The Italian beer market and estimation of a hedonic regression model for Italian craft beer price

The aim of this thesis is to examine the Italian beer market, with an emphasis on the craft beer movement, and to evaluate the determinants of the Italian craft beer price, which has not been so far the object of any empirical analyses, through a hedonic regression model. Before analyzing the Italian market in detail, an overview of the global market is provided, with insights for each continent and their major brewing countries. The analysis of the Italian beer market begins with a description of the Italian legislation and continues with a snapshot view of the sector: production and consumption, imports and exports, main competitors, distribution channels and suppliers are discussed in detail. The estimation of the hedonic regression model for Italian craft beer prices is carried out thanks to data provided by several sources: Guida alle birre d’Italia 2020, which is the most important publication in Italy for craft beer enthusiasts; websites and online shops of craft breweries; the internationally-known beer community websites Untappd and RateBeer; other websites addicted to Italian craft beer (www.microbirrifici.org and www.fermentobirra.com). These data, about sensory, chemical and objective characteristics of the beer, placements of the beers in national and international contests, objective characteristics of the breweries and consumer ratings of both beers and breweries, are processed using the STATA software. The empirical analysis proposes regression models for both beer ratings and prices, in order to address the endogeneity problem associated with the impact of consumer ratings on beer prices. The main result suggests that Italian craft beer prices are not influenced by beer ratings provided by beer community websites, such as Untappd and RateBeer, while there is a reputation effect of the brewery: breweries awarded as “Le Chiocciole” on Guida alle Birre d’Italia 2021 tend to raise their prices. In addition, beers awarded as “slow” or “imperdibili” on the guide have a positive impact on the beer rating. As far as the chemical characteristics of the beer are concerned, ABV is one of the main determinants of the beer price, while bitterness and calories are positively related to the consumer rating. Furthermore, the type of packaging, can or bottle, affects only the consumer rating and not the beer price.