Analysis of the impact of increased excise taxes, introduction of minimum prices and restrictions on advertising beer on the brewing industry in Croatia

Commissioned by: Brewers Association / Heineken Croatia 
Project duration: March 14, 2017 – June 13, 2017
Project manager: Marina Tkalec, PhD
Collaborators: Davor Mikulić, PhD, Maruška Vizek, PhD

Brief outline: 
The goal of this research project was to analyze the impact and calculate the effects of the implementation of the EU alcohol policy on the brewing industry in Croatia. The results of the research project provided a credible base for an informed debate on the formulation of measures to be put in place to achieve the objective of reducing the harmful use of alcohol. 

In this research project we assessed the impact of measures to reduce the harmful use of alcohol on the sales volumes of beer and on the producers of beer (and indirectly the total Croatian economy). In order to do this, we implemented a number of analytical methods and procedures to collect and display information about the basic features of the brewing industry and its importance to the national economy. 

Methodology: The study was divided into three analytical parts. In the first part we did the analysis based on the input-output model that allowed us to evaluate the overall effect of the brewing industry on the Croatian economy. In the second part, using econometric methods, we calculated the elasticity of beer consumption on the increase in excise duties. In the third part, we applied elasticities obtained from the second part of the research and assessments of the effects of policy measures to reduce consumption of beer from the existing literature on the figures that represent the importance of beer industry in Croatia (from the first part of the research). The analysis was carried out according to several scenarios that were based on a wider range of elasticities (from largest to smallest) in order to obtain a range of possible effects of price changes on consumption. Using these simulations it was possible to calculate the effects of price/excise increases not only on final beer consumption, but also on the whole brewing industry and related businesses. Within this section, using the results of existing research, we calculated the effects of the other two measures (the introduction of minimum prices and restrictions on advertising) on beer consumption, the brewing industry and the overall economy.