All we want is authentic beer: the role of geographic communities and authenticity on breweries' reactions to competition

Abstract

PurposeThe purpose of this paper is to show how authenticity limits businesses' responses to competition in the food and beverage industry.Design/methodology/approachThis paper focuses on a unique dataset of over 300 breweries and more than 1.300 beer drinkers in Franconia (Germany) to test the impact of authenticity on firms' reactions to competition within geographic communities. The paper uses ordinary least squares (OLS) and fractional logit models.FindingsThe findings reveal that breweries tend to enlarge their product portfolio by introducing non-authentic products as a response to competition in geographic communities, while reducing their product diversity and engagement in non-authentic segments when preferences for authenticity prevail in the geographic community. The findings further suggest that in geographic communities where both competition and preferences for authenticity are present, firms tend to keep their product portfolios narrow and withdraw non-authentic products even when product proliferation strategies would be more efficient to deal with competition.Originality/valueThis paper offers novel insights on the impact of authenticity on product proliferation strategies for food and beverage businesses. By showing that expectations on authenticity can constrain firms' product portfolio even in the presence of competition, this paper contributes to contemporary discussions in the fields of strategic management and organization theory about the role of authenticity for food and beverage firms. Unlike previous studies focusing on the benefits of authenticity for firms, the present study is one of the first ones to highlight the negative spillovers of authenticity for firms operating in the food and beverage industry.