Drink Beer for Science: An Experiment on Consumer Preferences for Local Craft Beer

Abstract

AbstractThe U.S. and global beer industries include a great many smaller-scale craft breweries supplying numerous differentiated products as well as a few macro-breweries with less diverse beer portfolios. The craft and macro segments of this industry have become quite distinct, with little substitutability between the two types of beer. Furthermore, since the early 2000s the craft segment has realized consistent growth whereas large breweries have seen a steady decline in sales. Macro-breweries have responded by acquiring smaller breweries to capture a share of the craft market. This study implements an experimental approach to measure consumers’ willingness to pay (WTP) for locally produced and independently owned beer. Regression analysis clearly indicates that consumers prefer locally owned and independently produced beer, and how much they are willing to pay for those attributes. (JEL Classifications: D12, L66)