The on-going generation of human comprises of addiction as one of the inseparable component in their lifestyle. The excessive craving for drugs, alcohol and cigarettes are on ever increasing trend pattern in the consumption that brings forth the strong and profitable existence of the subsequent markets with increased supply over time that also stirred the health related awareness.
This essay presents a discussion on the markets of beer, cigarettes and wine, three most consumed product worldwide. Further it tries to capture what impact the health concerned packaging of these products have on the consumption (Casswell, 2012). The strong correlation between smoking and drinking beer has been found to be proven and a brief case study is analysed in this essay followed by conclusion in the end.
Market Conditions & Discussion
As per the overview of global market for beer, the industry has shown significant growth over last few years. The market supply and demand of the product is combined effect of various factors like climatic condition, imposed tax and local prices, regulations of govt. demographic regulations and so on (Daube, 2012). The extensive advertising promotional activities and rise in disposable income has led to hiked consumption in some specific areas of North America, Asia and European nations. Moreover the growing investment on different kind of beers indicates the untapped growth opportunity the industry possesses at its heart.
Mostly concentrated in Europe and North American regions, the wine production is composed of approximately more than 1 million producers ranging from small to big ones. France is the manufacturing ground for most famous brands of wines. The global market for wine is largely driven by huge consumption habit pattern, changing lifestyle and growing income (Hawkins Holden & McCambridge, 2012). The half of the share of global trade of wine is taken care of by Europe alone. The recent market value of global wine production is $304 billion with and predicted estimation of reaching $380 billion by the year 2022 reflecting the opportunity of healthy investment and return from the market.
90% of the tobacco is sold in form of cigarettes that account for multi-billion dollar market in the world (source: IMARC group). The market size of the product can be assessed from the revenue the industry earns which is around $860 billion in 2016. Despite the decreasing demand in developed countries due to the impacts the social awareness, the cigarettes tend to capture growing market. The reason behind such is the higher prices of them that incentivize the seller, growth in consumption volume and pattern in developing countries, population explosion that creates more demand with maximum share of demand comes from young generation (Thrasher et al., 2012). Asia pacific provides largest market for cigarettes that take care of almost 60% of consumption made globally.
From the statistics it can be said that that veer and cigarettes have existence of complimentarity that is changes in the price of one affects the consumption of the other element.10 percent increase in the price of the cigarettes leads to 1 percent fall in the consumption of beer. This reflects the strong relationship drinking beer and smoking cigarettes have than that of between wine and smokes.
Impact of health warnings on cigarette packaging on beer consumption
One of the important non-price mechanisms to restrict and reduce consumption of cigarettes is the implementation of Graphic Warning Labels (McCreanor, 2013). This has been widespread policy implemented globally and has been found to be effective than textual warnings. The impact in favour of the warning has been greater among adolescent smokers. There has been cessation in induced smoking with significant reduction in tobacco intake and smoking as well. The impact of health warning thus can have positive impact on reduction of smoking rate. At the same price level now there would be downward shift in the demand curve in the cigarette market (Jha & Peto, 2014). Since cigarette and beer consumption have complimentary good effects, reduction in smoking rate will drive down the beer consumption rate also though amount of fall or shift in beer might not be same in both the market. The reason behind this is the existence of non-smoker consumers of beer who will keep their consumption intact.
Impact of yeast shortage on cigarette purchases
Alcoholic beverages are product of fermentation by yeast. In wine and beer production beer is widely used. Availability of yeast is not directly related to cigarettes consumption or purchase but have impact through the complimentary effect of beverage consumption (Hubbard et al., 2015). The trend reveals that drinking and smoking are closely related but the beer has more strong relation with smoke than wine. The trend of smoking while drinking beer is high than that of with wine (Hawkins Holden & McCambridge, 2012). Now if there appears shortage of yeast, less beer and wine will be produced. At same price level now beer supply will fall showing a upward shift in supply curve and as result. If we analyze the situation just in terms of compliment goods then cigarette purchase might fall shifting demand curve downward but again this fall would be small as there are many smokers who are addicted and smoke irrespective of the drinks they intake.
Impact of Isle of Man banning cigarettes on crime rates
The ban of cigarettes in the prisons of Isle of Man resulted in significant drop (almost 14%) in the crime rate in the region. The commitment of crime in terms of burglary, stealing cards and personal assaults which were pretty high in the region has declined sharply evoking much of curiosity in the society as whole (Mays et al., 2014). The very idea of no smokes available in the prison could stop criminals from committing crime and avoid going to jail. This is example of huge craving for smokes and how this drives the consumption decision of the people. People having higher addiction toward smoking can forgo the motives or satisfaction they derived from committing crimes. This can be highly interpreted in terms of higher taste and preference as the factor of demand driving the higher craving that stops them in order to avoid detainment. Individual taste and preference give birth to certain kind of intense demand decisions that shifts the demand in the market. The prison authority successfully detected and applied this factor in order create disincentive for committing crime and become imprisoned.
The discussion reveals the current scenario and prospects in markets for beverage and cigarettes with subsequent trends in consumption, supply and production factors. The young population all over the world are more prone to smoking and drinking beer with growth in the markets of Asia pacific regions. Wine has large scale of consumers concentrated in western countries. The analysis of complimentary effect found between smoking and drinking beer reveals that in absence of price change, fall in the demand or supply of any good will also cause significant shift in the demand or supply of complimentary goods. Moreover the taste and preference for smoking is so high that it could drop the crime rate of Isle of Man indicating higher craze for addiction over crime.
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