Why Craft Beer’s Rise Is a Warning Flag for All Sorts of Big Brands

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.

To test between these demand- and supply-side hypotheses, the researchers used the NielsenIQ Datasets at Booth’s Kilts Center for Marketing to build a database that tracks beer purchases made by more than 100,000 US households from 2004 to 2018. In 2004, craft brews made up 5 percent of the beer sold in the US take-home market and generated 5.3 percent of revenue. By 2018, they more than doubled their volume share to 12 percent and quadrupled their revenue share to 20 percent. Millennials accounted for only 1 percent of the craft beer purchased by volume in 2004, simply because so few of them were old enough to purchase alcohol legally. But by 2018, they bought 20 percent of the craft beer sold.

From 2004 to 2018, as the millennial share of the craft-beer market soared, every other generation’s share fell. By 2018, sales data showed that millennials were buying 34 percent of craft beer, compared with 20 percent for baby boomers (born 1946–64) and 13 percent for the Greatest Generation (born before 1928). Half of millennials said they drank craft beer, compared with 36 percent of the country overall.