Group Research Project Final Report

8/9/2019 Group Research Project Final Report

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Running head: CONSUMPTION TRENDS OF CRAFT BEER

Research Methodology 2700A

Consumption Trends of Craft Beer

Prepared by:

ustin !audet" Colin #te$enson" Anton !olubin" and Ben%amin &o

Prepared for:

&inda an'

(ecember )" 20*+

Executive Summary


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CONSUMPTION TTRENDS OF CRAFT BEER 2

The be$erage of beer has been around for thousands of years and has seen many changes

in the ,ay it is produced" consumed and mar-eted. The art of craft beer production has slo,lygained substantial follo,ing o$er the past fe, decades. The primary mar-et for beer is

dominated by a fe, large bre,eries" producing lo, /uality s,ill. This same mar-et has agro,ing number of consumers loo-ing for that potentially uni/ue bre, that a craft bre,ery hasthe ability to produce. f you ha$e e$er sat at the pub and loo-ed at the beer menu yearning to

e1perience a ne, e1plosion in fla$or from a beer then you are li-e so many others in the

mar-etplace today. t is in this frame of mind that ,e de$eloped a research /uestion to e1aminethe potential for craft beer to thri$e in the southern Alberta community of &ethbridge.

3e as researchers set out to find the ans,er to a /uestion concerning craft beer

consumption amongst post4secondary students at the 5ni$ersity of &ethbridge" more specifically,e ,anted to e1plore the magnitude of -no,ledge the student body had on the product of craft

beer" ,hat sort of mechanisms influence purchasing decisions and ,hether a mar-et for this

product truly e1ists. 6ur preliminary findings into the topic of craft beer found many articles

pertaining to o$erall gro,th of the craft beer segment of the ser$ice industry and the ta1loopholes pro$ided for this industrys gro,th in the pro$ince of Alberta. 3e also de$eloped a

better understanding on a personal le$el of ,hat craft beer really is and ho, many different

bre,eries really e1ist in Alberta and Canada. As for consumption trends specifically the ,ealthof research on this topic ,as relati$ely slim and allo,ed us to del$e into this area on our o,n.

As the time frame ,as limited for such an in4depth research topic ,e chose to limit our

scope to include only students that ,e could reach through uni$ersity email. 3e de$elopedsi1teen /uestions pertaining directly to consumption of craft beer. 3ith the assistance from our

research instructor" ,e used a program on a ,ebsite called 8ualtrics to design a sur$ey that could

be easily sent out through the student email on campus. 5sing this method ,e ,ere able to reach

a large number of respondents in a short amount of time. The time elapsed bet,een sur$eyrelease to analysis of the results ,as $ery short and thus did not allo, for a great deal of replies.

9o,e$er" after only ten days ,e had enough to gain the basic information ,e hoped to gather.

Through our analysis ,e disco$ered that the craft beer industry is ali$e and ,ell in the city of&ethbridge. The results sho, that most respondents ha$e tried craft beer and en%oy it. 3e ha$e

learned that any respondent ,ho has tried craft beer ,ould in fact recommend it to others. The

sur$ey also pro$ided some $aluable information pertaining to ad$ertising" mar-eting andconsumption trends. As this is only a small study ,ith limited time and e1perience ,e belie$e

further research ,ould pro$ide for a greater understanding of the craft beer consumption trends

in southern Alberta and from this further research shed more light on the thri$ing mar-et of craft

beer.3e belie$e that this research although limited is useful for all primary" secondary and

tertiary sta-eholders and it is of interest for anyone to read and gain a basic understanding of

craft beer. t is our hope that this information ,ill be useful for future hospitality andmanagement professionals and entrepreneurs ali-e. Although our research is not conclusi$e in

any ,ay it does sho, a general agreement ,ith an initial assumption that is that the craft beer

industry is gro,ing and gaining mar-et share. t is no longer a mar-etplace for o$er4priced" lo,/uality" bland tasting beer and that the rise of a fla$or e1plosion in the beer mar-et is gaining

momentum and ,ill soon be dri$ing sales in Alberta.

Introduction


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The first detailed reports of beer production date to more than fi$e thousand years ago by

the #umerians ,ho li$ed in an area ,e -no, today as ra/ ;enning" 7" *?


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/uality rather than /uantity and therefore offer an appealing beer that is aromatic" fla$orful and

comple1. These actions ga$e the opportunity for entrepreneurs to start a microbre,ery ,ithout

getting into huge debts in order to meet all re/uirements. The number of microbre,eries is

e1pected to rise significantly in the ne1t fe, years. According to Beer Canada" domestic beer

sales sa, an insignificant drop for the 20*+ year in comparison to 20*) by less than *.2@ ,ith a

total amount of appro1imately ele$en million hectoliters for 20*+ against ele$en million one4

hundred thousand hectoliters for 20*). Although the a$erage sales are declining" beer is still the

most popular alcoholic drin- in Canada ,ith a share of about forty4si1 percent of total alcohol

consumption. The microbre,ery business in Alberta is still relati$ely small ,ith only four

companies operating here as compared to British Columbia ,hich has o$er forty microbre,eries

in operation.

6ur research ,ill be focused on the consumption trends of uni$ersity students ,ithin the

&ethbridge area. 3e are interested to find out if there is a specialty beer community here already.

f so" ho, ha$e their products been accepted into the mar-et n the city of &ethbridge"

uni$ersity students ma-e up an eighth of the population. 3e ,ill focus primarily on the student

body and patrons of local establishments in order to gain the -no,ledge ,e see- in our research.

n order to collect this information ,e ,ill conduct a sur$ey on campus and around &ethbridge

that ,ill allo, us to gain a broad grasp on consumer preferences ,ithin the city. Combined ,ith

pre$ious -no,ledge from microbre,eries in Canada" the information from the sur$ey ,ill help

to understand consumption trends. According to 3arner: micro or craft bre,ers ,hich ha$e

come to be the most discussed albeit still small< segment of the industry 3arner" )>


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n$estigating the -no,ledge of craft beer consumption trends in &ethbridge is a $ital indicator to

understanding this gro,th.

Beneficiaries of this study ,ill be able to deri$e some useful information on consumption

trends to enhance their -no,ledge of the craft beer mar-et especially if their focus is on this

mar-et. This research pro%ect can also be attracti$e to lenders or in$estors in the craft beer

mar-et. Craft beer offers beer drin-ers ,ider $ariety of fla$ors" premium ingredients and the

speciali'ed care and attention ta-en to de$elop a richness of /uality not seen in the ma%or brands

of the beer mar-et. #pecialty bre,ers ha$e built a thri$ing mar-et for craft beer and should

continue to succeed in filling the gap left by traditional brands.

Literature Review

Research into the alcohol industry has indicated that there is a shift ta-ing place in the

mar-et. n the last fe, years significant changes of population in terms of aging" increasing

concerns about health" and increasing cultural di$ersity pose ne, challenges for the Canadian

bre,ing industry. 3hat ma-es craft beer products uni/ue is the priority of the micro bre,er is a

higher /uality fuller fla$ored beer. There are t,o main areas of research in this field. A great deal

of the research focuses on the business side of the bre,eries themsel$es. Those $endors ,ho

mass produce beer controlling the mar-et until smaller specialty bre,ers began car$ing out a

profitable niche. The problem ,ith starting a ne, bre,ery one has to get an accurate estimates

about consumer preferences in the mar-et. Blan-" in his studies" pro$ides a frame,or- for

conducting an analysis of factors that directly influence the success of a business. Blan-

distinguish three main groups of influencing factors" ,hich can be useful in the analysis: **@ for

taste" second highest ,as price ,ith F*@ and branda$ailability came in third highest factors that


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,ere important for our respondents ,hen choosing beer. Irom our findings ,e can conclude that

there are four main deciding factors ,hen it comes to choosing beer. Beer consumers= first loo-

for beer has the taste they prefer" second is price and third main deciding factor is brand and

a$ailability. Irom our finding" the preference of beer consumers is the most important

information due the scarce amount of information a$ailable. Past research has focused on the

business side of the craft beer mar-et" but these results focus on the consumer side.

Another disco$ery from analysing our results is that the factors that ,ill change the

respondents preference from domestic beer to a craft beer and the factors that assist in the

decision of ,hat type of beer to consume is closely related. The results of the t,o /uestions had

$ery similar responses. n order for respondents to change from domestic beer to craft beer the

product has to be either lo,er price" higher /uality or has an interesting taste in ne, products.

These three responses ,ere also the highest scores factors ,hen deciding ,hat type of beer to

consume. As ,e can see from these results" the factors that influence decision ,hen deciding

,hat type of beer to drin- can also influence consumers change their purchasing preference from

domestic to craft beers. This finding is $ery important for craft beer mar-eters ,ho are trying to

attract ne, consumers.

6ur research findings pro$ided ne, information on the craft beer mar-et at the

5ni$ersity of &ethbridge. Irom our sur$ey results" ,e found that ma%ority of the students that

consumed beer are in the millennial age group bet,een the ages of *42?. This group of students

fre/uently consumed beer as ,ell as craft beer. 3e also found that this group of students ha$e a

positi$e opinion of craft beer and ,ould recommend to their friends. After ta-ing a much more in

depth loo- at our results there ,ere a fe, -ey findings that ha$e not been co$ered by the


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a$ailable research. n our findings ,e disco$ered ne, information on the leading factors and

preferences that consumers use to ma-e purchasing decisions. 3e disco$ered that beer

consumers prioriti'e taste" price" brand" and a$ailability. Also ,e found -ey information about

consumer preference ,hen deciding ,hat type of beer to consume and these factors can also be

used to influence change of purchasing preference from domestic beer to craft beers. 6ur results

sho,ed that higher /uality" lo,er prices and interesting tasting ne, products are the leading

factors ,hen ma-ing the decision on ,hat type of beer to drin- and these three factors are

identical to the factors for changing purchasing preference. The factors for changing purchasing

preference is the same as the factors for decision ma-ing" so therefore these factors can be used

to influence consumers to purchase craft beers.

Discussion

n the past" the beer industry ,as dominated by ,hat some called the industrial

bre,ers.D These large scale companies used economies of scale to mass produce a beer generally

suited to the a$erage consumer. The problem ,ith this strategy is that color and fla$or ,ere

essentially remo$ed from the product lea$ing a relati$ely pale and tasteless offering. The

consumers of today ho,e$er" literally ha$e changing tastes. Craft beer appeals to younger ,ell

educated demographics" and much li-e ,ine" /uality of ingredients and fla$or are %oining price

point as the most important factors in the purchase decision. 3hile the o$erall trend in the

industry has been mo$ing to,ard specialty bre,ers and their high /uality uni/uely fla$ored

products" this trend is a relati$ely ne, phenomena in Alberta. Than-s to positi$e legislation

recently enacted the trend has really ta-en off here in our o,n pro$ince.


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This leads us to the starting point of our research. 3e ,anted to e1amine the consumer

preferences and determine the rele$ance here in &ethbridge. s there mar-et demand for craft

beers in our local mar-etplace The 5ni$ersity of &ethbridge offered not only a con$enient

sampling location" but also a $enue to sur$ey the young" ,ell4educated demographic that ,ould

embrace this gro,ing popularity. 6ur theory ,as that fla$or" color and /uality of ingredients are

becoming important factors in purchase decisions. Additionally" a significant percentage of the

student population ,ould demonstrate an interest in craft beer. Based on the responses gathered

from our sur$ey ,e belie$e that the data supports this theory.

According to our research" appro1imately 2)@ of respondents ha$e ne$er dran- beer"

,hich represent *00@ correlation ,ith research conducted by Coletto and Gadeau 20*)< in

6ntario" ,ho got the same distribution of drin-ersnon4drin-ers. A typical millennial

representati$e consumes" on a$erage" 2.? drin-s per ,ee- or *0 drin-s a month

The /uality of craft beer appears to be the best priority in ma-ing choice for almost *@

of respondents" ,e can then conclude that at this point students are prepared to pay a higher price

for craft beer if heshe ,ill get higher /uality product for that price. The opportunity to

e1perience ne, sensations appears to ha$e a strong effect on respondents ,ho put this factor

abo$e the price as ,ell. n this light" more than ?+@ of respondents indicated that they

e1perienced the positi$e reaction after tasting craft beer for the first time and only ?@ said that

the taste ,as bad.

6ur research indicates that t,o main factors for craft beer purchases are lo,er price and

higher /uality of the beer. As for craft beer consumption trends" in many cases there are a strong

correlation ,ith the trends for ordinary beer. The responses from our sur$ey indicate that many


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people ha$e tried craft beer" ,ould recommend it to their friends" and that taste is a $ery

important factor in their purchase decision. These findings suggest that consumers really are

embracing craft beer and the products of speciali'ed bre,ers. This is important because it not

only confirms the gro,ing popularity of this segment of the beer industry" but also indicates a

healthy competition in the industry as a ,hole.

n terms of o$erall results" there is a clear trend to,ard drin-ing and purchasing more

craft beer than traditional beer. 6ne may conclude that at this moment the /uality of beer in the

&ethbridge mar-et is lo,er than e1pected. The corporate big brand beers ,ill al,ays be there"

but on a small business scale it is apparent that there an opportunity for entrepreneurs. Craft

beers offer more in the ,ay of /uality" taste and $ariety of product ,hich appeals to many

modern consumers. Combining that ,ith ne, la,s enacted in Alberta regarding microbre,eries

it is /uite possible for companies to capitali'e on these trends in the mar-etplace.

3hile our research does pro$ide e$idence of the gro,ing popularity of craft beers

amongst the younger demographics" it does not e1tend beyond the student body. To really grasp

the full e1tent of this trend ,e ,ould ha$e had to sur$ey a ,ider spectrum of beer consumers. t

may be that the young student population consumes alcoholic be$erages regularly" so they

simply ac-no,ledge the presence of craft beers. Price point ,as still indicated as a $ery

important factor in the purchase decision. At the same time ho,e$er a desire for higher /uality

and different fla$or profiles indicates that at some le$el price point may become secondary.

Perhaps" in the ,ider spectrum of beer consumers" research ,ould gain a better understanding of

the shift in taste preferences. t may be that students ,ho are already budget conscious are ,ary

of spending a premium on a beer ,hen they can consume a cheaper alternati$e. t may be that


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e$en though younger demographics are often the early adopters of these products" that older

more established consumers ,ith more disposable income may demonstrate more interest.

6ur research pro%ect ,as not ,ithout ,ea-nesses and limitations. As mentioned the

sur$ey of the student body at the 5ni$ersity of &ethbridge represented a con$enience sample.

3hile a highly rele$ant population to sur$ey" it does not represent the entire spectrum of beer

consumers. n addition the pressure of time constraints meant that there ,as a limitation on time

allo,ed for e1tended data collection. Hthically" there ,as a need to e1clude respondents ,ho

,ere underage for legal reasons. 6$erall" ,e feel that the results of our sur$ey indicate the

presence of a gro,ing popularity in specialty beers. To truly ascertain if this translates into a

feasible opportunity for a business $enture ,ould re/uire a more thorough e1amination of the

local mar-et across se$eral demographics.

Craft bre,eries ha$e been gro,ing in popularity for decades. As the technology becomes

more a$ailable home bre,ing or micro bre,ing has become a pastime for a$id beer lo$ers.

Restaurants and pubs ha$e embraced craft beers as a ,ay to e1cite and entice ne, patronage. A

perfect e1ample in &ethbridge is T,o !uys Pi''a that boasts up to forty craft beer options. #ome

ha$e e$en ta-en it to the le$el of tailoring entire menus to pair ,ith fla$ored beers.

6ur research focused on Alberta and more specifically our local mar-et here in

&ethbridge. The student body represented a con$enient sample that ,as most li-ely to adopt craft

beer. This research does contribute to the recent Canadian data in this industry from a consumer

perspecti$e. t may not be applicable to the larger scope of the beer industry in its entirety" but

,e belie$e that this trend ,ill continue to gro,.


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Recommendations

3e ha$e already touched on some possible recommendation in our discussion section.

9o,e$er" further elaboration on the outcome of our research is re/uired. At first" ,e ,ould

recommend to future entrepreneurs to focus more on a product=s /uality and to gi$e up on a

target of decreasing the price. t comes from the fact that many craft beers consumers indicated a

high desire for a high4/uality product as their most important factor in choosing a brand of beer

or craft beer. Iurthermore" none of the respondents chose ad$ertising as the factor that could

influence their decision in choosing one brand of beer o$er another. Thus" ,e can recommend

not in$esting large amounts of capital into ad$ertising because it ,ill not reach the target

clientele. 6ne can in$est this money into impro$ing techni/ues and facilities to produce e$en

higher /uality beer" or use it to lo, costs of the final product. As our research=s results sho,"

,ord4of4mouth is the best ,ay to increase the a,areness of the product and students prefer

listening to their friends= opinion rather than belie$ing in commercials. That means the first

impression ,ill be significant for customers to decide ,hether or not they drin- craft beer.

n our research" ,e targeted only the 5ni$ersity of &ethbridge students. 3hile the

student=s body accounts for a big part of &ethbridge population" there are still other groups

,hich" ,e feel" ha$e to be carefully considered. Thus" the most ob$ious direction for our

research is to go beyond the 5ni$ersity of &ethbridge and e1pand it to people ,ho fre/uently

$isit pubs or restaurant. 6ne can le$erage these people through online research" through hard

copy /uestionnaire or inter$ie,ing. The other direction can be e1pand the research beyond the

city of &ethbridge to neighborhood cities such as Medicine 9at. 5nderstanding of the demand in


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these cities ,ill allo, to get accurate and timeless estimation of consumer demand outside

&ethbridge=s boundaries" thus gi$ing an opportunity for the future e1pansion.

Besides a sample limitation of our research" the most prominent ones ,ere time and ethical

constraints. ndeed" in order to go into more details in our research and e1plore more e1hausti$e

samples ,e should ha$e spent at least t,ice much time as ,e spent on the current research.

Hthical issues pose a big limitation for our research team as ,ell. 3e could not easily go into

as-ing too much personal /uestions in terms of not touching some unpleasant e1perience from

the participants= past. 3e also had to concern about age of responses and be a,are that the legal

age of drin-ing alcohol is *. Although ,e belie$e that these limitations did not cause a

significant discrepancy in reflecting a real situation of craft beer mar-et" ,e thin- that better

results /uality can be le$eraged through increasing the sample si'e and implementing more

sophisticated approaches to sur$ey possible craft beer consumers. The other action that should be

ta-en" ho,e$er not necessary" touches the redesign of /uestionnaire. ndeed" ,hen the research

topic comes to taste preferences it is hard enough to pro$ide mutually e1hausti$e ans,ers for

each /uestion as-ed. Thus" more open4ended /uestions are re/uired in order to gather more

accurate information. 6f course" it ,ill increase the comple1ity of the sur$ey ,hich ,ill re/uire

some sort of incenti$e for people to fill up the sur$ey.

onclusion

n our research" ,e focused on e1ploring the most common beer preferences among the

student body at the 5ni$ersity of &ethbridge. 3e also attempted to understand the most

important factors affecting the choices made by beer consumers. 3e began our research by

del$ing into pre$ious researches on the same topic and by analy'ing statistical data. After that"


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,e determined our target research group" ,hich appeared to be millennials. The most

challenging part of research ,as to de$elop and implement the research instrument. 3e decided

to go ,ith a si1teen /uestion sur$ey" ,hich ,e designed and distributed through the 8ualtrics

program online. 8ualtrics allo,s the use of logical functions helping us to get more $aluable and

precise data by ,eeding out those ,ho do not satisfy the minimal re/uirements for our sur$ey

age or e1perience in drin-ing beer


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References

Boteler" A.M. 200>+


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Men'ies" (. 20**


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Appendix A. Letter of Invitation.


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Appendix B. Questionnaire example.

*. 3hat is your age

o 5nder *o * to 2*

o 22 to 2?o 2F to 2>

o )0 and o$er

2. (o you drin- beero Nes

o Go

). (o you drin- craft beero Nes

o Go

o 5nsure

Regarding the ne1t ) /uestions: * drin- L *2o' beer" *.?o' alcohol" ?.?o' ,ine. *o'L)0ml.

+. 6n a$erage ho, many drin-s do you ha$e each ,ee-o 0 times

o *4) timeso +4F times

o 74> timeso *0 times or more

?. 6n a$erage ho, many beer do you ha$e each ,ee-o 0 timeso *4) times

o +4F timeso 74> times

o *0 times or more

F. 6n a$erage ho, many craft beer do you ha$e each ,ee-o 0 times

o *4) timeso +4F times

o 74> times

o *0 times or more7. 3here do you most often purchase beer

o &i/uor storeo Pub

o Restauranto 6ther please specify


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. 3hat ,as your reaction ,hen you first tried craft beer

o ery !ood

o !ood

o 6-o Got Bad

o ery Bado 6ther please specify. 3hat made you purchase craft beero Recommended by a friend

o #a, a print ado #a, an article about craft beer

o #a, signage at a restaurant or pubo #a, signage at a retail location

o 6ther please specify

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