Tobacco, Alcohol, and Crime in the US

The assignment analyzes the tobacco and alcohol market in the United States, focusing on the relationship between beer, wine, and cigarette sales. It investigates how health warnings on cigarettes influence beer demand and vice versa. The paper concludes by examining the ban on smoking in Isle of Man prisons and its correlation with a significant decrease in crime rates.

Running head: ALCOHOL AND TOBACCO MARKETS
Alcohol and Tobacco Markets
Name of the Student
Name of the University
Author note

1ALCOHOL AND TOBACCO MARKETS
Table of Contents
Introduction................................................................................................................................2
Beer, Wine and Cigarette Markets.............................................................................................2
Impact of health earning on packaging of cigarette...................................................................3
Impact of yeast shortage.............................................................................................................4
Cigarette ban and declining crime rate.......................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

2ALCOHOL AND TOBACCO MARKETS
Introduction
In United States, there is a growing concern for rising consumption of cigarette and
alcoholic beverages. In order to put a restriction on cigarette consumption tax rates on
cigarette has increased. The tax policy is successful in reducing cigarette demand. it is found
that when cigarette demand reduces then beer and spirit demand also reduces indicating ac
complementary relation. With an objective of reducing crime rate Isle of Man currently
employs the strategy of banning cigarette for prisoners.
Beer, Wine and Cigarette Markets
In United States beer market dominates other two most common beverages Wine and
Sprit market. Hence, Beer occupies an important place in the category of Alcoholic
beverages. American spends nearly $37 billion as recorded from bear retail selling in 2017
(nielsen.com, 2017). There is intensive competition among different brands. Some of the
dominating brands in beer industry are Anheuser-Busch In Bev, Miller Coors, Heineken
USA, Pabst and Boston Beer Co.
USA has the largest Wine market in World. Apart from domestic production United
States import a large volume of Wine every year. Australia is one of the large exporters of
Wine in USA. The sales in wine industry have an upward trend. In the wine market there are
90991 wineries as recorded in 2017 (wineinstitute.org, 2017). The preference and spending
on Wine is increasing day by day encouraging Wine production and Sales.
US posses a large cigarette market as like alcoholic beverages. In the phase of anti
smoking policies the producers in the market focus on developing newer product. In this
regard the E-cigarette market is has become important. Regular cigarette, menthol cigarette,
cigars are some of the varieties available in the market.

3ALCOHOL AND TOBACCO MARKETS
There is an interconnection between the alcohol and tobacco market. Most drinkers
prefer to smoke at times of drinking. People consume alcohol in combination with cigarette.
When a tax on cigarette increases price of cigarette then there is an obvious decrease in
cigarette demand. Associated with this, US economy has a recorded a decline in alcohol
consumption (washingtonpost.com, 2017). This shows a complementary relation between
cigarette and alcohol demand. However, the decline is not uniform among for all alcoholic
products. Beer is more closely related with cigarette than Wine and hence experiences a
larger fall in its market demand due to taxation on cigarette. Any change in beer or cigarette
market is likely to affect the other one.
Impact of health earning on packaging of cigarette
Figure 1: health warning on cigarette packaging and beer market

4ALCOHOL AND TOBACCO MARKETS
(Source: as created by the Author)
Cigarette and bear are complementary goods. When demand for either of the product
changed this has an impact on the other (Tauchmann et al., 2013). When cigarette tax reduces
demand for cigarette then there is a decline in demand for beer as well. On account of health
warning on cigarette packaging the demand for cigarette might reduces because of increasing
awareness among people. When cigarette demand declines then beer demand will also
decline. This is shown in figure 2. The demand curve will shift to the left and
correspondingly price quantity of beer sold will also decline.
Impact of yeast shortage
Figure 2: Yeast shortage and cigarette purchase
(Source: as created by Author)

5ALCOHOL AND TOBACCO MARKETS
Yeast is used as an in ingredient in preparing beer. Shortage in yeast supply lead
supply obviously reduces production of beer. Supply of beer then fall short of its demand and
causes a price hike in beer market (McKetin et al., 2014). In response to rising price demand
for beer will fall. Those who purchase cigarette for consuming cigarette at time of drinking
beer will reduce their purchase to some extent. Again demand curve for cigarette will move
inward direction from DD to D1D1. With a reduced in cigarette market price will decline from
P* to P1 and quantity purchased will fall from Q* to Q1.
The figure above shows how to complementary relation between cigarette and beer
brings changes when market scenario changes in any of the two markets.
Cigarette ban and declining crime rate
Smoking is an addictive habit found in people of different age groups. To support
their habits people often involve in different criminal activities. Crimes are more common
among teenagers who do not have a steady source of income. Therefore, imposing ban on
cigarette is expected to reduce crime rate such as stealing, smuggling and other types of
crimes (Kulick, Prieger & Kleiman, 2016). The strategy taken in Isle of Man is quite different
than traditional banning. There, the prisoners once entered the prison have to give up
smoking at anyhow. They have no other options but to leave their habit.
The threat of giving up smoking works more intensively than punishment of mere
imprisonment. This contributes to a significant decline in the crime rate. The accounted crime
rate falls to nearly 14% after imposition of banning (dailymail.co.uk, 2017). High community
Spirit and low rate of unemployment has already kept crime rate low in Isle of Man.
Additionally, banning cigarette in prisons has made crime rate even lower.

6ALCOHOL AND TOBACCO MARKETS
In the prison building, neither the inmates nor the guards are allowed to smoke. In
order to provide assistance in completely giving up the habit nicotine patches are given. Any
addiction has a direct impact on mental health (Sweeting & Hunt, 2015). Therefore,
arrangement for counselling is given to the prisoners. Criminals for all types of conviction are
brought under this policy. Therefore, people are doing away with even small crimes like
fighting, stealing cars. The idea of cigarette ban thus helps to reduce crime rate largely.
Conclusion
The paper evaluates alcohol and tobacco market in United States. Market for beer,
Wine and cigarette are closely evaluated and inter relationship between cigarette and alcohol
product has been found to exits. The relation is more relevant for beer that that for Wine.
Health warnings on cigarette affect beer market demand. Similarly yeast shortage in beer
market affects cigarette purchase. Final focus of the paper is on the banning of cigarette in
Isle of Man and an associated declining crime rate.

7ALCOHOL AND TOBACCO MARKETS
References
Drop in crime on Isle of Man attributed to Europe's only non-smoking prison. (2017). Mail
Online. Retrieved 14 September 2017, from http://www.dailymail.co.uk/news/article-
1239209/Drop-crime-Isle-Man-attributed-Europes-non-smoking-prison.html
Kulick, J., Prieger, J., & Kleiman, M. A. (2016). Unintended consequences of cigarette
prohibition, regulation, and taxation. International Journal of Law, Crime and
Justice, 46, 69-85.
Market, T. (2017). The State of the U.S. Beer Market. Nielsen.com. Retrieved 14 September
2017, from http://www.nielsen.com/us/en/insights/reports/2017/the-state-of-the-us-
beer-market.html
McKetin, R., Chalmers, J., Sunderland, M., & Bright, D. A. (2014). Recreational drug use
and binge drinking: Stimulant but not cannabis intoxication is associated with
excessive alcohol consumption. Drug and alcohol review, 33(4), 436-445.
Statistics - The Wine Institute. (2017). Wineinstitute.org. Retrieved 14 September 2017, from
https://www.wineinstitute.org/resources/statistics
Sweeting, H., & Hunt, K. (2015). Prison Service’s Tobacco Strategy Group.
Tauchmann, H., Lenz, S., Requate, T., & Schmidt, C. M. (2013). Tobacco and alcohol:
complements or substitutes?. Empirical Economics, 1-28.
Want people to drink less? Make their cigarettes more expensive. (2017). Washington Post.
Retrieved 14 September 2017, from
https://www.washingtonpost.com/news/wonk/wp/2014/10/27/want-people-to-drink-
less-make-their-cigarettes-more-expensive/?utm_term=.6a90eaa33261.