International Journal of Advertising The Quarterly Review of Marketing Communications
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Beer brand advertising and market share in the United States: 1977 to 1998 Gary B. Wilcox To cite this article: Gary B. Wilcox (2001) Beer brand advertising and market share in the United States: 1977 to 1998, International Journal of Advertising, 20:2, 149-168 To link to this article: http://dx.doi.org/10.1080/02650487.2001.11104884
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Beer brand advertising and market share in the United States: 1977 to 1998 Gary B. Wilcox The University of Texas at Austin
INTRODUCTION Since the early to mid-1980s, US brewers have encountered a number of challenges in the marketplace. From a period of steady growth during the 1970s, the beer industry reached a sales plateau where the primary emphasis has been on competition between the leading companies (see Figure 1). During the past 10 to 12 years, market share battles have become the major objective of the surviving companies. Central to this competition is advertising. Total media advertising expenditures for beer have increased fivefold from 1977 to 1998. In 1977 expenditures totalled $139.6 million and peaked in 1985 at $761.9 million. In 1998 brewers spent $7 52 million (Impact Databank, 1991, 1999). While overall spending has increased, the distribution of the advertising dollars has been relatively consistent. Beer advertising in the electronic media (television, cable and radio) has represented close to 90% of media expenditure since 1977. However, the share of beer advertising expenditure in network television has risen from slightly over 39% in 1977 to 58% in 1998 (Impact, 1991, 1999). Three companies have dominated beer advertising over the past several years. In 1998, Anhueser-Busch, Miller Brewing Company and Coors Brewing Company contributed over 85% of the media advertising dollars spent in the beer category. In 1980 the top 20 brands of beer accounted for almost 39% of the domestic media International Journal of Advertising, 20, pp. 149-168 © 2001 Advertising Association Published by the World Advertising Research Center, Farm Road, Henley-on-Thames, Oxon RG9 1EJ, UK
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INTERNATIONAL JOURNAL OF ADVERTISING, 2001, 20(2)
200 190 180 Ill
c:
.Q
170
a;
Ol
0
160
Ill
c:
~ 150 ~
140 130 120
1975
1980
1985
1990
1995
Years
FIGURE 1 US BEER CONSUMPTION: 1975 TO 1998
advertising expenditure. By 1998, the top 20 brands represented almost 90% of the domestic media advertising expenditure. While a number of studies have examined various determinates of aggregate beer consumption, little empirical research is available regarding the relationship between brand advertising expenditure and brand market share in the United States. The purpose of this article is to provide an analysis of the relationship between annual advertising expenditure and market share, using a generalised least-squares regression procedure, for several brands of beer sold in the United States from 1977 to 1998.
ADVERTISING AND ALCOHOL CONSUMPTION Advertising and econometric analyses The critics of alcoholic beverage advertising argue that the volume and content of such advertising results in increased levels of consumption of alcoholic beverages. They maintain that advertising restrictions or bans will lead to reduced levels of consumption. Several studies in the United States show minimal or no relationship between
150
BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
alcohol advertising and alcohol consumption. Other studies, notably in the United Kingdom, have suggested that total advertising does not influence consumption at all. A study by Prest (1949) indicated that advertising did not significantly increase primary demand for homogeneous packaged goods such as distilled spirits. A later study by Bourgeois and Barnes (1979) analysed the relationship between alcoholic beverage advertising and consumption in Canada from 19 51 to 1974. This study examined the relationship between beer, wine, distilled spirits and total alcohol consumption, along with a variety of marketing and nonmarketing variables, and found little correlation between alcoholic beverage advertising and per capita alcohol beverage consumption. They concluded that their study 'suggests that alcohol consumption is influenced more by uncontrollable variables than by those variables over which marketers and policy makers might exercise control in the short run.' Several econometric studies in the UK have suggested that the only consistent finding is a positive relationship for beer consumption with respect to beer advertising. Johnson and Oksanen (1974) found positive relationships for beer and wine advertising, but not for distilled spirits or total advertising. McGuinness (1980) found total alcohol consumption responsive to changes in distilled spirits advertising, but Walsh (1982) persuasively argues that beer, wine and spirits consumption should not be combined to form a total consumption variable. Walsh (1982) found a positive relationship for beer and distilled spirits consumption, but not for wine. Duffy (1983) also found positive effects of beer advertising on consumption. Therefore, the only somewhat consistent finding in these studies about the UK market is a positive relationship between beer advertising and beer consumption. A comparable study in the United States was conducted by Franke and Wilcox (1987) and examined the relationship between industrywide advertising expenditure and per capita consumption of beer, wine and distilled spirits from 1964 to 1984. Using quarterly data, advertising expenditure was studied in six media: network and spot television, network radio, magazines, newspaper supplements and outdoor. The findings reveal no evidence of a significant relationship between total advertising and consumption of beer, but found statistically significant although weak relationships between consumption and advertising of wine and distilled spirits.
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INTERNATIONAL JOURNAL OF ADVERTISING, 2001, 20(2)
In a very comprehensive analysis of beer, wine and spmts advertising, Fisher and Cook (1995) found that beer consumption was only related to demographic changes, increasing with larger numbers of 20 to 34-year-olds. The most important finding of their study was that yearly changes in advertising are not statistically related to changes in consumption for any of the product categories. Nelson and Moran (1995) also found that advertising was significantly related to beer consumption, but the magnitudes of these relationships were also very small. These findings are also consistent with those of Duffy (1990) and Selvanathan (1991).
Category/brand advertising In a two-article series, Ackoff and Emshoff (197 5) conducted experiments for Anheuser-Busch (A-B) that manipulated the amount spent on advertising, the media mix and timing of the advertising messages. From their research conducted between 1963 and 1968, AB sales doubled over the seven-year period, market share increased almost 5% while advertising expenditure was reduced by 58%. Fisher and Cook (1995) described total alcohol consumption as a system of declared consumer choices among product substitutes. In other words, consumers sometimes choose to drink wine or at other times beer and these products are seen as similar alternatives in the product category. This cross-category similarity can be further explained as a give and take relationship as illustrated by Fisher and Cook in that beer consumption increases when wine and spirits advertising is low. Nelson and Moran (199 5) also observed significant relationships between categories of alcohol beverages. Specifically distilled spirits consumption decreased as wine advertising increased and distilled spirits consumption increased when wine advertising reduced. This finding provides further evidence that individuals who consume alcoholic beverages may move between different categories of such beverages and that advertising may in part influence their category choice. Nelson and Moran (1995) also noted in their study that advertising had little impact on total consumption of alcoholic beverages but instead served to alter individual brand shares. Most recently, Gius (1996) provided useful insight into the relationship between distilled spirits advertising and consumption. This study examined brand advertising and brand consumption and provided empirical support that advertising for a distilled spirits brand had a significant positive effect on that brand's sales. He concluded that 'brand-level spirits 152
BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
advertising results only in brand switching and does not increase the size of the spirits market'. The majority of this research suggests the conclusion that advertising for alcoholic beverages appears to not significantly impact aggregate consumption, but is instead a competitive marketing tool that consumers use in their choice of what category of alcoholic beverage to consume and/ or what brand to purchase. While a few studies have examined the relationship between brand advertising expenditure and brand consumption, the majority of this research only examines aggregate data. The following sections present an analysis of the relationships between the market shares of several popular brands of beer and advertising expenditures in the United States, taking into account the Consumer Price Index for Beer, per capita income and federal/ state taxes from 1977 to 1998. This analysis uses a time-series regression approach, which allows for the observation of these variables over a 22-year period. Using this type of analysis technique over such an extended time period will provide greater insight than ever before possible into the advertising and market share relationships from a macro perspective.
RESEARCH METHODOLOGY Database The major objective in developing the database was to choose variables with reasonably frequent observations over a period of time that reflected advertising and consumption levels as well as other factors that might be expected to affect beer market share. A variety of sources were used to obtain yearly data from 1977 to 1998 for as many variables as possible. The database included 11 beer brand consumption variables, 11 beer brand advertising variables and five socioeconomic variables. Each of the 11 consumption variables consisted of the yearly brand market shares. The brand market shares were calculated from total yearly sales reported in millions of barrels and were felt to be the most reliable sales activity currently available. The advertising consisted of media expenditure totals for newspapers, magazines, network television, spot television, radio, outdoor, cable and syndicated television for each brand reported on an annual basis. Although these variables may not reflect total advertising expenditures, they are the best measures of expenditure currently 153
INTERNATIONAL JOURNAL OF ADVERTISING, 2001, 20(2)
TABLE 1 VARIABLES AND SOURCES Brand sales/ advertising variables
Manufacturer
Time period
Budweiser Bud Light Natural Light Busch Schlitz Old Milwaukee Pabst Coors Coors Light Miller Lite Miller High Life
Anheuser-Busch Anheuser-Busch Anheuser-Busch Anheuser-Busch Pabst Brewing Co Pabst Brewing Co Pabst Brewing Co Coors Brewing Co Coors Brewing Co Miller Brewing Co Miller Brewing Co
1977-1998 1981-1998 1977-1998 1977-1998 1977-1998 1977-1998 1977-1998 1977-1998 1978-1998 1977-1998 1977-1998
Sources: Brand sales - the US beer market, Impact Databank: Review and Forecast, M. Shanken Communications, Inc. NY, 1999,1991. Beverage lndustry/Annua/Manual, 1989. Advertising figures are in millions of 1982 to 1984 dollars; Leading National Advertisers, Inc. Socioeconomic variables Total population Source: US Department of Commerce, Bureau of the Census
1977-1998
Consumer Price Index for beer Source: US Department of Labor, Bureau of Labor Statistics
1977-1998
Per capita income Source: US Department of Labor, Bureau of Labor Statistics
1977-1998
Federal excise tax Source: US Treasury Department, Bureau of Alcohol, Tobacco, and Firearms
1977-1998
State taxes on malt beverages Source: The Beer Institute, Washington, DC
1977-1998
available (see Table 1). All advertising series were deflated using the McCann-Erickson Media Unit Cost Index. One 0-1 predictor was included in the models to capture the addition of warning labels that were placed on the products between 1988 and 1989. The socioeconomic variables used were population, Consumer Price Index for Beer, per capita income, federal excise tax and state taxes on malt beverages. The federal excise tax and the state taxes on malt beverages were adjusted by the Consumer Price Index to reflect a constant dollar taxation rate (see Table 1). One variable that was unavailable for inclusion in the analysis was the retail price of the individual brands. Even though price may be a competitive marketing tool in the sale of various brands, no reasonably frequent source of individual brand price was available for the 22-year period under examination. The Consumer Price Index and the federal/ state taxes were the only measures available to determine sensitivity to price. 154
BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
The beer brands were chosen for inclusion in the analysis based on two major criteria. First, a yearly series of advertising and consumption data was necessary for a brand to be included in the analysis. Second, a sufficient number of observations of beer consumption and advertising data was required of each brand. Therefore, some brands in the present market were excluded. The results of the selection process yielded 11 brands to be included in the analysis (see Table 1). The brands chosen were produced by the four leading brewing companies in the United States as of 1998. Nine of the brands had been positioned in the top five in sales at some point during the time period under investigation. For example, in 1977 Miller High Life and Schlitz had the second and third highest sales respectively that year, while in 1998 Budweiser, Bud Light and Miller Lite were the top three sales leaders with a combined market share of almost 40% (Beverage Industry, 1977; Impact Databank, 1999). Five of the brands were 'Premium' brands (including Light Premium) and six were 'SubPremium' brands (including Light Sub-Premium).
Data analysis procedures There are various methods for selecting a subset of predictor variables in any regression analysis. Because of the serious problems autocorrelation can present in analysis of time-series data, a generalised leastsquares regression approach that uses estimates of autocorrelation in a model's residuals in estimating structural parameters and significance levels was used. The maximum likelihood approach in the SAS AUTOREG procedure (SAS Institute, 1999) was used, taking into account any significant autocorrelation at lags of one and two years. A consistent model-building approach was used in determining which variables were significant predictors of the 11 consumption series. First, for each brand, total advertising and the other predictor variables were used in the regression equation with brand market share as the dependent variable. Second, the least significant predictors were dropped and another regression analysis was performed. The modelling continued until final models were found with all variables significant (p < 0.05). Finally, the R-squares of sequential models were compared to ensure that there was no significant drop in explained vanance. In addition to the analyses with total advertising levels, the same procedure utilised in the full model for each brand was followed employing individual advertising media. The final models in these 155
INTERNATIONAL JOURNAL OF ADVERTISING, 2001, 20(2)
analyses reveal which advertising media, if any, show significant relationships with the market share variables.
FINDINGS Because interpretation focuses on the final models with the nonsignificant predictors dropped, the full models with all predictors are not shown. The intercept parameters have no substantial relevance to understanding the advertising-market share relationship and are ignored in the discussion. Table 2 presents the final market share models for each brand's combined advertising. Advertising expenditure exhibited a significant relationship with brand share for eight of the 11 brands. Population, per capita income, excise tax, state tax and the warning label were also significandy associated with brand sales. Accounting for autocorrelation at lags of one and two years brings the total variance explained by the regression models to a minimum of 95% in all but two of the series. In the Busch and Budweiser models the total variance explained was 89% and 91% respectively. None of the predictors was significant in two of the models- Bud Light and Old Milwaukee. Visual representations of the advertising and market share relationship for each brand are presented in Figure 2. TABLE 2 FINAL MARKET SHARE MODELS- COMBINED ADVERTISING Brand consumption Predictor
Bvalue
t Ratio
Probability
Budweiser Intercept Advertising Excise tax CPI beer Total RSQ = 0.9112
0.219896 0.000183 -0.144486 0.002062 DFE = 19
7.633 2.140 -2.333 2.368
0.0001 0.0455 0.0308 0.0286
Natural Light Intercept Advertising Population CPI beer Total RSQ = 0.9811
-0.594505 0.000000598 0.000002593 -0.000005141 DFE = 19
-8.613 8.574 7.117 -3.549
0.0001 0.0001 0.0001 0.0021 (continued)
156
BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
TABLE 2 FINAL MARKET SHARE MODELS- COMBINED ADVERTISING (continued) Brand consumption Predictor
Bvalue
t Ratio
Probability
Busch Intercept Advertising Warning label State Tax Total RSQ = 0.8914
0.0335511 0.000001359 0.029040 -0.004375 DFE = 20
2.691 5.772 7.530 -2.450
O.D140 0.0001 0.0001 0.0236
Schlitz Intercept Advertising State tax Total RSQ = 0.9831
--0.127764 0.000000985 0.026184 DFE = 21
-9.905 5.766 10.575
0.0001 0.0001 0.0001
Coors Intercept Advertising Excise tax Trend Total RSQ = 0.9753
0.372704 0.000000424 0.065497 --0.000001474 DFE = 19
16.778 2.253 3.620 -20.841
0.0001 0.0362 0.0018 0.0001
Coors Light Intercept Advertising Population Total RSQ = 0.9897
--0.202166 0.00000066 0.00000093 DFE = 18
-11.246 8.595 11.487
0.0001 0.0001 0.0001
Miller Lite Intercept Advertising State tax Total RSQ = 0.9588
0.154438 0.000000142 --0.015503 DFE = 20
6.352 1.801 -4.322
0.0001 0.0868 0.0003
Miller High Life Intercept Per capita income State tax Total RSQ = 0.9558
0.339056 --0.000009264 --0.028617 DFE = 20
4.606 -3.706 -3.530
0.0002 0.0014 0.0021
Pabst Intercept Advertising Population CPI beer Per capita income Total RSQ = 0.9716
0.843390 0.000001776 --0.000004080 --0.001151 0.000010876 DFE = 18
3.181 3.727 -5.430 -2.561 2.119
0.0052 0.0015 0.0001 0.0197 0.0483
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Budweiser 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION
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BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
Coors 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
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INTERNATIONAL JOURNAL OF ADVERTISING, 2001, 20(2)
Miller High Life 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
160
BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
Natural Light 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
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Pabst 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
162
BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
Schlitz 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
Table 3 presents the final market share models for each brand's advertising by medium. Accounting for autocorrelation at lags of one and two years brings the total variance explained by the regression models to a minimum of 96% in all but two of the series. In the Busch and Miller Lite models the total variance explained was 72% and 65% respectively. The socioeconomic variables exhibited similar relationships as they did in the aggregate models. In the seven models, the electronic media (network, spot, cable and syndicated TV) accounted for the most frequent advertising media. In all but two of the occurrences, the relationships were positively related to market share. Cable advertising for Coors Light exhibited a negative relationship to Coors market share. Network TV advertising for Busch exhibited a negative relationship to Busch market share.
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TABLE 3 FINAL MARKET SHARE MODEL5- ADVERTISING BY MEDIUM Brand consumption Predictor
B value
t Ratio
Probability
Budweiser Intercept Newspaper Cable Excise tax CPI beer Total RSQ = 0.9711
0.234077 0.000005001 0.000011774 -0.230326 0.004047 DFE= 9
18.638 3.152 7.993 -8.720 6.829
0.0001 0.0117 0.0001 0.0001 0.0001
Natural Light Intercept Network TV Outdoor Total RSQ = 0.9631
-0.013917 0.000000405 0.000006077 DFE = 19
-1.903 2.498 2.313
0.0723 0.0218 0.0321
Busch Intercept Network TV Cable Total RSQ = 0.7204
0.042356 -0.000000691 0.000011762 DFE = 11
27.032 -4.510 4.414
0.0001 0.0009 0.0010
Schlitz Intercept Network TV State tax Total RSQ = 0.9806
-0.128818 0.000001139 0.026389 DFE = 21
-10.629 6.805 11.190
0.0001 0.0001 0.0001
Coors Light Intercept Magazine Cable Syndicated TV Population Total RSQ = 0.9851
-0.246280 0.000001496 -0.000004198 0.000000775 0.000001219 DFE= 6
-12.217 2.466 -4.564 3.935 15.120
0.0001 0.0487 0.0038 0.0077 0.0001
Pabst Intercept Network TV Cable Syndicated TV Excise tax Per capita income Total RSQ = 0.9970
0.033001 0.000009413 0.000016361 0.000196 -0.012308 -0.000001136 DFE=6
35.856 2.870 6.051 5.475 -7.893 -20.256
0.0001 0.0284 0.0009 0.0016 0.0002 0.0001
Miller Lite Intercept Network TV Spot TV Total RSQ = 0.6465
4.654996 0.000148 0.000662 DFE = 21
2.394 2.646 3.772
0.0261 0.0151 0.0011
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BEER BRAND ADVERTISING AND MARKET SHARE IN THE US: 1977 TO 1998
DISCUSSION The major finding in this study is that advertising and market share levels in the United States are significantly related for eight brands of beer from 1977 to 1998. Budweiser, Natural Light, Busch, Schlitz, Coors, Coors Light, Miller Lite and Pabst all exhibited a positive relationship between total brand advertising expenditures and brand market share. Because most of the previous empirical work examined aggregate advertising and consumption data, it is difficult to compare those findings with the results reported here. There appears to be a general agreement among the researchers that aggregate alcohol advertising expenditure in the United States has little or no effect on aggregate consumption but that advertising is one source of competition between brands for market share. The findings presented here support that relationship with eight of the 11 brands showing a positive relationship between total brand advertising expenditure and market share. It is illuminating to note that the top three brewing companies produce six of these eight brands. Budweiser, Miller Lite, Coors Light and Busch were four of the top five sales leaders in 1998 accounting for almost 38% of the market sales (Impact Databank, 1999). However, only one of these brands - Budweiser - was one of the top five sales leaders in 1977. In fact, Budweiser was the leading brand in 1977 and 1998 with over 26% and 18% brand share respectively. Schlitz, Coors, Miller High Life and Pabst were the other top five selling beers in 1977. Schlitz, Coors and Pabst exhibited significant relationships between brand advertising and market share. As expected, the electronic media were frequently associated with almost all of the brands. The market share series for four of the five top brands in 1998 were significantly related to expenditure in the electronic media. As noted earlier, all of those relationships were positive except for cable in the Coors Light model and Network TV in the Busch model. No clear pattern was evident regarding advertising and the category of beer. Of the brands showing a significant relationship between advertising and market share, two were Premium, two were Light Premium, three were Sub-Premium and one was Light Sub-Premium. These findings do not imply, however, that advertising may be the most important marketing tool for every successful beer brand. In the 165
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Bud Light model (the second leading brand in 1998), advertising was not significantly related to market share. These findings do suggest that advertising is perhaps a fairly important marketing tool for most of the leading brands and that when used effectively, it appears to influence brand market share. Even though the socioeconomic and 0-1 predictors were included in the analysis primarily to explain variance in market share that might otherwise be attributed to the advertising variables, they do have some relevance of their own. For example, the population variable was a significant predictor for three brands- Natural Light, Coors Light and Pabst. The direction of this relationship was varied- for Natural Light and Coors it was positive, and for Pabst it was negative. Examining this finding in more detail reveals that for brands exhibiting a constant level of growth such as Natural Light and Coors Light, the relationship was positive. Conversely, for a brand whose sales had peaked earlier in the time period examined and since declined - Pabst - the relationship was negative. Per capita income was a significant predictor for two of the brands. For Miller High Life the relationship was negative, suggesting that as per capita income increased, market share decreased. However, for Pabst the relationship was positive, suggesting that as per capita income increased, so did market share. The two tax variables were significant predictors in several of the models, suggesting possible price sensitivity for seven of the brands. The excise tax variable was significantly related to three brands Budweiser, Coors and Pabst. The state tax variable was significantly related to four of the brands - Busch, Schlitz, Miller Lite and Miller High Life. The direction of this relationship was varied. Schlitz, Coors and Pabst exhibited positive relationships, suggesting that increases in the tax were associated with increases in market share of those brands. Two of these brands are Sub-Premium brands with a price point typically lower than the Premium ones. Budweiser, Busch, Miller Lite and Miller High Life exhibited negative relationships, suggesting that increases in the tax were associated with decreases in the market share for those brands. In another measure of price sensitivity, CPI beer exhibited a significant, positive relationship with Budweiser and a negative relationship with Natural Light and Pabst. This finding suggests that increases in the Consumer Price Index are associated with increases in market share for Budweiser and decreases in market share for Natural Light and Pabst.
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On the 0-1 predictor, the warning label also exhibited a significant positive relationship with one of the brands - Busch. This finding in addition to the failure of any of the other brands to exhibit a significant relationship with the warning label might question the effectiveness of such warnings on brand market share.
CONCLUSIONS What is clear from this analysis is that, for certain brands, advertising exhibits an important relationship with market share - how important is difficult, if not impossible, to determine. However, product innovation such as packaging or ingredient changes can only be effectively communicated to a mass market via mass media advertising. Attempts to reduce consumption by eliminating advertising for beer would likely have a devastating effect on the communication of salient product information to the consumer. In relating advertising expenditure to market share, it is difficult to show that advertising alone impacts brand market share. Furthermore, the relationships observed in this study are correlational, not necessarily causal. Other factors not included in the analysis such as changing attitudes towards drinking, retail prices of the brands or personal preference shifts in brand choice may no doubt have had an impact on market share of these brands. It may be, in many cases, that market share performance 'causes' advertising expenditures. In addition, this study examines only advertising expenditure levels. The creative appeals used by the advertisers play a critical role by interacting with expenditure levels to result in effective advertising. There was no attempt here to measure such interaction effects. This article has focused on the economic and marketing aspects of beer advertising and has presented evidence that, in a majority of cases, advertising is important to brand market share. Clearly, social and legal aspects are areas that will require further empirical investigations and analyses.
REFERENCES Ackoff, R.L. & Emshoff,J.R. (1975) 'Advertising research at Anheuser-Busch, Inc. 1968-1974', Sloan Management Review, Spring, 1-15.
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Beverage industry (1977) Annual Manual. New York: Magazines for Industry. Bourgeois, J.C. & Barnes, J.G. (1979) 'Does advertising increase alcohol consumption?', Journal of Advertising Research, 19 (August), 19-29. Duffy, M. (1983) 'The demand for alcoholic drink in the United Kingdom, 1963-78',AppliedEconomics, 15 (February), 125-140. Duffy, M. (1990) 'Advertising and alcoholic drink demand in the UK: some further Rotterdam Model estimates', International Journal of Advertising, 9(3), 247-258. Fisher, J.C. & Cook, P.A. (1995) Advertising, Alcohol Consumption, and Mortality: An Empirical Investigation. Westport, CT: Greenwood Press. Franke, G. & Wilcox, G. (1987) 'Alcoholic beverage advertising and consumption in the United States, 1964-1984',Journal of Advertising, 16, 22-30. Guis, M.P. (1996) 'Using panel data to determine the effect of advertising on brand-level distilled spirits sales', Journal of Studies on Alcohol, January, 73-76. Impact Databank (1999, 1991) Review and Forecast, Brand Sales- The US Beer Market. New York: M. Shanken Communications, Inc. Johnson,J.A. & Oksanen, E.H. (1974) 'Socio-economic determinants of the consumption of alcoholic beverages', Applied Economics, 6 (December), 293-301. McGuinness, T. (1980) 'An econometric analysis of total demand for alcoholic beverages in the U.K., 1956-75',Journal of Industrial Economics, 29 (September), 85-109. Nelson, J.P. & Moran, JR. (1995) 'Advertising and U.S. alcoholic beverage demand: system-wide estimates', Applied Economics, 27, 1225-1236. Prest, A.R. (1949) 'Some experiments in demand analysis', Review of Economics and Statistics, 31 (February), 33-49. SAS Institute (1999) SAS>ETS User's Guide. Cary, NC: SAS Institute. Selvanathan, E.A. (1991) 'Cross-country alcohol consumption comparison: an application of the Rotterdam Demand System', Applied Economics, 23, 1613-1622. Walsh, B.M. (1982) 'The demand for alcohol in the UK: a comment', Journal of Industrial Economics, 30 Oune), 439-446.
ABOUT THE AUTHOR Gary B. Wilcox is the John A. Beck Centennial Professor in Communication at the University of Texas at Austin. His research interests include alcohol and cigarette advertising and interactive communication. Dr Wilcox was chair of the Department of Advertising at the University from 1990 to 1998 and currently serves as graduate adviser. He gained his Ph.D. in mass media from Michigan State University.
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ISSN: 0265-0487 (Print) 1759-3948 (Online) Journal homepage: http://www.tandfonline.com/loi/rina20
Beer brand advertising and market share in the United States: 1977 to 1998 Gary B. Wilcox To cite this article: Gary B. Wilcox (2001) Beer brand advertising and market share in the United States: 1977 to 1998, International Journal of Advertising, 20:2, 149-168 To link to this article: http://dx.doi.org/10.1080/02650487.2001.11104884
Published online: 02 Mar 2015.
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Date: 28 November 2016, At: 03:23
Beer brand advertising and market share in the United States: 1977 to 1998 Gary B. Wilcox The University of Texas at Austin
INTRODUCTION Since the early to mid-1980s, US brewers have encountered a number of challenges in the marketplace. From a period of steady growth during the 1970s, the beer industry reached a sales plateau where the primary emphasis has been on competition between the leading companies (see Figure 1). During the past 10 to 12 years, market share battles have become the major objective of the surviving companies. Central to this competition is advertising. Total media advertising expenditures for beer have increased fivefold from 1977 to 1998. In 1977 expenditures totalled $139.6 million and peaked in 1985 at $761.9 million. In 1998 brewers spent $7 52 million (Impact Databank, 1991, 1999). While overall spending has increased, the distribution of the advertising dollars has been relatively consistent. Beer advertising in the electronic media (television, cable and radio) has represented close to 90% of media expenditure since 1977. However, the share of beer advertising expenditure in network television has risen from slightly over 39% in 1977 to 58% in 1998 (Impact, 1991, 1999). Three companies have dominated beer advertising over the past several years. In 1998, Anhueser-Busch, Miller Brewing Company and Coors Brewing Company contributed over 85% of the media advertising dollars spent in the beer category. In 1980 the top 20 brands of beer accounted for almost 39% of the domestic media International Journal of Advertising, 20, pp. 149-168 © 2001 Advertising Association Published by the World Advertising Research Center, Farm Road, Henley-on-Thames, Oxon RG9 1EJ, UK
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INTERNATIONAL JOURNAL OF ADVERTISING, 2001, 20(2)
200 190 180 Ill
c:
.Q
170
a;
Ol
0
160
Ill
c:
~ 150 ~
140 130 120
1975
1980
1985
1990
1995
Years
FIGURE 1 US BEER CONSUMPTION: 1975 TO 1998
advertising expenditure. By 1998, the top 20 brands represented almost 90% of the domestic media advertising expenditure. While a number of studies have examined various determinates of aggregate beer consumption, little empirical research is available regarding the relationship between brand advertising expenditure and brand market share in the United States. The purpose of this article is to provide an analysis of the relationship between annual advertising expenditure and market share, using a generalised least-squares regression procedure, for several brands of beer sold in the United States from 1977 to 1998.
ADVERTISING AND ALCOHOL CONSUMPTION Advertising and econometric analyses The critics of alcoholic beverage advertising argue that the volume and content of such advertising results in increased levels of consumption of alcoholic beverages. They maintain that advertising restrictions or bans will lead to reduced levels of consumption. Several studies in the United States show minimal or no relationship between
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alcohol advertising and alcohol consumption. Other studies, notably in the United Kingdom, have suggested that total advertising does not influence consumption at all. A study by Prest (1949) indicated that advertising did not significantly increase primary demand for homogeneous packaged goods such as distilled spirits. A later study by Bourgeois and Barnes (1979) analysed the relationship between alcoholic beverage advertising and consumption in Canada from 19 51 to 1974. This study examined the relationship between beer, wine, distilled spirits and total alcohol consumption, along with a variety of marketing and nonmarketing variables, and found little correlation between alcoholic beverage advertising and per capita alcohol beverage consumption. They concluded that their study 'suggests that alcohol consumption is influenced more by uncontrollable variables than by those variables over which marketers and policy makers might exercise control in the short run.' Several econometric studies in the UK have suggested that the only consistent finding is a positive relationship for beer consumption with respect to beer advertising. Johnson and Oksanen (1974) found positive relationships for beer and wine advertising, but not for distilled spirits or total advertising. McGuinness (1980) found total alcohol consumption responsive to changes in distilled spirits advertising, but Walsh (1982) persuasively argues that beer, wine and spirits consumption should not be combined to form a total consumption variable. Walsh (1982) found a positive relationship for beer and distilled spirits consumption, but not for wine. Duffy (1983) also found positive effects of beer advertising on consumption. Therefore, the only somewhat consistent finding in these studies about the UK market is a positive relationship between beer advertising and beer consumption. A comparable study in the United States was conducted by Franke and Wilcox (1987) and examined the relationship between industrywide advertising expenditure and per capita consumption of beer, wine and distilled spirits from 1964 to 1984. Using quarterly data, advertising expenditure was studied in six media: network and spot television, network radio, magazines, newspaper supplements and outdoor. The findings reveal no evidence of a significant relationship between total advertising and consumption of beer, but found statistically significant although weak relationships between consumption and advertising of wine and distilled spirits.
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In a very comprehensive analysis of beer, wine and spmts advertising, Fisher and Cook (1995) found that beer consumption was only related to demographic changes, increasing with larger numbers of 20 to 34-year-olds. The most important finding of their study was that yearly changes in advertising are not statistically related to changes in consumption for any of the product categories. Nelson and Moran (1995) also found that advertising was significantly related to beer consumption, but the magnitudes of these relationships were also very small. These findings are also consistent with those of Duffy (1990) and Selvanathan (1991).
Category/brand advertising In a two-article series, Ackoff and Emshoff (197 5) conducted experiments for Anheuser-Busch (A-B) that manipulated the amount spent on advertising, the media mix and timing of the advertising messages. From their research conducted between 1963 and 1968, AB sales doubled over the seven-year period, market share increased almost 5% while advertising expenditure was reduced by 58%. Fisher and Cook (1995) described total alcohol consumption as a system of declared consumer choices among product substitutes. In other words, consumers sometimes choose to drink wine or at other times beer and these products are seen as similar alternatives in the product category. This cross-category similarity can be further explained as a give and take relationship as illustrated by Fisher and Cook in that beer consumption increases when wine and spirits advertising is low. Nelson and Moran (199 5) also observed significant relationships between categories of alcohol beverages. Specifically distilled spirits consumption decreased as wine advertising increased and distilled spirits consumption increased when wine advertising reduced. This finding provides further evidence that individuals who consume alcoholic beverages may move between different categories of such beverages and that advertising may in part influence their category choice. Nelson and Moran (1995) also noted in their study that advertising had little impact on total consumption of alcoholic beverages but instead served to alter individual brand shares. Most recently, Gius (1996) provided useful insight into the relationship between distilled spirits advertising and consumption. This study examined brand advertising and brand consumption and provided empirical support that advertising for a distilled spirits brand had a significant positive effect on that brand's sales. He concluded that 'brand-level spirits 152
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advertising results only in brand switching and does not increase the size of the spirits market'. The majority of this research suggests the conclusion that advertising for alcoholic beverages appears to not significantly impact aggregate consumption, but is instead a competitive marketing tool that consumers use in their choice of what category of alcoholic beverage to consume and/ or what brand to purchase. While a few studies have examined the relationship between brand advertising expenditure and brand consumption, the majority of this research only examines aggregate data. The following sections present an analysis of the relationships between the market shares of several popular brands of beer and advertising expenditures in the United States, taking into account the Consumer Price Index for Beer, per capita income and federal/ state taxes from 1977 to 1998. This analysis uses a time-series regression approach, which allows for the observation of these variables over a 22-year period. Using this type of analysis technique over such an extended time period will provide greater insight than ever before possible into the advertising and market share relationships from a macro perspective.
RESEARCH METHODOLOGY Database The major objective in developing the database was to choose variables with reasonably frequent observations over a period of time that reflected advertising and consumption levels as well as other factors that might be expected to affect beer market share. A variety of sources were used to obtain yearly data from 1977 to 1998 for as many variables as possible. The database included 11 beer brand consumption variables, 11 beer brand advertising variables and five socioeconomic variables. Each of the 11 consumption variables consisted of the yearly brand market shares. The brand market shares were calculated from total yearly sales reported in millions of barrels and were felt to be the most reliable sales activity currently available. The advertising consisted of media expenditure totals for newspapers, magazines, network television, spot television, radio, outdoor, cable and syndicated television for each brand reported on an annual basis. Although these variables may not reflect total advertising expenditures, they are the best measures of expenditure currently 153
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TABLE 1 VARIABLES AND SOURCES Brand sales/ advertising variables
Manufacturer
Time period
Budweiser Bud Light Natural Light Busch Schlitz Old Milwaukee Pabst Coors Coors Light Miller Lite Miller High Life
Anheuser-Busch Anheuser-Busch Anheuser-Busch Anheuser-Busch Pabst Brewing Co Pabst Brewing Co Pabst Brewing Co Coors Brewing Co Coors Brewing Co Miller Brewing Co Miller Brewing Co
1977-1998 1981-1998 1977-1998 1977-1998 1977-1998 1977-1998 1977-1998 1977-1998 1978-1998 1977-1998 1977-1998
Sources: Brand sales - the US beer market, Impact Databank: Review and Forecast, M. Shanken Communications, Inc. NY, 1999,1991. Beverage lndustry/Annua/Manual, 1989. Advertising figures are in millions of 1982 to 1984 dollars; Leading National Advertisers, Inc. Socioeconomic variables Total population Source: US Department of Commerce, Bureau of the Census
1977-1998
Consumer Price Index for beer Source: US Department of Labor, Bureau of Labor Statistics
1977-1998
Per capita income Source: US Department of Labor, Bureau of Labor Statistics
1977-1998
Federal excise tax Source: US Treasury Department, Bureau of Alcohol, Tobacco, and Firearms
1977-1998
State taxes on malt beverages Source: The Beer Institute, Washington, DC
1977-1998
available (see Table 1). All advertising series were deflated using the McCann-Erickson Media Unit Cost Index. One 0-1 predictor was included in the models to capture the addition of warning labels that were placed on the products between 1988 and 1989. The socioeconomic variables used were population, Consumer Price Index for Beer, per capita income, federal excise tax and state taxes on malt beverages. The federal excise tax and the state taxes on malt beverages were adjusted by the Consumer Price Index to reflect a constant dollar taxation rate (see Table 1). One variable that was unavailable for inclusion in the analysis was the retail price of the individual brands. Even though price may be a competitive marketing tool in the sale of various brands, no reasonably frequent source of individual brand price was available for the 22-year period under examination. The Consumer Price Index and the federal/ state taxes were the only measures available to determine sensitivity to price. 154
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The beer brands were chosen for inclusion in the analysis based on two major criteria. First, a yearly series of advertising and consumption data was necessary for a brand to be included in the analysis. Second, a sufficient number of observations of beer consumption and advertising data was required of each brand. Therefore, some brands in the present market were excluded. The results of the selection process yielded 11 brands to be included in the analysis (see Table 1). The brands chosen were produced by the four leading brewing companies in the United States as of 1998. Nine of the brands had been positioned in the top five in sales at some point during the time period under investigation. For example, in 1977 Miller High Life and Schlitz had the second and third highest sales respectively that year, while in 1998 Budweiser, Bud Light and Miller Lite were the top three sales leaders with a combined market share of almost 40% (Beverage Industry, 1977; Impact Databank, 1999). Five of the brands were 'Premium' brands (including Light Premium) and six were 'SubPremium' brands (including Light Sub-Premium).
Data analysis procedures There are various methods for selecting a subset of predictor variables in any regression analysis. Because of the serious problems autocorrelation can present in analysis of time-series data, a generalised leastsquares regression approach that uses estimates of autocorrelation in a model's residuals in estimating structural parameters and significance levels was used. The maximum likelihood approach in the SAS AUTOREG procedure (SAS Institute, 1999) was used, taking into account any significant autocorrelation at lags of one and two years. A consistent model-building approach was used in determining which variables were significant predictors of the 11 consumption series. First, for each brand, total advertising and the other predictor variables were used in the regression equation with brand market share as the dependent variable. Second, the least significant predictors were dropped and another regression analysis was performed. The modelling continued until final models were found with all variables significant (p < 0.05). Finally, the R-squares of sequential models were compared to ensure that there was no significant drop in explained vanance. In addition to the analyses with total advertising levels, the same procedure utilised in the full model for each brand was followed employing individual advertising media. The final models in these 155
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analyses reveal which advertising media, if any, show significant relationships with the market share variables.
FINDINGS Because interpretation focuses on the final models with the nonsignificant predictors dropped, the full models with all predictors are not shown. The intercept parameters have no substantial relevance to understanding the advertising-market share relationship and are ignored in the discussion. Table 2 presents the final market share models for each brand's combined advertising. Advertising expenditure exhibited a significant relationship with brand share for eight of the 11 brands. Population, per capita income, excise tax, state tax and the warning label were also significandy associated with brand sales. Accounting for autocorrelation at lags of one and two years brings the total variance explained by the regression models to a minimum of 95% in all but two of the series. In the Busch and Budweiser models the total variance explained was 89% and 91% respectively. None of the predictors was significant in two of the models- Bud Light and Old Milwaukee. Visual representations of the advertising and market share relationship for each brand are presented in Figure 2. TABLE 2 FINAL MARKET SHARE MODELS- COMBINED ADVERTISING Brand consumption Predictor
Bvalue
t Ratio
Probability
Budweiser Intercept Advertising Excise tax CPI beer Total RSQ = 0.9112
0.219896 0.000183 -0.144486 0.002062 DFE = 19
7.633 2.140 -2.333 2.368
0.0001 0.0455 0.0308 0.0286
Natural Light Intercept Advertising Population CPI beer Total RSQ = 0.9811
-0.594505 0.000000598 0.000002593 -0.000005141 DFE = 19
-8.613 8.574 7.117 -3.549
0.0001 0.0001 0.0001 0.0021 (continued)
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TABLE 2 FINAL MARKET SHARE MODELS- COMBINED ADVERTISING (continued) Brand consumption Predictor
Bvalue
t Ratio
Probability
Busch Intercept Advertising Warning label State Tax Total RSQ = 0.8914
0.0335511 0.000001359 0.029040 -0.004375 DFE = 20
2.691 5.772 7.530 -2.450
O.D140 0.0001 0.0001 0.0236
Schlitz Intercept Advertising State tax Total RSQ = 0.9831
--0.127764 0.000000985 0.026184 DFE = 21
-9.905 5.766 10.575
0.0001 0.0001 0.0001
Coors Intercept Advertising Excise tax Trend Total RSQ = 0.9753
0.372704 0.000000424 0.065497 --0.000001474 DFE = 19
16.778 2.253 3.620 -20.841
0.0001 0.0362 0.0018 0.0001
Coors Light Intercept Advertising Population Total RSQ = 0.9897
--0.202166 0.00000066 0.00000093 DFE = 18
-11.246 8.595 11.487
0.0001 0.0001 0.0001
Miller Lite Intercept Advertising State tax Total RSQ = 0.9588
0.154438 0.000000142 --0.015503 DFE = 20
6.352 1.801 -4.322
0.0001 0.0868 0.0003
Miller High Life Intercept Per capita income State tax Total RSQ = 0.9558
0.339056 --0.000009264 --0.028617 DFE = 20
4.606 -3.706 -3.530
0.0002 0.0014 0.0021
Pabst Intercept Advertising Population CPI beer Per capita income Total RSQ = 0.9716
0.843390 0.000001776 --0.000004080 --0.001151 0.000010876 DFE = 18
3.181 3.727 -5.430 -2.561 2.119
0.0052 0.0015 0.0001 0.0197 0.0483
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Budweiser 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION
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Coors 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
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Miller High Life 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
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Natural Light 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
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Pabst 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
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Schlitz 1977-1998
FIGURE 2 ADVERTISING AND MARKET SHARE INFORMATION (contd)
Table 3 presents the final market share models for each brand's advertising by medium. Accounting for autocorrelation at lags of one and two years brings the total variance explained by the regression models to a minimum of 96% in all but two of the series. In the Busch and Miller Lite models the total variance explained was 72% and 65% respectively. The socioeconomic variables exhibited similar relationships as they did in the aggregate models. In the seven models, the electronic media (network, spot, cable and syndicated TV) accounted for the most frequent advertising media. In all but two of the occurrences, the relationships were positively related to market share. Cable advertising for Coors Light exhibited a negative relationship to Coors market share. Network TV advertising for Busch exhibited a negative relationship to Busch market share.
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TABLE 3 FINAL MARKET SHARE MODEL5- ADVERTISING BY MEDIUM Brand consumption Predictor
B value
t Ratio
Probability
Budweiser Intercept Newspaper Cable Excise tax CPI beer Total RSQ = 0.9711
0.234077 0.000005001 0.000011774 -0.230326 0.004047 DFE= 9
18.638 3.152 7.993 -8.720 6.829
0.0001 0.0117 0.0001 0.0001 0.0001
Natural Light Intercept Network TV Outdoor Total RSQ = 0.9631
-0.013917 0.000000405 0.000006077 DFE = 19
-1.903 2.498 2.313
0.0723 0.0218 0.0321
Busch Intercept Network TV Cable Total RSQ = 0.7204
0.042356 -0.000000691 0.000011762 DFE = 11
27.032 -4.510 4.414
0.0001 0.0009 0.0010
Schlitz Intercept Network TV State tax Total RSQ = 0.9806
-0.128818 0.000001139 0.026389 DFE = 21
-10.629 6.805 11.190
0.0001 0.0001 0.0001
Coors Light Intercept Magazine Cable Syndicated TV Population Total RSQ = 0.9851
-0.246280 0.000001496 -0.000004198 0.000000775 0.000001219 DFE= 6
-12.217 2.466 -4.564 3.935 15.120
0.0001 0.0487 0.0038 0.0077 0.0001
Pabst Intercept Network TV Cable Syndicated TV Excise tax Per capita income Total RSQ = 0.9970
0.033001 0.000009413 0.000016361 0.000196 -0.012308 -0.000001136 DFE=6
35.856 2.870 6.051 5.475 -7.893 -20.256
0.0001 0.0284 0.0009 0.0016 0.0002 0.0001
Miller Lite Intercept Network TV Spot TV Total RSQ = 0.6465
4.654996 0.000148 0.000662 DFE = 21
2.394 2.646 3.772
0.0261 0.0151 0.0011
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DISCUSSION The major finding in this study is that advertising and market share levels in the United States are significantly related for eight brands of beer from 1977 to 1998. Budweiser, Natural Light, Busch, Schlitz, Coors, Coors Light, Miller Lite and Pabst all exhibited a positive relationship between total brand advertising expenditures and brand market share. Because most of the previous empirical work examined aggregate advertising and consumption data, it is difficult to compare those findings with the results reported here. There appears to be a general agreement among the researchers that aggregate alcohol advertising expenditure in the United States has little or no effect on aggregate consumption but that advertising is one source of competition between brands for market share. The findings presented here support that relationship with eight of the 11 brands showing a positive relationship between total brand advertising expenditure and market share. It is illuminating to note that the top three brewing companies produce six of these eight brands. Budweiser, Miller Lite, Coors Light and Busch were four of the top five sales leaders in 1998 accounting for almost 38% of the market sales (Impact Databank, 1999). However, only one of these brands - Budweiser - was one of the top five sales leaders in 1977. In fact, Budweiser was the leading brand in 1977 and 1998 with over 26% and 18% brand share respectively. Schlitz, Coors, Miller High Life and Pabst were the other top five selling beers in 1977. Schlitz, Coors and Pabst exhibited significant relationships between brand advertising and market share. As expected, the electronic media were frequently associated with almost all of the brands. The market share series for four of the five top brands in 1998 were significantly related to expenditure in the electronic media. As noted earlier, all of those relationships were positive except for cable in the Coors Light model and Network TV in the Busch model. No clear pattern was evident regarding advertising and the category of beer. Of the brands showing a significant relationship between advertising and market share, two were Premium, two were Light Premium, three were Sub-Premium and one was Light Sub-Premium. These findings do not imply, however, that advertising may be the most important marketing tool for every successful beer brand. In the 165
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Bud Light model (the second leading brand in 1998), advertising was not significantly related to market share. These findings do suggest that advertising is perhaps a fairly important marketing tool for most of the leading brands and that when used effectively, it appears to influence brand market share. Even though the socioeconomic and 0-1 predictors were included in the analysis primarily to explain variance in market share that might otherwise be attributed to the advertising variables, they do have some relevance of their own. For example, the population variable was a significant predictor for three brands- Natural Light, Coors Light and Pabst. The direction of this relationship was varied- for Natural Light and Coors it was positive, and for Pabst it was negative. Examining this finding in more detail reveals that for brands exhibiting a constant level of growth such as Natural Light and Coors Light, the relationship was positive. Conversely, for a brand whose sales had peaked earlier in the time period examined and since declined - Pabst - the relationship was negative. Per capita income was a significant predictor for two of the brands. For Miller High Life the relationship was negative, suggesting that as per capita income increased, market share decreased. However, for Pabst the relationship was positive, suggesting that as per capita income increased, so did market share. The two tax variables were significant predictors in several of the models, suggesting possible price sensitivity for seven of the brands. The excise tax variable was significantly related to three brands Budweiser, Coors and Pabst. The state tax variable was significantly related to four of the brands - Busch, Schlitz, Miller Lite and Miller High Life. The direction of this relationship was varied. Schlitz, Coors and Pabst exhibited positive relationships, suggesting that increases in the tax were associated with increases in market share of those brands. Two of these brands are Sub-Premium brands with a price point typically lower than the Premium ones. Budweiser, Busch, Miller Lite and Miller High Life exhibited negative relationships, suggesting that increases in the tax were associated with decreases in the market share for those brands. In another measure of price sensitivity, CPI beer exhibited a significant, positive relationship with Budweiser and a negative relationship with Natural Light and Pabst. This finding suggests that increases in the Consumer Price Index are associated with increases in market share for Budweiser and decreases in market share for Natural Light and Pabst.
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On the 0-1 predictor, the warning label also exhibited a significant positive relationship with one of the brands - Busch. This finding in addition to the failure of any of the other brands to exhibit a significant relationship with the warning label might question the effectiveness of such warnings on brand market share.
CONCLUSIONS What is clear from this analysis is that, for certain brands, advertising exhibits an important relationship with market share - how important is difficult, if not impossible, to determine. However, product innovation such as packaging or ingredient changes can only be effectively communicated to a mass market via mass media advertising. Attempts to reduce consumption by eliminating advertising for beer would likely have a devastating effect on the communication of salient product information to the consumer. In relating advertising expenditure to market share, it is difficult to show that advertising alone impacts brand market share. Furthermore, the relationships observed in this study are correlational, not necessarily causal. Other factors not included in the analysis such as changing attitudes towards drinking, retail prices of the brands or personal preference shifts in brand choice may no doubt have had an impact on market share of these brands. It may be, in many cases, that market share performance 'causes' advertising expenditures. In addition, this study examines only advertising expenditure levels. The creative appeals used by the advertisers play a critical role by interacting with expenditure levels to result in effective advertising. There was no attempt here to measure such interaction effects. This article has focused on the economic and marketing aspects of beer advertising and has presented evidence that, in a majority of cases, advertising is important to brand market share. Clearly, social and legal aspects are areas that will require further empirical investigations and analyses.
REFERENCES Ackoff, R.L. & Emshoff,J.R. (1975) 'Advertising research at Anheuser-Busch, Inc. 1968-1974', Sloan Management Review, Spring, 1-15.
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Beverage industry (1977) Annual Manual. New York: Magazines for Industry. Bourgeois, J.C. & Barnes, J.G. (1979) 'Does advertising increase alcohol consumption?', Journal of Advertising Research, 19 (August), 19-29. Duffy, M. (1983) 'The demand for alcoholic drink in the United Kingdom, 1963-78',AppliedEconomics, 15 (February), 125-140. Duffy, M. (1990) 'Advertising and alcoholic drink demand in the UK: some further Rotterdam Model estimates', International Journal of Advertising, 9(3), 247-258. Fisher, J.C. & Cook, P.A. (1995) Advertising, Alcohol Consumption, and Mortality: An Empirical Investigation. Westport, CT: Greenwood Press. Franke, G. & Wilcox, G. (1987) 'Alcoholic beverage advertising and consumption in the United States, 1964-1984',Journal of Advertising, 16, 22-30. Guis, M.P. (1996) 'Using panel data to determine the effect of advertising on brand-level distilled spirits sales', Journal of Studies on Alcohol, January, 73-76. Impact Databank (1999, 1991) Review and Forecast, Brand Sales- The US Beer Market. New York: M. Shanken Communications, Inc. Johnson,J.A. & Oksanen, E.H. (1974) 'Socio-economic determinants of the consumption of alcoholic beverages', Applied Economics, 6 (December), 293-301. McGuinness, T. (1980) 'An econometric analysis of total demand for alcoholic beverages in the U.K., 1956-75',Journal of Industrial Economics, 29 (September), 85-109. Nelson, J.P. & Moran, JR. (1995) 'Advertising and U.S. alcoholic beverage demand: system-wide estimates', Applied Economics, 27, 1225-1236. Prest, A.R. (1949) 'Some experiments in demand analysis', Review of Economics and Statistics, 31 (February), 33-49. SAS Institute (1999) SAS>ETS User's Guide. Cary, NC: SAS Institute. Selvanathan, E.A. (1991) 'Cross-country alcohol consumption comparison: an application of the Rotterdam Demand System', Applied Economics, 23, 1613-1622. Walsh, B.M. (1982) 'The demand for alcohol in the UK: a comment', Journal of Industrial Economics, 30 Oune), 439-446.
ABOUT THE AUTHOR Gary B. Wilcox is the John A. Beck Centennial Professor in Communication at the University of Texas at Austin. His research interests include alcohol and cigarette advertising and interactive communication. Dr Wilcox was chair of the Department of Advertising at the University from 1990 to 1998 and currently serves as graduate adviser. He gained his Ph.D. in mass media from Michigan State University.
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