Drinkers prefer Big Beer does not touch their craft breweries

Much of this growth has occurred at the expense of traditional brewery giants such as Anheuser-Busch InBev and MillerCoors.

So, of course, these macro brewers have been trying to get a share of the action by buying their craft counterparts. Examples include AB InBev's 2011 purchase of Goose Island Brewery and the acquisition of Anchor Brewing – Sapporo's oldest US brewery in 2017.

But since a major attraction of craft beer – and the drinker's willingness to pay extra for a pint – is local and not devoid of guilt, is what I call "craft" beer in Big Beer spoils the beer?

This is a question I asked at the doctoral level. I am writing for a degree in economics of agriculture and resources. I wanted to know if the drinkers were willing to pay more for a beer knowing that it was not produced independently and locally.

In my latest research, I've directly invited consumers to answer my questions by performing an "experience of choice" in a bar specializing in craft beer.

Staging

The scene of my experience was a bar, University of Beer, in the University City of Davis, California, where I study. For more than a month, I recruited 301 law firm clients for my experience.

Participants began the experiment by selecting the beer they would most like to order from the rotating list of 60 proposed brews. Then I presented them with a list of 10 beers selected randomly from the menu.

For each of them, I asked the participants what they would be willing to pay for the beer at random so as not to worry about whether it had received it or their initial selection – that is, to say what price would make them happy with one or the other choice.

I also randomly gave some attendees information about the location of the beer brewery and its owner status – such as "Brewers Association-certified craft beer," "import" or "MillerCoors" ". Other participants did not receive this information for some randomly presented beers. .

From there, I was able to determine the price that consumers were willing to pay for a "local" or "artisbad" beer, but the conclusions are not as dry as the hypothesis.

Set "local"

I had to understand what constitutes "local" first.

I asked the participants to identify each of the beers chosen randomly, whether they are local or non-local. Later in the experiment, I asked them to define "local".

Participants' responses revealed a set of "local" qualifiers – proximity was included in most definitions, but some also cited the size of the production or ownership of the brewery.

Frequently, a participant's definition of "local" was inconsistent with the beers he actually considered "local".

To circumvent these inconsistencies, I have not adopted a universal definition of the term. Instead, a beer was considered "local" if a person identified it as such.

Sorting for snobs

I also needed to separate the "beer geeks" from average consumers.

Not everyone is enthusiastic about craft beer. Some people care a lot about their beer, for example where it comes from and who produces it. Others just want something tasty.

I've hypothesized that these different types of consumers would likely have distinct preferences for craft beer versus macro beer and compared to local beer versus non-local beer. To identify and sort participants, I organized a questionnaire at the end of the experiment to test their knowledge of the locations and ownership of craft breweries.

Put a price on the local beer

My findings unequivocally show that consumers prefer local beer – whatever their definition.

But how much do they prefer that, how much are they willing to pay extra to have a local beer compared to a non-local beer?

Unfortunately, I have to give a boring answer to an economist: it depends.

On average, the "local" premium is generally between 25 and 54 cents per quart. However, this premium does not apply to all local beers. Consumers prefer beer styles – such as APIs, pilsners and stouts – and I find the "local" premium drops for beers of their favorite style.

For example, an IPA enthusiast does not distinguish between a local and a non-local IPA.

However, when she orders a tart beer, she is willing to pay 45 cents – on average – more for a local tart than for a non-local tart.

And for craft beer?

I've found that only beer geeks, not average consumers, are willing to pay extra for a certified craft beer compared to a beer of unknown property. The 5% of beer-savvy consumers were willing to pay 75 cents more per quart on average, while the richest 25% offered 47 cents more.

And, like the "local" premium, this premium decreases in the consumer's preferred beer style.

Are "crafty" beers devalued?

Finally, do "craft" beers owned by Big Beer have the same advantage as certified craft beers? Typically no.

Among the major beer companies, I found that only the Founders Brewing Company, now partially owned by Mahou San Miguel, was able to obtain consumer bonuses similar to those obtained with independent craft breweries.

The other "craft" beers of my study could not however benefit from the same premiums. In fact, I found that consumers wanted to pay $ 0.72 to $ 1.04 less per quart for a craft beer owned by other Big Beer companies than a beer owned by an independent brewery.

So, unless you're a beer geek like me, you probably do not care if your craft beer is a "Certified Brewer's Association". The beer does not brew it.

Jarrett Hart, Ph.D. Student in Agricultural Economics and Resources, University of California, Davis

This article is republished from The Conversation under a Creative Commons license.