Brief Report



Engagement, Variety Seeking, and Age Predict Consumer Value for Low and High ABV Craft Beer

Market Segmentation Research and Analysis


Andrew Brandt, PhD & Felipe Duarte


Executive Summary


Introduction

Industry. From 2007 to 2020, the number of craft breweries operating in the U.S. increased from 1,602 to 8,764, with an estimated value of $22.2 billion, or about 24% of the total U.S. beer industry.1 Compared to the large domestic beer companies that have produced the same few types of beer for over 100 years, craft producers are known for producing low and high ABV beers across wide variety of flavor profiles.

Product Information. Whether visiting a tap room, examining a craft beer bottle at a store, or exploring beers online, some of the first information presented to a consumer beyond the name of the beer and the brewery is the beer style (e.g., IPA, Lager, Stout) and ABV, which is required by law. Most craft beers, regardless of style, have 5% to 11% ABV.

Value. Subjective and objective product information play an important role in a consumer’s purchasing behavior because both help predict the product experiences the customer can expect. Unlike other subjective factors, ABV provides customers a simple way to gauge one of the psychological experience that will be gained from their purchase, so it stands to reason that AVB has a measurable impact on consumer purchasing behavior. In this paper, we explore how different consumer segments respond to ABV information.

Method

Participants were 284 (111 females) U.S. craft beer consumers between the age of 21 and 72 years (M = 34, SD = 9.5) who agreed to complete an online survey in Qualtrics for $1.04.

The original sample consisted of 504 participants. Outliers were removed based on an attention check (n = 102), income (> $129K, n = 10), craft beers consumed per week (> 13, n = 21), average purchase price (> $15, n = 49), purchase price for 6% ABV (< $2 and > $10, n = 21), purchase price for 10% ABV (> $14, n = 8), and difference in purchase price for 6% and 10% ABV beers (< $-3 and > $5, n = 9).

Consumer segments were created by partitioning participants into low and high Engagement (median = 5.45/7) and Variety Seeking (median = 5.75/7) groups.2,3

Variety seeking related to craft beer captures enjoyment and openness to new experiences, such as trying new beers, trying different brands, and trying other craft beer styles. An 8-item scale was adapted from the VARSEEK scale4 to measure variety seeking with respect to craft beer on a 7-point Likert scale. An example item is ‘I enjoy trying new beers.’

Engagement with craft beer captures the personal relevance that it has for a person and the extent to which they seek information about it. An 11-item scale was adapted from the P-II scale5 to measure consumer engagement with craft beer on a 7-point Likert scale. Examples items include ‘Means a lot to me’ and ‘Good use of money to me.’



Results and Discussion

Consumer Characteristics

Preferred beer style. Participants were asked to indicate their most preferred style of beer from six options; IPA, lager, pale ale, pilsner, porter, or stout. A chi-square test showed there was no difference in preferred beer style (p = .550) across the four segments.




Demographics. Most participants were white (71%) males (61%) under 40 years old (75%) with a college degree (63%) making over $35K annually (61%). Chi-square tests showed there were no differences in the distribution of gender (p = .064), age (p = .803), education (p = .295), or income (p = .972) across the four segments.





Paying More for Higher ABV

After indicating their preferred style of beer, participants were asked how much they would be willing to pay for a pint of their preferred beer if it had either 6% or 10% ABV. The difference in these prices indicated the amount the participant is willing to pay for higher ABV (PAYdiff).

The histogram to the right shows the overall distribution of PAYdiff scores (M = $1.46, SD = 1.35). Approximately 76% of participants indicated a higher price for the higher ABV beer (positive PAYdiff score), 4% indicated a lower price (negative PAYdiff score), and 20% indicated the same price for the low and high ABV options (PAYdiff = $0).

The line graphs below show (left) that higher engagement was associated with higher PAYdiff only among high variety seekers and (right) older craft beer consumers were less likely to pay more for high ABV beers.






Modeling Pay for Higher ABV

The amount participants were willing to pay for higher ABV (PAYdiff) was modeled on Age, Engagement, and Variety Seeking (all mean centered) using multiple linear regression, F(7, 266) = 4.334, p < .001. Younger Age (p < .001) and higher Engagement (p = .029) both predicted higher PAYdiff, however, there was a significant Age X Engagement X Variety Seeking interaction, p =.007.

To examine the three-way interaction, simple slopes analyses were conducted on the three two-way interactions. We chose to split the mean centered Variety Seeking scores into Low and High groups (median = 0.13), which matches the consumer segment model, and we split the mean centered Age scores into three groups based on standard deviation; 29 years and younger (< -0.5 SD), 30 to 38 years, and 39 years and older (> +0.5 SD).

Engagement X Variety Seeking. The figure to the right and the results of a simple slopes analysis showed that higher Engagement predicted higher PAYdiff among High Variety Seekers (p < .001), but not among Low Variety Seekers.

Age X Variety Seeking. The figure below (left) and the results of a simple slopes analysis showed that older Age predicted lower PAYdiff among Low Variety Seekers (p = .013), and marginally predicted lower PAYdiff among High Variety Seekers (p = .057).

Engagement X Age. The figure below (right) shows that higher Engagement was positively related to PAYdiff across Age groups, however, these relationships were not statistically significant.





Visualizing the 3-Way Interaction: Age X Engagement X Variety Seeking

Below is an interactive 3D scatter plot of PAYdiff scores by Age, Engagement, and Low/High Variety Seeking (regression planes). A horizontal line (residual) connects each data point to its regression plane. View a larger version of the plot here. [linked plot may not be interactive in your mobile browser]

Examined from the side showing Engagement by Variety Seeking with the Age axis coming towards you on the left, the front edge of the plane shows the “X” shaped interaction on PAYdiff as shown in the 2D plot above.

Rotate the plot 90 degrees to the right to the side showing Age by Variety Seeking with the Engagement axis coming towards you on the right, the front edge of the plane shows the decline in PAYdiff with older Age as shown in the 2D plot above.



References

  1. Brewers Association. National Beer Sales & Production Data. https://www.brewersassociation.org/statistics-and-data/national-beer-stats/
  2. Beldona, S., Moreo, A. P., & Mundhra, G. D. (2010). The role of involvement and variety-seeking in eating out behaviors. Eating Out Behaviors, 22(3), 433-444.
  3. Taylor, S. & DiPietro, R. B. (2017). Segmenting craft beer drinkers: An analysis of motivations, willingness to pay, and repeat patronage intentions. International Journal of Hospitality & Tourism Administration.
  4. Van Trijp, H. C. M. & Steenkamp, J. E. M. (1992). Consumers’ variety seeking tendency with respect to foods: Measurement and managerial implications. European Review of Agricultural Economics, 19(2), 181–195.
  5. Zaichkowsky, J. L. (1985). Measuring the Involvement Construct. Journal of Consumer Research, 12(3), 341–352.



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