Agricultural Economics 41(2): 139–153.CrossRefGoogle Scholar
Kinnucan, H.W., Miao, Y., Xiao, H., and Kaiser, H.M. 2001. “Effects of Advertising on U.S. Non-Alcoholic Beverage Demand: Evidence from a Two-Stage Rotterdam Model.” In Baye, M.R. and Nelson, J.P., eds., Advances in Applied Microeconomics. Amsterdam, Netherlands: Elsevier.Google Scholar
Koordeman, R., Anschutz, D.J., van Baaren, R.B., and Engels, R.C.M.E. 2010 “Exposure to Soda Commercials Affects Sugar-Sweetened Soda Consumption in Young Women. An Observational Study.” Appetite 54(3): 619–622.Google Scholar
Larivière, È., Larue, B., and Chalfant, J. 2000. “Modeling Demand for Alcoholic Beverages and Advertising Specifications.” Agricultural Economics 22(2): 147–162.CrossRefGoogle Scholar
Lesser, L., Zimmerman, F., and Cohen, D. 2013. “Outdoor Advertising, Obesity, and Soda Consumption: A Cross-sectional Study.” BMC Public Health 13(1): 20.Google Scholar
Muth, M.K., Siegel, P.H., and Zhen, C. 2007. “ERS Data Quality Study Design.” Project 0210153.001, RTI International, Research Triangle Park, NC.Google Scholar
Piggott, N.E., Chalfant, J.A., Alston, J.M., and Griffith, G.R. 1996. “Demand Response to Advertising in Australian Meat Industry.” American Journal of Agricultural Economics 78(2): 268–279.Google Scholar
Pollak, R.A. 1970. “Habit Formation and Dynamic Demand Functions.” Journal of Political Economy 78(4): 745–763.Google Scholar
Pollak, R.A., and Wales, T.J. 1981. “Demographic Variables in Demand Analysis.” Econometrica 49(6): 1533–1551.Google Scholar
Ray, R. 1984. “A Dynamic Generalization of the Almost Ideal Demand System.” Economics Letters 14(2/3): 235–239.CrossRefGoogle Scholar
Rickertsen, K., Chalfant, J.A., and Steen, M. 1995. “The Effects of Advertising on the Demand for Vegetables.” European Review of Agricultural Economics 22(4): 481–494.Google Scholar
Shehata, E.A.E. 2011. “Stata Module to Compute Overall System Autocorrelation Tests after (3SLS-SURE) Regressions.” Available at http://ideas.repec.Org/c/boc/bocode/s457345.html (accessed January 5, 2014).Google Scholar
Smith, T.A., Lin, B-H., and Lee, J-Y. 2010. Taxing Caloric Sweetened Beverages: Potential Effects on Beverage Consumption, Calorie Intake, and Obesity. Economic Research Report 100, Economic Research Service, USDA, Washington, DC.Google Scholar
U.S. Census Bureau. 2013. “Poverty Thresholds” data. Available at www.census.gov/hhes/www/poverty/data/threshld (accessed February 10, 2014).Google Scholar
White House Task Force on Childhood Obesity. 2010. Report to the President: Solving the Problem of Childhood Obesity within a Generation. Executive Office of the President of the United States, Washington, DC. Available at www.letsmove.gov/sites/letsmove.gov/files/TaskForce_on_Childhood_Obesity_May2010_FullReport.pdf (accessed December 18, 2013).Google Scholar
Zhen, C., Wohlgenant, M.K., Karns, S., and Kaufman, P. 2011. “Habit Formation and Demand for Sugar-Sweetened Beverages.” American Journal of Agricultural Economics 93(1): 175–193.Google Scholar
Zheng, Y., and Kaiser, H.M. 2008. “Advertising and U.S. Nonalcoholic Beverage Demand.” Agricultural and Resource Economics Review 31(2): 147–159.Google Scholar
Zheng, Y., Kinnucan, H., and Kaiser, H.M. 2010. “Measuring and Testing Advertising-induced Rotation in the Demand Curve.” Applied Economics 42(13): 1601–1614.Google Scholar