Income Elasticity: The Global Beer Example (A Tellusant Quick Read)

How does demand for a category or industry change with disposable income and how do you go from analysis to strategic implications?

We use global beer demand to illustrate. The World Health Organization's alcoholic beverages database (GISAH) and Tellusant's TelluBase provide data.

The way to answer the first question is to quantify the income elasticity. That is, how much a percentage increase in demand is caused by percentage increase in disposable income: ΔD/D = ϵ⋅ΔI/I

Income elasticity is well known in academic research but unknown in business.

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The GISAH dataset is useful for developing and testing statistical models because it covers many years (currently 1961-2020) and many countries (currently 60+ for the full time period).