The paper then runs as follows in its whole. The statistics and a set of industry facts on market structure and advertising are presented in the next section. Section 3 uses a reduced-form approach to examine how entrance affects advertising and consequentially demand Section 4 presents the structural empirical model; Section 5 talks on identification.Background
of the US beer market for the years 2006–2016 is given in this part. Three facts stand out in this overview: changing market concentration; the gradual decline of domestic businesses and the take-off of the craft fringe (Section 2.1); the massive entry of craft breweries across the US (Section 2.2); and the increasing TV advertising driven essentially by macro breweries
Section 3 addresses the interrelations among these facts. The d <Traditionally, the US brewing sector has been judged as one with somewhat high national concentration. A sequence of somewhat overlapping events—i) the preemptive marketing race that followed the rapid diffusion of network television throughout the 1950s; ii) the technological progress in
Packaging brewing and automated
breweries; iii) the successful introduction of highly-advertised light beer in the early 1970s; and iv) a myriad of (global and local) mergers and acquisitions—defines the dominant market structure with few large firms and high market share. Five major breweries controlled more than eighty percent of the US beer market by the end of the 20th century: AnheuserBusch,
Miller, Molson Coors, Heineken, and Grupo Modelo Over the past two decades, this market system has been under attack. Figure 1 displays the US market share evolution byThe explosion of craft breweries in the retail sector is varied depending on the locale (Figure 3, Panel B). While few states exhibit little change in the number of brewers between 2010 and
most saw a significant rise in the presence of rival businesses. Sales tend to be favorably connected with the increase in the number of brewers. For example, the retail market in California in 2016 boasts two times the count of brewers compared to 2010. Over the 2006–2016 timeframe, low- and mid-sales states' changed market structure results in less breweries. Three trends.The third pattern reveals that, particularly following 2010, the artisan
Fringe's market share has collapsed
By the end of 2016, craft breweries were entering the scene in an unheard-of numbers.13 also Together with demand-side elements, lower entrance barriers helped new breweries to proliferate. Figure 3, Panel A graphs the craft brewery count with time. Including regional breweries, microbreweries, and brewpubs, the dashed line stands for all kinds of craft
breweries. Beginning the survey period, the number of craft brewers reported slightly increased from 1,409 in 2006 to 1,758 in 2010. But there has been a significant rise since 2011, with 5,622 running craft brewers expected in 2016. Of the beer sales (by volume), over 75% happen off-site.14. The solid line in Figure 3, Panel A shows the evolving retail market
brewery count. Although the retail trend is like that of the whole industry, the level is quite lower. Just over 700 brewers were vying for attention at retail locations in 2016. Microbreweries account for most of the retail sector's entrance; the craft beer market share is roughly 13%.Over the data period, the median market exhibits a 0.065 concentration
Decrease Fascinatingly the drop
in concentration shows rather significant (growing) dispersion over local marketplaces. Market concentration dropped roughly 0.035 for the 90th percentile. For the bottom 10th percentile where concentration has dropped by 0.09 the fall is more noticeable. Recent data demonstrating that average local market concentration has been declining across US
businesses in the past decades corresponds with this decreased trend in local concentration (Rossi-Hansberg et al., 2021). Still, the fundamental cause of declining market concentration is rising local competitive pressure rather than the spread into local markets by big breweries and by 2030 it should reach 27.8% based on Bronnenberg et al. (2022a). One interesting
note is that the period of shifting market structure arrived while the sector overall stayed somewhat steady. Beer producers have sold yearly on average 260 million 144-ounce equivalent units in the retail market since 2010 (Figure B1). Stated differently, the shift in market shares appears to be connected more with brand replacement than with market
Conclusion
shrinkage or increase Comparable trends in the examination of the local market concentration expose themselves to the dynamics of the national market shares: Local concentration has dropped steadily since middle-2008. Figure 2 shows the distribution of the change in concentration for geographical areas specified by Designated Market Areas. First, the market shares of the biggest home breweries have been gradually dropping even with mergers of
global breweries.10 In 2016, ABI and Millercoors' market shares are roughly 5 percentage points below their mid-2008 level. The second trend is the increasing popularity of imported beers, which has challenged the supremacy of well-known national brands and changed top industry market share distribution. Owned by Constellation Brands, the Mexican lager-style
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