Collections > UNC Chapel Hill Undergraduate Honors Theses Collection > Brewing a Bubble: An explanation of the Craft Beer Revolution with Conspicuous Consumption Theory and Agent-Based Modelling

Since the 1960’s, the American beer industry has become increasingly consolidated as a dwindling number of breweries have supplied a growing proportion of the national market with mass produced beer. The Craft Beer Revolution, a term Hindy uses to describe the sudden increase in craft beer sales that has occurred since the mid 2000’s, bucks this trend (Hindy, 2014). Defying conventional business logic, the sales of smaller batch beers primarily intended for local consumption have flourished despite facing a significant cost disadvantage against national breweries, which can spread their fixed costs over a larger sales volume. This paper seeks to leverage anthropology to understand the Craft Beer Revolution by analyzing the American beer market through Conspicuous Consumption Theory, an idea originally proposed by Veblen in 1899 (Trigg, 2001). The theory holds that because Western society, in general, values individual wealth, people make purchases that are associated with the wealthy or beyond the means of the poor in order to enhance their perceived socio-economic status. Thus, this paper argues that the widespread popularity of craft beer is the result of a culturally recognized middle class large enough to sustain demand for a luxury good and a sufficiently strong association between craft beer and high socio-economic status. This claim is supported by an original agent-based model (ABM) which simulates the purchasing behavior of individual beer drinkers as their choices are influenced by a host of factors including their relative position in the socio-economic hierarchy, financial constraints and the preferences of their peers.