{"id":15334,"date":"2019-02-12T02:32:08","date_gmt":"2019-02-12T02:32:08","guid":{"rendered":"http:\/\/www.lifeandnews.com\/articles\/?p=15334"},"modified":"2019-02-13T20:20:38","modified_gmt":"2019-02-13T20:20:38","slug":"drinkers-prefer-big-beer-keeps-its-hands-off-their-local-craft-brews","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/drinkers-prefer-big-beer-keeps-its-hands-off-their-local-craft-brews\/","title":{"rendered":"Drinkers prefer Big Beer keeps its hands off their local craft brews"},"content":{"rendered":"

Jarrett Hart<\/a>, University of California, Davis<\/a><\/em><\/p>\n

Craft beer\u2019s popularity<\/a> has exploded in the U.S. in recent decades, leading to soaring production<\/a> and the creation of thousands of new breweries<\/a>.<\/p>\n

Much of that growth has come at the expense<\/a> of traditional brewing giants like Anheuser-Busch InBev and MillerCoors.<\/p>\n

So, naturally, these macro brewers have been trying to get a piece of the action<\/a> by buying up their craft counterparts. Examples include AB InBev\u2019s 2011 purchase of Goose Island Brewery and Tokyo-based Sapporo\u2019s 2017 acquisition of Anchor Brewing \u2013 America\u2019s oldest craft brewery.<\/p>\n

But since a major appeal of craft beer<\/a> \u2013 and a drinker\u2019s willingness to pay a premium for a pint \u2013 is its localness and non-bigness, does being what I dub \u201ccrafty\u201d beer owned by Big Beer spoil the brew?<\/p>\n

That\u2019s a question I ask in the Ph.D. dissertation<\/a> I am writing for a degree in agricultural and resource economics. I wanted to know whether drinkers are willing to pay more for beer knowing that it isn\u2019t actually independently and locally produced.<\/p>\n

In my most recent research<\/a>, I directly tapped consumers for answers by conducted a \u201cchoice experiment\u201d at a bar specializing in craft beer.<\/p>\n

\"\"
Tokyo-based Sapporo acquired Anchor Brewing in 2017.<\/span>
\nWikimedia Commons\/WolfmanSF<\/a>, CC BY<\/a><\/span><\/figcaption><\/figure>\n

Setting the scene<\/h2>\n

The scene of my experiment was a bar, University of Beer, in the college town of Davis, California, where I study. Over the course of more than a month, I recruited 301 patrons of the bar for my experiment.<\/p>\n

Participants began the experiment by selecting the beer they would most like to order from the venue\u2019s rotating list of 60 brews on tap. Then I presented them with a list of 10 randomly selected beers from the menu.<\/p>\n

For each, I asked participants what they\u2019d be willing to pay for the random beer so that they wouldn\u2019t care whether they received it or their original selection \u2013 that is, whatever price would make them happy with either choice.<\/p>\n

I also randomly gave some participants information about the beer\u2019s brewery location and ownership status \u2013 such as \u201cBrewers Association certified craft beer,\u201d \u201cimport\u201d or \u201cMillerCoors.\u201d Other participants did not receive this information for some or any of the randomly presented beers.<\/p>\n

From here I was able to determine how much consumers were willing to pay for \u201clocal\u201d or \u201ccraft\u201d beer, but the findings were not as cut-and-dried as hypothesized.<\/p>\n

Defining \u2018local\u2019<\/h2>\n

First I had to figure out what constitutes<\/a> \u201clocal.\u201d<\/p>\n

I asked participants to identify each of the random beers they viewed as local or not local. Later in the experiment, I asked them to define \u201clocal.\u201d<\/p>\n

Participant responses revealed an array of \u201clocal\u201d qualifiers \u2013 proximity was included in most definitions but some also cited production size or brewery ownership.<\/p>\n

Frequently, a participant\u2019s definition of \u201clocal\u201d was inconsistent with the beers they actually deemed \u201clocal.\u201d<\/p>\n

To circumvent these inconsistencies, I did not adopt a universal definition of the term. Instead, a beer was considered \u201clocal\u201d if an individual identified it as such.<\/p>\n

Sorting for snobs<\/h2>\n

I also needed to separate \u201cbeer geeks\u201d from average consumers.<\/p>\n

Not everyone is equally enthusiastic about craft beer. Some care deeply about their beer, such as where it comes from and who produces it. Others simply want something tasty.<\/p>\n

I hypothesized that these different types of consumers would likely have distinct preferences for craft versus macro and local versus non-local beer. To identify and sort participants, I administered a quiz at the end of the experiment to test their knowledge of craft brewery locations and ownership.<\/p>\n

Putting a price on local beer<\/h2>\n

My findings unequivocally show that consumers prefer local beer \u2013 however they define it.<\/p>\n

But how much do they prefer it \u2013 that is, how much are they willing to pay extra to have a local over a non-local brew?<\/p>\n

Unfortunately I have to give a boring economist\u2019s answer: That depends.<\/p>\n

On average, the \u201clocal\u201d premium is generally worth 25 cents to 54 cents per pint. However, this premium does not apply to every local beer. Consumers have beer styles they prefer \u2013 like IPAs, pilsners and stouts \u2013 and I find that the \u201clocal\u201d premium diminishes for beers within their preferred style.<\/p>\n

For example, an IPA lover doesn\u2019t make a distinction between a local and non-local IPA.<\/p>\n

However, when she orders a sour beer, she is willing to pay 45 cents \u2013 on average \u2013 more for a local sour than a non-local sour.<\/p>\n

And how about for craft beer?<\/p>\n

I found that only beer geeks, and not average consumers, are willing to pay a premium for certified craft beer versus a beer of unknown ownership. The 5 percent of consumers with the most beer knowledge were willing to pay 75 cents more per pint on average, while the top 25 percent offered an extra 47 cents.<\/p>\n

And, like the \u201clocal\u201d premium, this premium diminishes within the consumer\u2019s preferred beer style.<\/p>\n

\"\"
A group of birding enthusiasts sample a flight of beers at the Maine Brewing Company.<\/span>
\nAP Photo\/Robert F. Bukaty<\/a><\/span><\/figcaption><\/figure>\n

Are \u2018crafty\u2019 beers devalued?<\/h2>\n

Finally, do \u201ccrafty\u201d beers that are owned by Big Beer fetch the same premium as certified craft beer? Typically, no.<\/p>\n

Of the Big Beer companies, I found that only Founders Brewing Company, now owned by Mahou San Miguel, was able to extract premiums from consumers similar to the ones independent craft brews obtained.<\/p>\n

The other \u201ccrafty\u201d beers in my study, however, couldn\u2019t command the same premiums. In fact, I found that consumers wanted to pay $0.72 to $1.04 less per pint for a craft beers owned by other Big Beer companies relative to one owned by an independent brewery.<\/p>\n

So unless you\u2019re a beer geek like me, you probably don\u2019t care if your artisanal ale is \u201cBrewer\u2019s Association certified craft.\u201d But beer geek or not, when drinking your favorite type of ale or lager, you probably prefer that Big Beer doesn\u2019t brew it.\"The<\/p>\n

Jarrett Hart<\/a>, Ph.D. Student of Agricultural and Resource Economics, University of California, Davis<\/a><\/em><\/p>\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Jarrett Hart, University of California, Davis Craft beer\u2019s popularity has exploded in the U.S. in recent decades, leading to soaring production and the creation of thousands of new breweries. Much of that growth has come at the expense of traditional brewing giants like Anheuser-Busch InBev and MillerCoors. So, naturally, these macro brewers have been trying […]<\/p>\n","protected":false},"author":44,"featured_media":15327,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[277],"tags":[5882,3601,638,224,196,5149],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/15334"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=15334"}],"version-history":[{"count":2,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/15334\/revisions"}],"predecessor-version":[{"id":15336,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/15334\/revisions\/15336"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/15327"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=15334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=15334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=15334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}