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The Water of Life and Death: A Brief Economic History of Spirits

Published online by Cambridge University Press:  18 February 2022

Lara Cockx ,
Giulia Meloni Open the ORCID record for Giulia Meloni [Opens in a new window]  and
Johan Swinnen
Lara Cockx
Affiliation:
Department of Economics, Nazarbayev University, 53 Kabanbay Batyr Avenue, Nur-Sultan city, 010000 Kazakhstan; e-mail: lara.cockx@nu.edu.kz.
Giulia Meloni*
Affiliation:
LICOS Center for Institutions and Economic Performance & Department of Economics, University of Leuven (KU Leuven), Waaistraat 6, 3000 Leuven, Belgium; Centre for European Policy Studies, Place du Congrès 1, 1000 Brussels
Johan Swinnen
Affiliation:
LICOS Center for Institutions and Economic Performance & Department of Economics, University of Leuven (KU Leuven), Waaistraat 6, 3000 Leuven, Belgium; e-mail: jo.swinnen@kuleuven.be.
*
e-mail: giulia.meloni@kuleuven.be (corresponding author).
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Abstract

Spirits represent around 50% of global alcohol consumption. This sector is much less studied than other alcoholic beverages such as wine or beer. This paper reviews the economic history of spirits and analyzes recent trends in the spirits markets. The technology to produce spirits is more complex than for wine or beer. Distillation was known in ancient Chinese, Indian, Greek, and Egyptian societies, but it took innovations by the Arabs to distill alcohol. Initially, this alcohol was used for medicinal purposes. Only in the Middle Ages did spirits become a widespread drink. The Industrial Revolution created a large consumer market and reduced the cost of spirits, contributing to excess consumption and alcoholism. Governments have intervened extensively in spirits markets to reduce excessive consumption and to raise taxes. There have been significant changes in spirits consumption and trade over time. Over the past 50 years, the share of spirits in global alcohol consumption increased from around 30% to around 50%. In the past decades, there was strong growth in emerging markets, including in China and India. Recent developments in the spirits industry include premiumization, the growth of craft spirits, and the introduction of terroir for spirits. (JEL Classifications: L51, L66, N40, Q11, Q18)

Keywords

alcohol and healthalcohol regulationscraft and industry concentrationdistillation technologyglobalization and convergence of alcohol preferencesspirits
Type
Articles
Information
Journal of Wine Economics , Volume 16 , Issue 4 , November 2021 , pp. 355 - 399
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of American Association of Wine Economists

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Footnotes

Our paper benefited from helpful conversations with and suggestions from Julian Alston, Kym Anderson, Liz Ignowski, and participants in the 2018 ICAE Conference in Vancouver, Canada, and the 2019 AARES Conference in Melbourne, Australia. Research on this project was financially supported by the KU Leuven (Methusalem Program) and the Excellence of Science (EOS) Research project of FWO G0G4318N. We thank the editor, Karl Storchmann, and an anonymous referee for very constructive comments.

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