As a first effort at modeling nonalcoholic beverage demand in a systemwide framework that includes bottled water, this article examines the impact of advertising on the demand for nonalcoholic beverages in the United States. We employed an AIDS (almost ideal demand system) model of five jointly estimated equations that included advertising expenditures as explanatory variables to evaluate annual U. S. consumption of nonalcoholic beverages for 1974 through 2005. Results suggest that advertising increases demand for fluid milk, soft drinks, and coffee and tea, but not for juice or bottled water. Advertising spillover effects occur in over 50 percent of the cases considered, and such effects can be substantial, particularly for advertising of soft drinks, and coffee and tea. We find that a large increase in the retail price of fluid milk, an increasing trend towards dining out, and positive spillover effects from soft-drink advertising made significant contributions to bottled water's success in recent years.

Obesity is one of the most pressing and widely emphasized health problems in America today. Beverage choices made by households have impacts on determining the intake of calories, calcium, caffeine, and vitamin C. Using data from the Nielsen Homescan Panel over the period 1998-2003, and a two-way random-effects Fuller-Battese error components procedure, we estimate econometric models to examine economic and demographic factors affecting per-capita daily intake of calories, calcium, caffeine, and vitamin C derived from the consumption of nonalcoholic beverages. Our study demonstrates the effectiveness of the USDA 2000 Dietary Guidelines in reducing caloric and nutrient intake associated with nonalcoholic beverages.