Do beer and wine respond to price and tax changes in Vietnam? Evidence from the Vietnam Household Living Standards Survey.

Abstract

To provide the first ever published estimates of the price and expenditure elasticities of demand for beer and wine in Vietnam and thereby contribute to policy initiatives aimed at reducing the excessive consumption of alcohol. We use a linear approximation of the Almost Ideal Demand System and data from the Vietnam Household Living Standards Survey for 2010, 2012 and 2014. We find that the demand for beer and wine in Vietnam is price and expenditure inelastic with average price elasticities of -0.283 and -0.317 and average expenditure elasticities of 0.401 and 0.156, respectively. That is, we find that beer and wine consumption decline whenever their respective prices increase and their consumption increases whenever expenditure rises. The results of the study lend confidence to calls for increased taxation of alcoholic products on public health grounds in Vietnam.