Factors of Wine Demand in the Czech Republic and in the Neighbouring Wine-Growing Countries

Factors of wine demand in the Czech Republic and in the neighbouring wine-growing countries Faktory poptávky po víně v ČR a sousedních vinařských zemích R. KUČEROVÁ Mendel University of Agriculture and Forestry, Brno, Czech Republic Abstract: The paper is focused on the analysis of the wine demand and chosen factors which influence the wine demand in the Czech Republic, in Slovakia, in Austria, and in Germany. In the Czech Republic, the wine consumption per inhabitant went up slightly in 1994–2003, the wine demand has a rising trend. The wine demand has the rising trend in Germany as well. In Slovakia, the year wine consumption per inhabitant decreased by 14.9% from 1994 to 2003; in Austria by 7.7%. The- re is a downward trend of development in these countries. The influence of the analyzed factors on the development of the wine demand is different in the particular countries. The dependence is possible to follow at the total level of incomes in comparison with the consumer’s price of wine. Key words: demand, wine, consumption of wine, consumer’s price, average wages, Germany, Austria, Czech Republic, Slo- vakia Abstrakt: Příspěvek je zaměřen na anýzu poptávky po víně a vybrané faktory, které ji ovlivňují v České republice, na Slovensku, v Rakousku a Německu. V České republice se spotřeba vína na jednoho obyvatele ve všech sledovaných letech mírně zvyšovala, poptávka vykazuje vzestupný trend. Vzestupný trend lze sledovat také v Německu. Naproti tomu na Slovensku poklesla roční spotřeba vína na jednoho obyvatele od roku 1994 do roku 2003 o 14,9 %, v Rakousku o 7,7 %. V těchto zemích je trend vývoje sestupný. Vliv analyzovaných faktorů na vývoj poptávky je v jednotlivých zemích různý. Závislost lze sledovat u celkové výše příjmů v porovnání s výší spotřebitelných cen vína. Klíčová slova: poptávka, víno, spotřeba vína, spotřebitelské ceny, průměrná hrubá měsíční mzda, Německo, Rakousko, ČR, Slovensko INTRODUCTION ket went up step by step in the past ten years. The analyzed industry is very attractive from this point The size of the market, its growth and the period of view. It is possible to expect a rising trend in of the industry life cycle are the basic characteristics the development of the wine demand in the future of an industry. They are important for the evaluation (Žufan 2004). of the intensity of rivalry among businesses in the The wine demand determines the total amount of industry. They are the key criteria for the evaluation the production, which can be realized in the market. of the industry attractiveness. The size of the market The increasing demand means that the business can is determined by the size of the demand. increase its market share without doing it at the Tomšík, Žufan (2004) evaluated the size of the expense of the market share of its competitors. The market in the wine-production sector in the Czech development of demand coheres with the development Republic and its development from the point of view of the industry and with the period of the industry of its influence on the attractiveness. The Czech life cycle. But the factors, which influence demand, Republic is the country where the size of the mar- are very important too. Supported by the Ministry of Education, Youth and Sports of the Czech Republic (Grant No. MSM 6215648904) and the Ministry of Agriculture of the Czech Republic (Grant No. QF 3276). AGRIC. ECON. – CZECH, 51, 2005 (9): 403–410 403 SURVEY OF LITERATURE AND METHOD depends on cost, quality, and availability of complementary products, The aim of the paper is to analyze the factors which – group of new customer – most of the very high influence the wine demand and the development of industry growth rates are the result of increas- wine demand in the Czech Republic and in the neigh- ing sales to new customer rather than to repeated bouring wine-growing countries – Austria, Germany customer. and Slovakia. The aim also is to describe the trends of development of these factors and their influence Wine demand and its development are described by on wine demand in all of the analyzed countries. the average year consumption of wine per inhabitant The individual demand for goods (the demand of in the paper. The analysis comes partialy from the one consumer) depends on price of goods, on income managerial and partialy from the micro-economic of consumer, and on prices of other goods. If the concept. Consumer’s prices of wine, income levels, demand increases with the growth of consumer’s unemployment rate, and development of bier con- income, it is the common goods. For the necessary sumption are compared and evaluated in all of the goods, the demand quantity grows more slowly than analyzed countries. the consumer’s income, for the luxurious goods, the The information for this analysis were drawn from demand quantity grows faster than the consumer’s the Situation and Perspective Bulletin for the com- income. The influence of price change of goods is modity wine in the Czech Republic and in Slovakia, negative for the normal goods – the demand quantity from web site of the Austrian and the German Institute moves contrary to the price. Substitute products and for Wine, from the information of the Czech and complementary products are distinguished from the Slovak Wine Producers Union, from the Ministry of point of view of the influence of prices of other goods Agriculture of the Czech Republic and of the Slovakia, on demand. The demand turns into in the same di- from the Research Institute of Agricultural Economics, rection to the price of substitute products and in the from the State Agricultural Intervention Fund, and contrary direction than the price of complementary the Czech, Slovak, Austrian and German Statistical products. Market demand is a sum of individual Office. demands of particular consumers. In case of market demand, other influences also affect the decision making – e.g. psychological or ethical factors. The RESULTS AND DISCUSSION demand of particular consumers and their groups are in an interaction. In case that the individual demand Wine demand in the Czech Republic has the rising grows in consequence of the growth of bought amount trend; it went up slightly in all analyzed years. It was by other consumers – it is a “fashion” effect. In case 16.3 litres per inhabitant in 2003; it rose almost by that the individual demand falls with the growth of 6% since 1994. number of consumers – it is a “snobbish consump- The similar development is also possible to observe tion” effect (Soukupová 1996). in Germany. The average year wine consumption per Porter (1994) speaks about the long-run changes inhabitant increased almost by 5% from 1993 to 2004, in growth of the market concerning to the demand. but it varied around 24 litres per inhabitant per year These changes depend on: – it is by 33% more than in the Czech Republic. – demographic changes, which are one key deter- The lowest wine consumption per inhabitant is minant of the size of buyer pool and thereby the observed in Slovakia from all of the analyzed coun- rate of growth in demand. The potential customer tries. The average year wine consumption was only group for a product consists of buyers character- 10.3 litres per inhabitant in 2003, it is also the lowest ized by the particular age groups, income levels, level in the past 10 years in Slovakia. In addition, educational level, or geographic locations, wine consumption went down step by step from 1994 – needs, which are affected by changes in the lifestyle, (excepting 1996 and 1997). It came to the decline of tastes, philosophies, and social conditions of the wine consumption by 17.6% in comparison of 2003 buyer population, to 1997, and to the decline by 14.9% in comparison – relative position of substitutes – if the cost of substi- of 2003 to 1994. tute falls in relative terms, or if its ability improves The development of wine demand has also the to satisfy the buyer’s needs, the industry growth downward trend in Austria (it fell almost by 8% in will be adversely affected (and vice versa), the analyzed years). But the level of consumption – position of complementary products – the effec- is the highest from all of the analyzed countries; it tive cost and quality of many products to the buyer varied around 30 litres per inhabitant. Austria mostly 404 AGRIC. ECON. – CZECH, 51, 2005 (9): 403–410 32 30 28 26 Czech nt 24 Republic bita 22 Slovakia 20 r inha 18 pe Germany s 16 litre 14 Austria 12 10 8 6 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 year Figure 1. Development and trend of development of the average year wine consumption in the Czech Republic, in Slo- vakia, in Germany, and in Austria (litres per inhabitant) Source: Situation and Perspective Bulletin for the commodity wine 2004, FAOSTAT Database Results, own calcula- tions approximates to the average year wine consumption Development of consumer’s price 1 per inhabitant in the countries EU-15 , where it varied around 34 litres per inhabitant. Consumer’s prices of wine in the Czech Republic Wine consumption in the Czech Republic reaches went up in the analyzed years. The growth was higher only 47% of the average year wine consumption in the in the red wine – 24% from 1997 to 2003. The growth countries EU-15; wine consumption in Slovakia only was only 16.4% in the white wine in the same period 32% of the European average year wine consumption; (Table 1). but it is 73% in Germany, and 91% in Austria.

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