Hostname: page-component-cd9895bd7-dzt6s Total loading time: 0 Render date: 2024-12-23T12:58:13.615Z Has data issue: false hasContentIssue false
  • English
  • Français

Advertising and U. S. Nonalcoholic Beverage Demand

Published online by Cambridge University Press:  15 September 2016

Yuqing Zheng  and
Harry M. Kaiser
Yuqing Zheng
Affiliation:
Applied Economics and Management, respectively, in the Department of Applied Economics and Management at Cornell University in Ithaca, New York
Harry M. Kaiser
Affiliation:
Applied Economics and Management, respectively, in the Department of Applied Economics and Management at Cornell University in Ithaca, New York
Get access Rights & Permissions [Opens in a new window]

Abstract

As a first effort at modeling nonalcoholic beverage demand in a systemwide framework that includes bottled water, this article examines the impact of advertising on the demand for nonalcoholic beverages in the United States. We employed an AIDS (almost ideal demand system) model of five jointly estimated equations that included advertising expenditures as explanatory variables to evaluate annual U. S. consumption of nonalcoholic beverages for 1974 through 2005. Results suggest that advertising increases demand for fluid milk, soft drinks, and coffee and tea, but not for juice or bottled water. Advertising spillover effects occur in over 50 percent of the cases considered, and such effects can be substantial, particularly for advertising of soft drinks, and coffee and tea. We find that a large increase in the retail price of fluid milk, an increasing trend towards dining out, and positive spillover effects from soft-drink advertising made significant contributions to bottled water's success in recent years.

Keywords

advertisingdemandelasticitynonalcoholic beverages
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 37 , Issue 2 , October 2008 , pp. 147 - 159
Copyright
Copyright © 2008 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

Alston, J. M., Chalfant, J.A., and Piggott, N. E. 2001. “Incorporating Demand Shifters in the Almost Ideal Demand System.” Economics Letters 70(1): 73–78.Google Scholar
Alston, J. M., Freebairn, J. W., and James, J. S. 2001. “Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs.” American Journal of Agricultural Economics 83(4): 888–902.Google Scholar
Beverage Marketing Corporation. 2006. Chapter 4 in “Report to Congress on the National Dairy Promotion and Research Program and the National Fluid Milk Processor Promotion Programs,” U. S. Department of Agriculture, Washington, D. C.Google Scholar
Buse, A. 1994. “Evaluating the Linearized Almost Ideal Demand System.” American Journal of Agricultural Economics 76(4): 781–793.Google Scholar
Coulibaly, N., and Brorsen, B. W. 1999. “Explaining Differences between Two Previous Meat Generic Advertising Studies.” Agribusiness 15(4): 501–516.3.0.CO;2-M>CrossRefGoogle Scholar
Deaton, A., and Muelbauer, J. 1980. “An Almost Ideal Demand System.” American Economic Review 70(3): 312–326.Google Scholar
Duffy, M. 1995. “Advertising in Demand Systems for Alcoholic Drinks and Tobacco: A Comparative Study.” Journal of Policy Modeling 17(6): 557–577.CrossRefGoogle Scholar
Gao, X. M., and Lee, J. 1995. “A Factor Analysis Approach to Measure the Biased Effects of Retail Fruit Juice Advertising.” Empirical Economics 20(1): 93–107.CrossRefGoogle Scholar
Kaiser, H. M. 1997. “Impact of National Generic Dairy Advertising on Dairy Markets, 1984-95.” Journal of Agricultural and Applied Economics 29(2): 303–313.Google Scholar
Kaiser, H. M. 2000. “Impact of National Generic Dairy Advertising on Dairy Markets, 1984-99.” NICPRE Research Bulletin No. 00-01, Cornell University, Ithaca, NY.Google Scholar
Kaiser, H. M. 2006. Chapter 3 in “Report to Congress on the National Dairy Promotion and Research Program and the National Fluid Milk Processor Promotion Programs,” U.S. Department of Agriculture, Washington, D. C. Google 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: Elsevier Science.Google Scholar
Kinnucan, H. W., Xiao, H., Hsia, C., and Jackson, J. D. 1997. “Effects of Health Information and Generic Advertising on U. S. Meat Demand.” American Journal of Agricultural Economics 79(1): 13–23.Google Scholar
Kinnucan, H. W., and Zheng, Y. 2005. “National Benefit-Cost Estimates for the Dairy, Beef, Pork and Cotton Promotion Programs.” In Kaiser, H. M., Alston, J. M., Crespi, J., and Sexton, R. J., eds., The Economics of Commodity Promotion Programs: Lessons from California. New York: Peter Lang.Google Scholar
LaFrance, J. 1991. “When Is Expenditure ‘Exogenous’ in Separable Demand Models?” Western Journal of Agricultural Economics 16(1): 49–62.Google Scholar
Lariviere, E., Larue, B., and Chalfant, J. 2000. “Modeling the Demand for Alcoholic Beverages and Advertising Specifications.” Agricultural Economics 22(2): 147–162.CrossRefGoogle Scholar
Lee, Y., and Brown, M. G. 1992. “Commodity versus Brand Advertising: A Case Study of the Florida Orange Juice Industry.” In Kinnucan, H. W., Thompson, S. R., and Chang, H., eds., Commodity Advertising and Promotion. Ames, IA: Iowa State University Press.Google Scholar
McGuirk, A., Driscoll, P., Alwang, J., and Huang, H., 1995. “System Misspecification Testing and Structural Change in the Demand for Meats.” Journal of Agricultural and Resource Economics 20(1): 1–21.Google Scholar
Moschini, G. 1995. “Units of Measurement and the Stone Index in Demand System Estimation.” American Journal of Agricultural Economics 77(1): 63–68.Google Scholar
Nelson, J. P., and Moran, J. R. 1995. “Advertising and U. S. Alcoholic Beverage Demand: System-Wide Estimates.” Applied Economics 27(12): 1225–1236.CrossRefGoogle Scholar
Nelson, P., Siegfried, J. J., and Howell, J. 1992. “A Simultaneous Equations Model of Coffee Brand Pricing and Advertising.” Review of Economics and Statistics 74(1): 54–63.Google Scholar
Schmit, T. M., and Kaiser, H. M. 2004. “Decomposing the Variation in Generic Advertising Response over Time.” American Journal of Agricultural Economics 86(1): 139–153.Google Scholar
Seale, Jr., L., J., Marchant, M.A., and Basso, A. 2003. “Imports versus Domestic Production: A Demand System Analysis of the U. S. Red Wine Market.” Review of Agricultural Economics 25(1): 187–202.Google Scholar
Thompson, W. 2004. “Using Elasticities from an Almost Ideal Demand System? Watch Out for Group Expenditure” American Journal of Agricultural Economics 86(4): 1108–1116.CrossRefGoogle Scholar
Tomek, W. G., and Kaiser, H. M. 1999. “On Improving Econometric Analyses of Generic Advertising Impacts.” Agribusiness 15(4): 485–500.3.0.CO;2-8>CrossRefGoogle Scholar
Ward, R. W., and Dixon, B. L. 1989. “Effectiveness of Fluid Milk Advertising Since the Dairy and Tobacco Adjustment Act of 1983.” American Journal of Agricultural Economics 71(3): 730–740.CrossRefGoogle Scholar
Yen, S. T., Lin, B., Smallwood, D. M., and Andrews, M. 2004. “Demand for Nonalcoholic Beverages: The Case of Low-Income Households.” Agribusiness 20(3): 309–321.CrossRefGoogle Scholar
Zheng, Y., Kinnucan, H. W., and Kaiser, H. M. 2008. “Measuring and Testing Advertising-Induced Rotation in the Demand Curve.” Applied Economics (forthcoming) (available at http://ssrn.com/abstract=1026596).Google Scholar