Since 2018, the premium beer category has exhibited sustained growth, despite recent declines in overall U.S. beer sales, stiff competition from local craft breweries, and the debut of alcoholic seltzers, which were growing triple digits in the years leading up to the pandemic.
In such a competitive space, what is driving this growth in premium beer purchases and consumption over that of mass-market and lower-end beer? Why do consumers purchase premium beers and how can companies drive growth accordingly? In a recent Yale Center for Customer Insights (YCCI) Discovery Project, Yale School of Management students sought to uncover the motivations behind choosing premium beers over mass-market beers for off-premise consumption – defined as purchase for use later – and for non-craft, premium beer. To do so, the team followed the Behavioral Science framework created by YCCI, conducting primary and secondary research followed by a series of A/B testing. Through this process, the team surfaced insights around consumers’ beliefs and perceptions about premium beer.
Uncovering Beliefs Around Premium Beer
Through consumer interviews, the study most prominently found that consumers often associate premium beers with rituals. These rituals range from adding accessories to the bottles of premium beer, to pouring the beer in certain stages or into specific glasses. The connection to such rituals often elevated the drinking experience and made it more enjoyable.
Regarding taste, the study found that consumers associate specific keywords with the taste of premium beers. Repeated descriptors of taste included “crisp” and “smooth,” while consumers also compared the flavor profiles of premium beer to those of champagne. Finally, one consumer articulated that higher-quality beers “tend to have more substance, content, ingredients [and] flavor,” reflecting the higher taste complexity associated with premium beers.
Packaging was another theme that was repeatedly brought up by consumers as a factor that contributed to their associations of premium beers. In particular, the study found that unique packaging, including paper wrappers and matte labeling, were indicators that the beer was more premium or “high-end.” Consumers also perceived that premium beer should come in glass bottles and that dark bottles preserved the taste of beer better than lighter-colored bottles. The team also uncovered the belief that larger pack sizes, including 24-packs and 30-packs, were not considered to be premium.
Uncovering Goals Around Premium Beer
Many consumers voiced that premium beer was a great choice to bring to social gatherings to help them look good in front of their peers. This applied to both social and professional functions. They also expressed that the perceived reliability and quality of premium beer, which would be more widely enjoyed, made such beer more appropriate for these larger, in-person gatherings.
Celebrating or Commencing Something
The study also uncovered a variety of goals around occasions associated with premium beer. Premium beer was purchased by consumers to reward everyday moments, to signify entering a new stage of life (such as adulthood), and to enhance special trips or occasions, like the playoffs or Independence Day.
Consumers conveyed that drinking premium beer was more enjoyable, helping them moderate their drinking behavior. They associated cheaper beer with binge drinking and premium beer with activities “by the lake” or “to have a good time.”
To test these consumer insights, the team conducted A/B testing of over 2,000 consumers. In the tests, the team used images of featured products and packaging that did not exist in the market. A relatively new brand was featured in a multitude of tests to ensure results were as free as possible from pre-existing brand biases and associations.
Testing validated several insights related to packaging. When asked to rate the quality of the brand of beer, 40% of respondents perceived the screen-printed bottle to indicate a high-quality brand, as compared to 32% who perceived the regular label to indicate a high-quality brand. The team also tested three different bottle colors – dark brown, clear, and green – in the same size and shape, and found that consumers rated the beer in the dark brown bottle color as both higher quality and having a higher calorie count. From testing the perceived quality of 4-bottle packs as compared to 6-bottle packs, the team found that Millennials exclusively perceived a quality bump from a 6-bottle pack to a 4-bottle pack, as 49% rated 4-packs of the same brand of beer to be of high quality, while 40% rated 6-packs to be of high quality.
The team ran a series of tests asking respondents which of two 6-packs of beer they would bring to a dinner party. When asked this question, and prompted to “bring something you know everyone will love,” 62% of respondents chose the premium beer over the mass-market beer, as compared to 51% who chose the premium beer when not prompted with this extra statement. Similarly, when prompted to “bring something that makes you look good” and shown an image of friends clinking beer glasses, 29% of female respondents chose to bring a premium 6-pack of beer rather than a bottle of wine to a dinner party with their boss and co-workers. This was in comparison to 20% of female respondents who opted for the premium 6-pack of beer without the additional prompts.
To test the insight that consumers wanted to purchase premium beer to celebrate small, everyday “wins,” the team asked people with kids in the house which beer they would choose between a mass-market brand and a premium brand. One group of respondents was prompted with a situation about a small win for parents of successfully getting their kids to bed. The team found when providing this prompt to people with kids, 62% of respondents chose the premium beer option over the mass-market brand, as compared to 49% of respondents who chose the premium beer when not provided the prompt.
In a similar vein, the team tested whether landing the perfect job opportunity would also influence respondents to purchase a premium beer over a mass-market beer. For this test, 68% of respondents who were provided the prompt of having just landed the perfect job opportunity chose the premium brand over the mass-market brand, while 56% of respondents chose the premium brand without the prompt. Similar results were also seen when respondents were prompted about going on a special date with their partner on a Friday evening and needing to grab a drink from the fridge.
This study demonstrates several themes about what drives consumers to purchase premium beer: (1) people have rituals associated with premium beers, (2) beliefs around packaging impact consumers’ perception of whether beer is premium, (3) premium beers have certain taste attributes associated with them, and (4) premium beer is often purchased to reward oneself for large and small occasions and when transitioning to a new stage in life.