This study aims to evaluate price elasticities of beer, wine, and spirits in Sweden in order to understand consumer demand and assess: what could be the potential effect of the upcoming tax increase in 2023 on alcohol consumption? The period of study includes 2011-2019, uses from CAN (The Swedish Council for Information on Alcohol and Other Drugs) data for alcohol consumption in Sweden, and also evaluates alcohol purchased or smuggled from abroad for the first time.

Output includes chart analysis of consumption in liters per capita, real price level, substitution effects between beer, wine, and spirits; regressions that evaluate price elasticities for beer, wine, and spirits, and combined; and tax simulation scenarios for beer, wine, and spirits to evaluate the potential effects of the upcoming tax increase using the calculated elasticities.

Results include relatively inelastic demand for beer and spirits purchases at Systembolaget, in line with previous research studies, and insignificant elasticity results for wine. A high-level projection of potential tax government revenues for beer and spirits is in line with the announced expected revenues from the tax increase by the Swedish government, in accordance with expectations that demand is relatively inelastic.