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Has Anheuser-Busch Let the Steam Out of Craft Beer? The Economics of Acquiring Craft Brewers

Author

Listed:
  • Kenneth G. Elzinga

    (University of Virginia)

  • Alexander J. McGlothlin

    (University of Kentucky)

Abstract

Macrobrewers initially responded to the rapid growth of the craft beer segment by product differentiation: offering versions of their own “craft beer.” When this proved unsuccessful, they began acquiring independent craft brewers. We examine the consequences of Anheuser-Busch InBev’s acquisition of Goose Island. We find large gains in sales for craft brewers post-acquisition, which suggests that marketing spillovers attracted new consumers to craft beer. We also find large negative effects on product variety, which suggests greater difficulty for craft brewers gaining shelf space in off-premise accounts. These variety effects are particularly pronounced in Goose Island’s regional “birthplace”: Illinois.

Suggested Citation

  • Kenneth G. Elzinga & Alexander J. McGlothlin, 2022. "Has Anheuser-Busch Let the Steam Out of Craft Beer? The Economics of Acquiring Craft Brewers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(2), pages 147-173, March.
    • Handle: RePEc:kap:revind:v:60:y:2022:i:2:d:10.1007_s11151-021-09838-7
    DOI: 10.1007/s11151-021-09838-7
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    References listed on IDEAS

    as
    1. Elzinga, Kenneth G. & Tremblay, Carol Horton & Tremblay, Victor J., 2015. "Craft Beer in the United States: History, Numbers, and Geography," Journal of Wine Economics, Cambridge University Press, vol. 10(3), pages 242-274, December.
    2. Nathan H. Miller & Matthew C. Weinberg, 2017. "Understanding the Price Effects of the MillerCoors Joint Venture," Econometrica, Econometric Society, vol. 85(6), pages 1763-1791, November.
    3. Justin Frake, 2017. "Selling Out: The Inauthenticity Discount in the Craft Beer Industry," Management Science, INFORMS, vol. 63(11), pages 3930-3943, November.
    4. 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.
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    Cited by:

    1. 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.

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    More about this item

    Keywords

    L11; L42; L66;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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