Demand for non-alcoholic beverages among urban households in southwest, Nigeria

Abstract

This study examined the roles of income, prices and household demography in household demand for non-alcoholic beverages (NABs) in two cities – Abeokuta and Ibadan in Southwest Nigeria. The study was based on primary data obtained from a cross-section of 407 households (211 from Abeokuta and 198 from Ibadan) drawn by multistage sampling technique across six Local Government Areas (LGAs) and 60 National Population Commission (NPC) enumeration areas (EAs). A structured questionnaire was used to collect data on households NABs expenditure, income, prices and other relevant socio-economic variables. The data were analysed within the framework of a linear approximation of an Almost Ideal Demand System. The study found that an average household, consisting of five (5) members, expended an average N5, 235.89 per month on NABs (approximately US$34.21 at N153.06/US$1 exchange rate in 2010). The bulk (67%) of the NABs expenditures were devoted to
purchase of dairy products (36%) and cocoa-based products used in preparing chocolate drinks (31%). The estimated income elasticity of demand for the six categories of NABs studied were positive while all the own price elasticity of demand were negative. Demand for dairy products and cocoa based drinks were found to be price elastic, while those of carbonated drinks, malt drinks, fruit juice and other NABs were price inelastic. Increase in education of the household heads was found to be associated with significant increase in the budget shares of dairy products (p<0.01) and fruit juice (p<0.10), but a significant reduction in budget shares of cocoa-based products (p<0.05), carbonated drinks (p<0.01) and malt drinks (p<0.05). The study concludes that policies aimed at promoting increased demand and healthy choices of NABS must pay some attention to raising real income and increasing level of education among the citizenry. Profitability of business enterprises involved in dairies and cocoa-based products would also be better enhanced if the firms adopt cost saving strategies as against price hikes in a bid to enhance performance.

Key words: Demand, Non-Alcoholic Beverages, LA-AIDS model