A Cheers to Craft Beer Choices

A recent article in the popular press suggested that the growing number of craft beer choices might not be good for beer drinkers, arguing that for consumers, more options are confusing.

Although I have a number of issues with this argument (the central tenet of economics is pretty much that increasing competition is good for consumers), I wanted to deal briefly with the notion that choice is confusing. The research basis for that statement is the famous “jam study” by Iyengar and Lepper (2000), which found that consumers presented with more types of jam were actually less likely to purchase a jam. I’ve heard this study referenced several times recently in beer circles.

First off, I’ll point off that there are probably some differences between how people interact with jam and beer. Sure, I like a good jam (preferably made with beer), but I’d say my behavior is a bit different when it comes to beer than it is for preserved fruit (maybe the people who didn’t buy jam were in a hurry to get to the beer aisle?).

More importantly, further analyses have found little evidence for the “choice overload hypothesis”. A meta-review of 50 experiments by Scheibehenne et al. (2010) found that the effect of increasing choices on purchasing was “virtually zero” and that “retailers in the marketplace who offer more choice seem to have a competitive advantage”.

Why has this effect disappeared in follow-up studies? Much of it comes from repeating the initial experiment in different settings and with different products. No one to my knowledge has repeated the choice experiment in the beer aisle, but  I don’t think we should be worried about the increasing number of choices in the world of beer for a couple of reasons:

1. Choices can be aided by information

Over the past few years, the amount of information available to beer lovers has risen exponentially. It’s easier to take in a crowded beer aisle or tap list with beer apps and websites like BeerAdvocate, RateBeer, and Untappd. People are clearly using these. BeerAdvocate’s website claims 45+ million monthly pageviews. Couple these with your local bartender (hopefully Cicerone certified) and it’s easier than ever to sort through the choices and pick a great beer.

2. Craft lovers really like variety

When Nielsen asked its Household panel in March of 2013 why they bought craft beer, the found #1 reason was “like to experiment with different styles, flavors” – 50% of respondents cited it as a primary motivation for buying. Similarly, a July 2012 survey by Mintel found that 71% of respondents agreed with the statement “I like the variety of styles and brands” when asked about craft beer, the highest agreement for any attitude question. Beer drinkers, particularly craft beer drinkers, really like choices. You can see it when retailer like Hopcat (with over 100 taps) is increasing locations or when the GABF sells out in 32 minutes. So variety isn’t scaring people away from craft, it’s bringing them in.

3. Competition = innovation… and innovation is delicious

Regardless of the optimal number of brands on a shelf, the innovation and entry of so many great new breweries can only be a good thing for the category. Competition breeds innovation, and innovation has bred the incredible diversity of amazing beers available in the US today. The beers that people love will thrive and continue to find shelves and taps and the ones that don’t stand out will fade away. Make a list of your favorite craft beer brands. How many are 10 years old? 5? 1? I know that I’m continuously amazed by the new offerings from America’s 3,000+ breweries, and if it means I have to spend a few extra minutes in the beer aisle sorting out my next selection, it’s worth the wait.

Bart Watson, Chief Economist for the Brewers Association, is a stats geek, beer lover, and Certified Cicerone®. He holds a PhD from the University of California, Berkeley, where in addition to his dissertation, he completed a comprehensive survey of Bay Area brewpubs one pint at a time.

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