Beer Brand Loyalties No Longer Passed On From Boomers

Beer consumption has always provided insights into shifts in demographic preferences and a new study has found that younger generations aren’t necessarily embracing their Dad’s favorite beer brand like they once did.

The study, which was conducted to measure beer brand preference based on demographics announced findings that most of us might consider kind of obvious… that Baby Boomers did not pass their own beer brand loyalties down to their Millennial children.

And the reason, according to researchers from Tilburg University in the Netherlands and the Centre for Economic and Policy Research in London; the University of Chicago and the National Bureau of Economic Research; and the University of Texas, is the rise of craft beer.

The study, entitled “Millennials and the Takeoff of Craft Brands: Preference Formation in the U.S. Beer Industry” and published in the current edition of the INFORMS journal Marketing Science, points to generational behavior that extends well beyond beer brands…

“We found that the differences between Millennials’ brand preferences when it comes to beer are based on their own experiences and broader range of choices when compared to members of the Generation X and Baby Boomer cohorts who did not ‘grow up’ with the same number of choices,” said the researchers….

“Older generations built their brand preferences on the limited choices they had, which consisted primarily of brands sold by the major national consumer packaged goods companies.”

The researchers found that because Millennials came of age as beer consumers when craft beer had emerged on the scene, they were more open to trying new beer and built brand loyalties around smaller, lesser known and more diverse brands.

As this younger demographic built more fragmented loyalties among craft beer and smaller beer brands, the larger national beer brands saw a decline in market share specifically in this younger demographic.

“In our own case study of the changes in the beer industry, we saw a striking generational share gap with half (50%) of older millennials (25-34 year-olds) drinking craft beer, in contrast to 36 percent of U.S. consumers overall,” said the researchers.

 “Millennials may value the perception of higher quality for craft beer since our study found 43 percent of Millennial and Generation X consumers said craft beer tastes better than the national brands.”

The study took into account the geographic differences in the timing and speed of the availability of new craft beers based on location, and the researcher assembled an interesting database from various industry sources that tracked the history of all craft beer brands sold in the US, using the Universal Product Code (UPC) for tracking.

“For each UPC, we observed the product attributes, including beer style and alcohol content, launch date and location of the brewer, and the eligibility of each brewery for official ‘craft’ designation going back to the 1970s when the first craft brewers entered the market,” said the researchers.

“We were able to match this beer census with the Nielsen-Kilts Homescan database (HMS), containing the 2004-2018 purchase activity for a national representative sampling of more than 100,000 U.S. households.”

Tracking retail data from 2004 through 2018, a period where craft beer grew from 5.3% to 20%, researchers found that Millennials accounted for 20% of total craft beer sales and allocated 34% of their beer spending to craft bands. This was 14% higher than Baby Boomers allocated.

Bottom Line…

Before the emergence of craft beer choices in the US were relatively limited, and the majority of those beers were mass-produced brands. Craft beer changed that landscape entirely…beer got more interesting and with the growth of new craft breweries, options exploded exponentially.