DETERMINING THE INEQUALITY OF ALCOHOL CONSUMPTION USING THE THEIL INDEX Damien Wilson, James Juniper and Larry Lockshin Wine Marketing Research Group Abstract The wine industry is changing from a focus on production improvements to adopting the discipline of marketing. The wine market is perceived as large heterogeneous groups of consumers who have homogeneous consumption habits. This research aims to investigate the reliability of that perception by using log ratios to generate a measure of inequality between and within age groups. The aim of this analysis method is to provide an index that represents the level of uniformity in alcohol consumption. The results present the Theil index for each period analysed, which describes the dispersion in consumption habits of alcohol drinkers based on age. The Australian Bureau of Statistics provided the data, and previous publications based on this data assume relative uniformity in alcohol consumption across age groups. We found the perception of uniformity in consumption habits between groups exists compared tot within groups, in the periods studied. The consequences for marketers are that knowing there is uniformity in consumption between age groups allows decision making to be conducted with more confidence for future trends. Introduction The wine industry in Australasia has experienced significant growth in the past ten years. Throughout Australia and New Zealand, that growth has primarily come from an increase in demand from export markets (AWF 1995). During the past five years, wine producers have been able to sell as much wine as could be made, therefore producers have spent scant time or investment into researching the needs of consumers, primarily because investment was directed to meeting current demand. However, as supply to the global market increases and producers feel the effects of competition, the consumer seems to be more discerning when faced with an increasing number of wine choices (Scott 2001). The history of the wine industry is riddled with practices of the production concept. Too often a wine producer focuses on making wines that suit the producer’s tastes, rather than focussing on matching the needs of consumers. As the demand for wine falls, or supply increases, many producers are left trying to sell wine that consumers have little interest in (Beetson 1994). The consumer will direct their attention to purchasing wines that are made to suit personal preferences. The producer’s focus on production helps explain the ‘boom-bust’ nature of the wine industry. In an effort to reduce the impact of ‘boom and bust’ cycles wine producers must institute the discipline of marketing. In 1994, the Australian Wine and Brandy Commission [AWBC] commissioned the Australian Bureau of Statistics [ABS] to research the alcohol consumption habits of a representative selection of the Australian population. Research conducted over four quarterly periods throughout a year; over 94/95, was duplicated over two quarters in 1998. The results from the 1998 survey were analysed by Lawrie Stanford of the AWBC in 1999, and published in the Australian and New Zealand Wine Industry Journal (Stanford 2000). His analysis illustrated a