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KMID : 0915820150160010041
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Journal of Korean Alcohol Science
2015 Volume.16 No. 1 p.41 ~ p.53
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The Price Elasticity on Alcoholic Beverages in Korea
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Kim David H
Yun Mi-Eun
Kim Mi-Kyung
Sung Woo-Rim
Chun Sung-Soo
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Abstract
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Objectives: The aims of this study were to analyze the price elasticity on alcoholic beverages’ consumption and figure out the consumption pattern and its changes in Korea from 1997 to 2010 for using the official data relating alcohol consumption and its’ price.
Methods: The alcohol 'unit' price of each type of alcoholic beverage in each year from 1997 to 2010 was extracted and its price inflation was compared with the consumer price inflation. Also, alcohol consumption of each type of beverage was calculated to see any changes over the years. Finally, the price elasticity of each alcoholic beverage was calculated to see the effect of the price changes on the alcoholic beverages’ consumption rate.
Results: The price inflation rate from 1997 to 2010 was 3.682% for soju, 4.584% for wine, 1.887% for beer, and ?1.48% for spirit and whisky and other similar kinds. The consumption rate decreased for soju 3611g (83%), but it was increased for beer 558g (120%), for spirit and whisky kinds 358g (208%), and for wine 107g (396%). The price elasticity of soju as ?0.112, and beer as ?0.153 showed that there is no significant effect of the price on the consumption rate, but the spirit and whisky kinds displayed as 1.840, wine 1.457, did show significant effect.
Conclusion: From 1997 to 2010, the price inflation of alcoholic beverages was higher than the consumer price inflation. Of the total alcoholic beverage consumption, soju consumption was the highest with 60%. Especially, the phenomenon of producing lower alcoholic content liquor from 2006 caused a decrease in the total alcohol consumption. This means that the alcoholic beverage consumption of the drinkers(ℓ) remained the same, but only the unit consumption(g) has decreased. Thus, the decrease in the total unit alcohol consumption is not caused by the changes in consumption patterns of the drinkers. The price elasticity shows that the price does not have an effect on the drinking patterns. This may mean that the price of alcoholic beverages in Korea is still too cheap that it does not have a significant effect on the consumption pattern.
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KEYWORD
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price elasticity, unit price, alcohol consumption pattern
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