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BeerDrinkingNations

BeerDrinkingNations

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Published by Richard Lee

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Published by: Richard Lee on Apr 13, 2011
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AMERICAN ASSOCIATIONOF WINE ECONOMISTS
AAWE WORKING PAPER No. 79
Economics
BEER DRINKING NATIONSTHE DETERMINANTS OF GLOBALBEER CONSUMPTION
Liesbeth Colen and Johan Swinnen
April 2011
 
www.wine-economics.org
 
 
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Beer Drinking NationsThe Determinants of Global Beer Consumption
Liesbeth Colen and Johan Swinnen
 
LICOS Centre for Institutions and Economic Performance& Department of EconomicsUniversity of Leuven (KUL)
Abstract
In this paper we analyze the evolution of beer consumption between countries and over time.Historically, there have been major changes in beer consumption in the world. In recent times, percapita consumption has decreased in traditional “beer drinking nations” while it increased strongly inemerging economies. Recently, China has overtaken the US as the largest beer economy. Aquantitative empirical analysis shows that the relationship between income and beer consumptionhas an inverse U-shape. Beer consumption initially increases with rising incomes, but at higherlevels of income beer consumption falls. Increased openness to trade and globalization hascontributed to a convergence in alcohol consumption patterns across countries. In countries thatwere originally “beer drinking nations”, the share of beer in total alcohol consumption reduced whilethis is not the case in countries which traditionally drank mostly wine or spirits. Climatic conditions,religion, and relative prices also influence beer consumption.JEL Classification: N30, D12, Q11Keywords: beer, consumption patterns, history, taste convergence
 
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Beer Drinking NationsThe Determinants of Global Beer Consumption
When one thinks of the favorite alcoholic drinks of people in Italy, Spain and France, one thinks of wine; when one thinks of Russia one thinks of vodka; when one thinks of countries like Belgium,Germany, Czech Republic or Britain, one thinks of beer. The question then arises: what makes acountry a “beer (or wine) drinking nation”?The first answer that may come to mind is “the climate”. Viticulture – the production of grapes for wine – requires certain ecological conditions typically found in warmer (but not too warm)climates, so it seems logical that people living around the Mediterranean and in California drink wine, and people living in Northern Europe and around the Great Lakes in the US – deprived of theopportunity of growing quality grapes because of the cold – have to resort to beer, based on barleywhich can be grown in harsher conditions.This explanation is based on production arguments – and the implicit assumption that trade inbeer or wine cannot make up for different production conditions. This is – as we will document – agood assumption for most of history. Trade in beer or wine is expensive since it involves mostlytransport of water, which made it costly except for the more expensive wines. That said, trade inbeverages has always existed and has grown more important in recent years.Another explanation that seems intuitive is religion. Islam, Mormon and Hindu religionsforbid alcohol use. In contrast, wine is used in Catholic religious services, and monasteries werecenters of brewing for many centuries. Not surprisingly wine and beer have been actively used andproduced in Catholic regions.Government regulations obviously affect consumption as well. Governments have activelyintervened in alcohol markets throughout history (Meloni and Swinnen 2010). Regulations have

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