MSI Webinar: Millennials and the Take-Off of Craft Brands: Preference Formation in the U.S. Beer Industry
We conduct an empirical case study of the U.S. beer industry to analyze the disruptive effects of locally-manufactured, craft brands on market structure, an increasingly common phenomenon in CPG industries typically attributed to the emerging generation of adult Millennial consumers. We document a generational share gap: Millennials buy more craft beer than earlier generations. We test between two competing mechanisms: (i) persistent generational differences in tastes and (ii) differences in past experiences, or, consumption capital. Our test exploits a novel database tracking the geographic differences in the diffusion of craft breweries across the U.S.. Using a structural model of demand with endogenous consumption capital stock formation, we find that heterogeneous consumption capital accounts for 86% of the generational share gap between Millennials and Baby Boomers, with the remainder explained by intrinsic generational differences in preferences. We predict the beer market structure will continue to fragment over the next decade, over-turning a nearly century-old structure dominated by a small number of national brands. The attribution of the share gap to consumption capital shaped through availability on the supply side of the market highlights how barriers to entry, such as regulation and high traditional marketing costs, sustained a concentrated market structure.
Bart Bronnenberg is a Professor of Marketing at the Tilburg School of Economics and Management and a research fellow of the Centre for Economic Policy Research (CEPR) in London. Previously, he has held appointments at the University of Texas in Austin, the University of California, Los Angeles, and Stanford University. Bart Bronnenberg holds Ph.D. and M.Sc. degrees in management from INSEAD, Fontainebleau, France, and a M.Sc. degree in industrial engineering from Twente University, the Netherlands. Bart Bronnenberg’s current research covers (1) the formation of consumer preferences, (2) consumer search behavior and online product search, and (3) consumer time use and convenience. His publications on these topics have appeared in leading academic journals in business and economics. With his co-authors, Bart has been a recipient of the 2003 and 2008 Paul Green Award for best article in the Journal of Marketing Research, the 2003 IJRM Best Paper Award at the International Journal of Research in Marketing, the 2003 and 2016 John D.C. Little Best Paper Award for best marketing paper in Marketing Science/Management Science, and the 2021 Long-Term Impact Award at Marketing Science/Management Science. He was also awarded several large grants from the Dutch Science Foundation, NWO, and the European Research Council. Bart teaches quantitatively oriented marketing courses. He teaches Pricing and Monetization Strategies at Tilburg University, where he won several teaching distinctions. Bart also won teaching awards at the University of Texas and the University of California. At Stanford, Bart taught the Marketing Core class to MBAs and customer analytics to senior executives in Stanford’s flagship SEP executive education program. Bart is a husband to Pam and a father of three. In his spare time, he runs, sails when he gets a chance, and likes to listen to live blues- and soul music.