improving the potential to forecast demand for wine by ... - ANZMAC

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Unfortunately, the patterns of wine consumption are relatively unknown as there is little empirical evidence of the habits of wine consumers. There are two studies on the population’s wine consumption habits, from the Australian Bureau of Statistics (ABS) in 1994/5 and 1998, but in isolation, these cross-sectional studies are of little use in forecasting demand. However, an argument can be made that if consumers’ historical patterns of wine consumption can be confirmed with data from these two samples, empirical evidence on wine consumption could be generated retrospectively. Consequently, this study proposes the use of a retrospective survey method as a way of investigating consumers’ wine consumption habits over their lives. Evidence of retrospective studies in marketing is difficult to find. However, the process of a retrospective cohort study is well established in the field of epidemiology. This paper suggests the historical consumption patterns of Australians are investigated using the established methodology for a retrospective cohort study. The findings can be tested against the data provided by the ABS in 1994/5 and 1998 for validity of the study. This study contributes to the development of a new methodology for validating the behaviours of consumers in past periods. Additionally, if consumers can be shown to recall their wine consumption patterns, their patterns of consumption can be evaluated, and forecasting of future consumption can be made with improved accuracy. The first section of this paper explains the background to demand forecasting and the benefits of the process for industry. The second section highlights the information required for applying the principles of demand forecasting. The third section outlines the goal of generating empirical data on historical wine consumption. The next section details the methodology used in epidemiology for surveying respondents on their retrospective behaviours, and how it can be applied to this study. The final section summarises the concept of this paper before suggesting further directions for this study. Demand Forecasting Demand forecasting is the process of using historical data on consumption in order to anticipate future demand for a product or service (Smith, Herbig, Milewicz and Golden 1996; Armstrong 1999). Industries budget for potential demand as a way to allocate resources to a firm’s operations. However, to enable a reliable forecast of demand, the approximate number of consumers and their probability of consumption need to be known by the forecaster (Massy 1969). The problem in the wine industry in Australia is that neither of that information is available as there is little data on the consumption habits of the population. Applications to the Wine Industry To forecast demand in the wine industry, there are three main options: 1. Assume that production and consumption occur at the same time; 2. Use sales data, assuming that sales and consumption occur concurrently; or 3. Use actual consumption data. ANZMAC 2003 Conference Proceedings Adelaide 1-3 December 2003 687
For the first option, the production data from year to year is available from the ABS as ‘apparent [wine] consumption’ data (Abs 2003). The ABS has recorded apparent wine consumption habits of Australians since the early 1940s (Abs 2003). However, problems arise in that inventories in the distribution channel are not considered, nor is the potential that wine may be matured for up to five years after harvest before release to the market (Halliday and Johnson 1994). The second option of using sales data seems more appropriate. However, sales data is difficult to capture from all firms selling wine in the market. Further, the demographic characteristics of consumers are not provided. Additionally, the consumer’s propensity to share wine with another, or to offer the wine as a gift is not a consideration with this method. Authors have laid claims to knowledge on the patterns of wine consumption, but these figures have been based on sales data, not actual consumption. There is no doubt that wine sales have a close relationship with wine consumption. However, the relationship between sales and consumption is not clearly defined. This leaves the use of actual consumption data as the only viable option. The written history of wine consumption in Australia asserts these details: Up to the 1960s, wine consumption is believed to have been dominated by fortified wine consumption (Johnson 1971; Beeston 1994). The 1970s witnessed a growth in white wine consumption, and this pattern is believed to have held through the 1980s and into the early 1990s (Gluckman 1986; Beeston 1994; Cartiere 1997). The mid-90s saw the pattern change to dominance in red wine production (Awbc 2002), and the existence of consumption data shows red wine becoming the preferred style of Australians (Stanford 2000). These patterns seem quite clear. However, with the exception of Stanford’s paper, all authors use their observations and knowledge of the wine industry without supporting these assertions with empirical evidence. Consequently, the actual patterns of wine consumption are relatively unknown. Therefore, the problem associated with using actual wine consumption data is that very little of it exists. Further complicating the problem is that years of detailed consumption data have to be used in order to make forecasts of potential demand. However, there is some documented history of wine consumption in Australia from the ABS. In late-1994 and early 1995 the ABS surveyed consumers on their actual alcohol consumption for the first time, repeating the study in 1998. Conceptual Papers / Marketing Theory Track 688
Page 1: IMPROVING THE POTENTIAL TO FORECAST
Page 5 and 6: Researching Considerations In order
Page 7 and 8: levels of success with both methods
Page 9 and 10: generate some empirical data on the
Page 11 and 12: Hennekens, C. H. and J. E. Buring (

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