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Describe and explain the likely causes of the rise in the demand for Champagne in recent years.

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Introduction

Describe and explain the likely causes of the rise in the demand for Champagne in recent years. Tim Hoffmann Economics 11 IB HL 23/09/03 The rise in demand for champagne recently can be set down to certain factors. The six determinants that will have affected the rise in demand for champagne over the last few years include: Rise in income, rise in the price of substitutes, fall in price of complements, change in tastes (in favour of champagne), increase in population and an increase in price expected. ...read more.

Middle

When champagne is considered, substitutes such as wine or perhaps whisky must be taken into account. If wine is not selling well, or perhaps it is a very good year for selling and the prices are allowed to rise, there will be a lower demand for wine. This drop in demand for wine will mean more available income that can possibly be spent on champagne, therefore a rise in demand for it. A fall in the price of substitutes would also increase the demand for champagne. ...read more.

Conclusion

An increase in population creates quite a simple example: more people, more consumption. The more people there are the more possible consumers to spend money on champagne. Finally, the price expected can create a rise in demand. If, for example, prices were "expected" to rise over the next few years, consumers in general would usually purchase champagne now as it is a good that keeps for a long time and would be a much more rational thing to do to purchase it at a cheaper price now than for a dearer price later (for the same good.) ...read more.

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