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Beer Snobs do Exist: Estimation of Beer Demand by Type

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  • Toro-González, Daniel
  • McCluskey, Jill J.
  • Mittelhammer, Ron C.

Abstract

Although mass-produced beers still represent the vast majority of U.S. beer sales, there has been a significant growth trend in the craft beer segment. This study analyzes the demand for beer as a differentiated product and estimates own-price, cross-price and income elasticities for beer by type: craft beer, mass-produced beer, and imported beer. We verify that beer is a normal good with a considerably inelastic demand and also find that the cross price elasticity across types of beer is close to zero. The results suggest that there are effectively separate markets for beer by type.

Suggested Citation

  • Toro-González, Daniel & McCluskey, Jill J. & Mittelhammer, Ron C., 2014. "Beer Snobs do Exist: Estimation of Beer Demand by Type," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169787, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:169787
    DOI: 10.22004/ag.econ.169787
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    Cited by:

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    2. Aaron J. Staples & Carson J. Reeling & Nicole J. Olynk Widmar & Jayson L. Lusk, 2020. "Consumer willingness to pay for sustainability attributes in beer: A choice experiment using eco‐labels," Agribusiness, John Wiley & Sons, Ltd., vol. 36(4), pages 591-612, October.
    3. Jeff Luckstead & Stephen Devadoss, 2021. "Taste renaissance, tax reform, and industrial organization of the beer industry," Economic Inquiry, Western Economic Association International, vol. 59(4), pages 1702-1722, October.
    4. Trey Malone & Jayson L. Lusk, 2016. "Brewing up entrepreneurship: government intervention in beer," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(3), pages 325-342, November.
    5. Mary J. Weber & John Timothy Lambert & Kelley A. Conrad & Sherry S. Jennings & Jennifer R. Mastal Adams, 2018. "Discovering a Cultural System Using Consumer Ethnocentrism Theory," Systemic Practice and Action Research, Springer, vol. 31(6), pages 617-636, December.
    6. Witham, Adam & Leite, Brian, 2023. "Business is Hopping: The Effects of Deregulation on Southern Craft Beer," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 53(1), January.
    7. Brester, Gary W. & McCullough, Michael & Atwood, Joseph & Austin, Caroline, 2023. "Beer Excise Taxes and the Craft Beverage and Modernization Tax Reform Act," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(2), May.
    8. Wesley Blundell & Kyle Wilson, 2023. "Acquisitions, product variety, and distribution in the U.S. craft beer industry," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 1053-1076, October.
    9. Wang, Xiangrui & Mittelhammer, Ron C. & Marsh, Thomas L. & McCluskey, Jill J., 2017. "Divestiture of US Businesses May Fail as a Merger Remedy: The Case of the US Beer Industry," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258388, Agricultural and Applied Economics Association.
    10. Toro Gonzalez, Daniel, 2014. "Demand Model Simulation in R with Endogenous Prices and Unobservable Quality," MPRA Paper 59117, University Library of Munich, Germany.
    11. Timothy J. Richards & Bradley J. Rickard, 2021. "Dynamic model of beer pricing and buyouts," Agribusiness, John Wiley & Sons, Ltd., vol. 37(4), pages 685-712, October.
    12. Burgdorf, Jacob, 2019. "Impact of mandated exclusive territories in the US brewing industry: Evidence from scanner level data," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 376-416.
    13. Alicia Rosburg & Carola Grebitus, 2021. "Sustainable development in the craft brewing industry: A case study of Iowa brewers," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 2966-2979, November.
    14. Watson, Philip & Winfree, Jason & Toro-González, Daniel, . "Fiscal Impacts and Cross-Border Effects of a Change in State Liquor Policy," Journal of Food Distribution Research, Food Distribution Research Society, vol. 51(2).
    15. repec:mcm:deptwp:2021-10 is not listed on IDEAS
    16. Samane Zare & Mahdi Asgari & Timothy Woods & Yuqing Zheng, 2020. "Consumer proximity and brand loyalty in craft soda marketing: A case study of Ale‐8‐One," Agribusiness, John Wiley & Sons, Ltd., vol. 36(4), pages 522-541, October.
    17. Rosa Maria Fanelli, 2018. "Have beer markets in European Union countries converged?," Economia agro-alimentare, FrancoAngeli Editore, vol. 20(3), pages 445-477.
    18. Megan E. Waldrop & Jill J. McCluskey, 2019. "Does information about organic status affect consumer sensory liking and willingness to pay for beer?," Agribusiness, John Wiley & Sons, Ltd., vol. 35(2), pages 149-167, April.

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    More about this item

    Keywords

    Demand and Price Analysis; Food Consumption/Nutrition/Food Safety;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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