US Beer Research Articles

Post-Leegin resale price maintenance: evidence from US beer industry

ABSTRACT This letter investigates the impact of the shift in antitrust treatment of Resale Price Maintenance (RPM) in the US beer industry, transitioning from a categorical illegality (per se illegal) to a case-by-case evaluation (rule of reason) post-Leegin. Our objective is to analyse the effects of this change on beer prices. We find a significant increase in beer prices in states permitting RPM after Leegin. Our findings contribute to the ongoing debate on RPM agreements by highlighting potential welfare implications associated with the shift in antitrust treatment.

Beer drinker perceptions of cannabis-infused beverages

PurposeAs cannabis markets have expanded and nonalcoholic beer sales have grown, craft beverage manufacturers are increasingly interested in alternative beverage markets for product differentiation. This study evaluates consumer perceptions of nonalcoholic, cannabis-infused beverages to explore the market potential.Design/methodology/approachThe study used survey data from 1,094 US beer drinkers to identify consumer willingness to try and general perceptions of cannabis-infused beverages. First, we identified who is most likely to try cannabis-infused beverages using multinomial logistic regression analysis. Then, we identified perceptions of cannabis-infused beverages relative to conventional beer by asking respondents to rate the expected taste, nutrition, safety and price for one of three hypothetical product options: a traditional beer, a cannabidiol (CBD) beverage or a tetrahydrocannabinol (THC) beverage. Comparisons across products were then drawn using standard statistical tests.FindingsApproximately 53–56% of beer drinkers in our sample stated they were willing to try cannabis-infused beverages, with age, product knowledge and past purchasing behaviors correlating with this response. Additionally, consumers expected cannabis-infused beverage scores to have similar safety and nutrition metrics to traditional beer but at higher prices. On average, consumers expected CBD- and THC-infused beverages to be $0.33 and $0.98 more expensive per six-pack than a conventional beer, respectively.Originality/valueWith an evolving craft beverage and cannabis landscape, these results provide a glimpse into beer drinkers’ attitudes toward CBD- and THC-infused beverages. The results offer novel insights into the target audience and market potential for cannabis-infused beverages that manufacturers and entrepreneurs can use in their business strategies. Additionally, the findings can be useful to policymakers and public health officials in monitoring this emerging market, informing policy design and designing public health messaging. Lastly, the study opens avenues for future research on consumer perceptions of cannabis versus alcoholic products across academic disciplines.

Material and energy flow analysis of craft brewing: A case study at a California microbrewery

Small breweries have been growing in number and volume share in the US marketplace. Brewing is water- and energy-intensive, especially for small brewers who do not benefit from the same economies of scale as large brewers. A systematic approach to characterizing the water and energy flows in small breweries will help researchers and process owners identify opportunities for efficiency improvement by reducing waste. The information from such analysis yields granular information about where water and energy (electrical and thermal) are embedded into beer. It also contextualizes a small brewery's specific water and energy consumption relative to peer breweries, providing a quantitative basis for decision-making that ultimately impacts economic competitiveness. In the present work, a case study is performed on a microbrewery in northern California. Visualization tools are provided that delineate how water and energy flow through the brewery. Specific electrical energy consumption was 183.7 MJ per US beer barrel (bbl) (1.6 MJ/L) packaged in the first half of 2018, thermal energy 489.4 MJ/bbl (4.2 MJ/L), water 12.8 bbl consumed/bbl (12.8 L/L), and wastewater 10.8 bbl discharged/bbl (10.8 L/L). These specific resource consumptions are placed into context relative to other small breweries. The metrics are high due to general inefficiency relative to peer facilities, reverse economies of scale in small breweries, and associated utility costs impacted by geographic location. Overall utility costs were $26.95 per bbl packaged vs. $16.01 for similar-sized breweries. This analysis sheds light on the virtuous cycle of how reducing one input in the beer-water-energy nexus will often lead to other resources being conserved as well, due to the overlapping nature of their embedment in the final product.

Accommodating heterogeneity in brand loyalty estimation: application to the U.S. beer retail market

The assessment of consumer behavior in brand-choice models may be greatly influenced by accurately modeling and evaluating a brand-loyalty parameter. The most well-known approaches for estimating brand loyalty employ a household’s past purchase data and account for habit formation with a single smoothing parameter that indicates the weight assigned to households’ current decisions versus their distant shopping history. In this study, we present a method for estimating time-varying smoothing parameters for heterogeneous households. We estimate smoothing parameters for American households from 2014 to 2017 using Nielsen Homescan data for the US beer retail market. Using this more flexible method, we discover that the smoothing parameter varies significantly among households and time frames (for the same households). We next include a brand-loyalty index based on this approach into a brand-choice model of the American beer retail market, demonstrating that this new method improves estimation results.

Alfa Laval acquires US beer technology company

Alfa Laval has bought Sandymount, a US-based company with a patented membrane technology to concentrate beer.

Impact of mandated exclusive territories in the US brewing industry: Evidence from scanner level data

I examine the competitive effects of mandated exclusive territories in the US beer industry. Theory is ambiguous as to the competitive impacts of this vertical practice. Using scanner data from a large number of grocery stores, I empirically examine the impact on beer prices, quantities, and number of brands sold after Wisconsin mandated that brewers must assign exclusive wholesale territories in 2006. Reduced form results from a differences-in-differences model using several control groups and a synthetic control show that the mandates increased prices and reduced quantity of craft beer. Overall number of brands sold decreased as well and craft brewers were the most negatively impacted. Findings suggest that the mandate gave protection to wholesalers and caused an increase in the costs of distribution and reduced competition in the brewing industry.

Efficiencies brewed: pricing and consolidation in the US beer industry

Merger efficiencies provide the primary justification for why mergers of competitors may benefit consumers. Surprisingly, there is little evidence that efficiencies can offset incentives to raise prices following mergers. We estimate the effects of increased concentration and efficiencies on pricing by using panel scanner data and geographic variation in how the merger of the brewers Miller and Coors was expected to increase concentration and reduce costs. All else equal, the average predicted increase in concentration led to price increases of 2%, but at the mean this was offset by a nearly equal and opposite efficiency effect.

What makes you grab low carb beers?

What makes people choose low-carbohydrate, high-protein food (low-carb food), which is good for health but usually tastes bad? Using panel data on US beer consumption in which each consumption occasion is uniquely associated with various companion-based consumption contexts and exposure levels to diet information, we analyse the variations in consumers’ preferences for low-carb food. The results show that there exist considerable gender differences in the preference variation under peer pressure. First, single females behave in a way they dislike drinking low-carb beer in front of friends, spouses and significant others. Second, male (both married and single) and married females pretend to choose low-carb beer when accompanied by spouses or significant others. Finally, the elasticity of demand for healthy food with respect to news articles about low-carb diets is positive, yet with substantial differences in the degree of elasticity across demographic groups.

THE POTENTIAL FOR SHORT-RUN SHIFTING OF A CORPORATE PROFITS TAX

Can the owners of a firm shift a corporate profits tax to consumers? Not in the short run if the tax is stated as a proportion of profits and the firm is a profit maximizer. But what if the firm wishes to pursue a strategy other than profit maximization, say revenue maximization subject to a profit constraint? Under such a condition the firm's reaction to a tax or tax increase might be a price rise that captures part of the foregone profits. We show that firms which operate at a point on their demand curve that differs from profit maximization have an incentive to raise price in response to the tax – and that high cost firms have a greater incentive to raise price than do low cost firms. Our empirical analysis of the US beer industry confirms this finding, and sheds light on the Krzyzaniak–Musgrave analysis of the 1960s which suggested that the corporation income tax produced significant short-run shifting.

An Empirical Evaluation of the US Beer Institute’s Self-Regulation Code Governing the Content of Beer Advertising

We evaluated advertising code violations using the US Beer Institute guidelines for responsible advertising. We applied the Delphi rating technique to all beer ads (n = 289) broadcast in national markets between 1999 and 2008 during the National Collegiate Athletic Association basketball tournament games. Fifteen public health professionals completed ratings using quantitative scales measuring the content of alcohol advertisements (e.g., perceived actor age, portrayal of excessive drinking) according to 1997 and 2006 versions of the Beer Institute Code. Depending on the code version, exclusion criteria, and scoring method, expert raters found that between 35% and 74% of the ads had code violations. There were significant differences among producers in the frequency with which ads with violations were broadcast, but not in the proportions of unique ads with violations. Guidelines most likely to be violated included the association of beer drinking with social success and the use of content appealing to persons younger than 21 years. The alcohol industry's current self-regulatory framework is ineffective at preventing content violations but could be improved by the use of new rating procedures designed to better detect content code violations.

A Non-Parametric Model of Residual Brand Equity in Hierarchical Branding Structures with Application to US Beer Data

SummaryProduct offerings in many grocery product categories in supermarkets display varied branding structures built around a discernible branding hierarchy typically comprising brands, subbrands and stock keeping units. Firms often want to know what contribution each layer in the brand hierarchy brings to overall product value, and precisely how much of this contribution comes from unique branding associations (we term this value contribution the ‘residual equity’ of that branding layer). We make the economic argument that, in mature product categories, profit maximizing firms would retain the upper levels of the branding structure only if they were value enhancing. Using only aggregate sales and product data, we develop a semiparametric Bayesian method for a market response model to estimate jointly the residual equity of each layer in the branding structure while accommodating certain a priori restrictions on the equity values. Our proposed model is simple yet flexible and avoids common drawbacks in extant approaches. We implement our model on AC Nielsen beer category data from US supermarkets. We find that residual equity exists, is sizable in magnitude and sales impact, is heterogeneous in occurrence across the branding structure, yields realistic brand valuations and bears managerially relevant insights and implications.

Changes in the self‐regulation guidelines of the US Beer Code reduce the number of content violations reported in TV advertisements

Abstract From a public health perspective, alcohol advertising should not be directed at vulnerable groups, nor should it portray excessive drinking or other objectionable content such as illegal activity. To promote the responsible advertising of alcoholic beverages, alcohol industry groups have developed self‐regulation guidelines that describe which types of content (and exposure markets) are unacceptable. In 2006 the US Beer Institute revised the content guidelines of the 1997 Beer Code. This study was designed to determine whether these changes made the revised Code more or less likely for expert judges to report guideline violations, and for alcohol advertisements to include otherwise inappropriate content from a public health perspective. Six alcohol advertisements known or suspected to have multiple content violations were rated by 139 experts selected on the basis of their expertise in public health, mental health, alcohol research and marketing. The ads were rated on two occasions with feedback about other viewers' ratings provided at the second rating. The data were collected by means of a computer‐based rating program that used multiple items to evaluate the eight major content guidelines of the US Beer Code. The ratings were scored according to both the 1997 and the 2006 versions of the Beer Code. According to the 1997 criteria, raters identified an average of 26 guideline violations across the six ads; the number of violations was reduced to 18 when the 2006 criteria were applied. The difference was statistically significant and was primarily attributable to changes in guidelines dealing with the portrayal of illegal activity, humorous situations and the act of drinking. By removing or revising commonly violated guidelines, the 2006 Beer Code revision permits portrayal of previously objectionable ad content and increases the likelihood that risky drinking behaviours will be portrayed in US beer advertisements. Copyright © 2009 John Wiley & Sons, Ltd.

Diagnostic test for unstable autoregressive models

In this article, we investigate the limiting distribution of the Ljung and Box test statistic based on squared residuals in unstable autoregressive models [Chan, N.H. and Wei, C.Z., 1988, Limiting distribution of least squares estimates of unstable autoregressive processes. Annals of Statistics, 16, 367–401.]. We show that the limiting distribution is a chi-square distribution in which the degrees of freedom depends only on the number of lags of the residual autocorrelations. Further, we investigate the limiting distribution of Hong's [Hong, Y., 1996, Consistent testing for serial correlation of unknown form. Econometrica, 64, 837–864.] test statistic based on the original and squared residuals. It is shown that their limiting distributions are independent of the unit roots of the characteristic polynomial of the unstable model. The simulation results are listed and an application to quarterly US beer production data has been provided for illustration.

Advertising efficiency and the choice of media mix: a case of beer

In this paper we use techniques from the efficiency measurement literature to evaluate the performance of six US beer firms in terms of their ability to translate advertising messages into sales. We employ quarterly data from the 1983 to 1993 period. Our results suggest that Anheuser–Busch was relatively efficient in its advertising and its choice of media mix, whereas most of the other firms in our sample were not.

Discrimination in the workplace of the beer industry

Looks at discrimination within the US beer industry, providing examples of sexual, racial and age discrimination which violate Title VII of the Civil Rights Act 1964. Provides suggestions for minimizing or eliminating these issues together with examples from industry.