Updates from Chicago Booth

Why craft beer’s rise is a warning flag for all sorts of big brands
Research suggests a supply-driven explanation for millennials’ taste for craft beer
By Brian Wallheimer – Over the past 20 years, the largest consumer packaged goods companies have seen their sales erode while smaller companies selling artisanal and locally sourced products have grown. These changes, many believe, occurred as millennials came of age and used their buying power to disrupt established brands with significantly different preferences from those of their forebears.

Those who buy into this demand-side explanation can point to countless surveys in which millennials—born after 1980—profess a desire to support companies that align with their values, offer more sustainably produced or nutritious foods, or take part in social causes.

But Tilburg University’s Bart J. Bronnenberg, Chicago Booth’s Jean-Pierre Dubé, and University of Texas at Dallas’s Joonhwi Joo  analyze the recent surge in sales of craft beers and reject the demand-side explanation in favor of an alternative supply-side one. Millennials often have a wider selection of craft beers to choose from than past generations did, as artisanal products have disrupted a century-old market structure dominated by a small number of big players, and they developed preferences on the basis of that experience, the researchers argue. It’s important to understand the mechanisms, the researchers note, because the same dynamics could erode the dominance of major brands in other categories, or alter how they maintain control. more>

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