Consumer Willingness-to-Pay for Sustainability Attributes in Beer: A Choice Experiment Using Eco-Labels
Commercial and regional brewers are increasingly investing in sustainability equipment that reduces input use, operating costs, and environmental impact. These technologies often require significant upfront costs that can limit market access to microbreweries. One potential solution for these brewers is to market their product as sustainable and charge a premium for their product to offset some of the costs. A stated preference choice experiment of a nationally-representative sample is undertaken to elicit consumer willingness-to-pay (WTP) for sustainability attributes in beer, thus determining whether a market for sustainably-made beer exists. The facets of sustainability, including water reduction, energy reduction, and landfill diversion, are portrayed through eco-labels affixed the front of the primary packaging (aluminum can or glass bottle). Multiple specifications are employed to handle model shortcomings and incorporate discrete heterogeneity. Across all model specifications, consumers show a positive and statistically significant marginal WTP for landfill diversion practices and carbon reduction practices, ranging from $0.40 to $1.37 per six-pack and $0.67 to $1.21 per six-pack, respectively. These results indicate consumers do in fact place value on beer produced using sustainable practices, and the demographics of consumers with the greatest WTP are similar to that of craft beer consumer.
Jim and Neta Hicks Graduate Student Grant
- Master of Science
- Agricultural Economics
- West Lafayette