Elasticity of Demand for Sweetened and Unsweetened Drinks: The Case of Argentinian Households

Argentina is the fourth highest consumer of sweetened drinks, and the first consumer of soda in the world. In this paper we estimate a quadratic almost ideal demand system (QUAIDS) to explore demand for a number of sweetened and unsweetened beverages in Argentina. We use two household surveys: the last one available, performed in 2012-2013, and the previous one, carried over in 2004-2005. We explore expenditure shares and own and cross price elasticities. These results can shed light on a discussion that was held in 2017 in Congress towards the design of a tax reform on sweet beverages that will affect consumers, farmers, and the retail and food industries. Our results support the notion that a tax applied to highly sweetened beverages will affect consumption: for every 1% increase in price there will be a 1.32% drop in quantity purchased. In addition,we find that for every 1% price increase in highly sweetened beverages there will be a 1.12% increase in the amount of dairy beverages purchased. Acknowledgement :