A Demand Analysis for Non-Alcoholic Beverages and Fruit Juice Markets in the United States

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Beverage consumption plays a crucial part in the American diet. It is estimated that the daily beverage calorie intake for an adult in the United States is approximately 400 calories and sugar-sweetened beverages account for a large share of total consumption. Much research has studied various aspects regarding the consumption of sugar-sweetened beverages, however, there is less work investigating its interrelationships with other beverages. Some studies suggest consumers may switch their consumption to fruit juices in response to a price rise in sugar-sweetened beverages. The IRI Consumer Network suggested that the U.S. consumption of sugar-sweetened beverages, particularly regular carbonated soft drinks (regular CSD) has constantly decreased over time, whereas there has been a significant increase in the consumption of water. To understand consumers’ preferences for beverage alternatives to sugar-sweetened beverages, we study two monthly aggregate demand systems of 8 ready-to-drink non-alcoholic beverages and 8 most consumed fruit juices in the United States from 2009 to 2018 using a quadratic almost ideal demand system (QUAIDS) model. Furthermore, we stratify our demand systems based on household income levels. Our findings suggest that water and fruit juices (other than orange and grapefruit juices) are substitutes for regular CSD. Specifically, low income households are inclined to consume more water whilst upper income households would consume more fruit juices. Regarding the demand for fruit juices, high income households are most sensitive to the consumption of apple juice whereas low and middle income households are most sensitive to orange juice and grape juice in terms of expenditure and price. We find that there is a significant complement effect between apple juice and grape juice, and this effect is particularly pronounced in low and middle income households.

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53 pages


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Rickard, Bradley

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Li, Jie

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Applied Economics and Management

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M.S., Applied Economics and Management

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Master of Science

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Attribution 4.0 International


dissertation or thesis

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