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Beer Snobs Do Exist: Estimation of Beer Demand by Type

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  • Toro-Gonzalez, Daniel
  • McCluskey, Jill J.
  • Mittelhammer, Ron

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-Gonzalez, Daniel & McCluskey, Jill J. & Mittelhammer, Ron, 2014. "Beer Snobs Do Exist: Estimation of Beer Demand by Type," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-14.
  • Handle: RePEc:ags:jlaare:186564
    DOI: 10.22004/ag.econ.186564
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    Cited by:

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    2. 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.
    3. Trey Malone & Jayson L. Lusk, 2016. "Brewing up entrepreneurship: government intervention in beer," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing, vol. 5(3), pages 325-342, November.
    4. 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.
    5. 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).
    6. 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.
    7. 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.
    8. Toro Gonzalez, Daniel, 2014. "Demand Model Simulation in R with Endogenous Prices and Unobservable Quality," MPRA Paper 59117, University Library of Munich, Germany.
    9. Seungjin Han & Josip Lesica, 2021. "Differentiated Excise Taxation in the Beer Market," Department of Economics Working Papers 2021-10, McMaster University.
    10. 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.
    11. 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.
    12. 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.

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    More about this item

    Keywords

    Consumer/Household Economics; Demand and Price Analysis; Production Economics;
    All these keywords.

    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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