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The Economics of Beer

Author(s):Swinnen, Johan F.M.
Reviewer(s):Stack, Martin

Published by EH.Net (November 2012)

Johan F.M. Swinnen, editor, The Economics of Beer. Oxford: Oxford Press, 2011.? xxii + 375 pp. $45 (hardcover), ISBN: 978-0-19-969380-1.

Reviewed for EH.Net by Martin Stack, Department of Management, Rockhurst University.??

In 2007, Blackwell Press published an edited book titled Beer and Philosophy: The Unexamined Beer Isn?t Worth Drinking.? So, it shouldn?t really be a surprise that a few years later Oxford University Press, under the excellent oversight of Johan Swinnen, has published an edited volume with entries by economists and an historian or two titled The Economics of Beer.?? In fact, given the global ubiquity of beer, and its economic (and cultural) importance, the surprise may be that a collection along these lines was so long in coming.?

While volume editors always play an integral role, Swinnen?s imprint here is deeper than usual.? In addition to penning the brief preface, he is the co-author of six of the eighteen essays.? And, perhaps even more important, he organized the first conference on Beeronomics held in Leuven, Belgium, in May 2009, where many of the essays featured in this volume were first presented.

The book is divided into four broad categories: History (5 essays), Consumption (5 essays), Industrial Organization (5 essays), New Beer Markets (3 essays), and a concluding chapter titled ?Beeronomics: The Economics of Beer and Brewing.?? This final chapter, co-authored by Swinnen and Thijs Vandemoortele, a post-doctoral researcher at the LICOS Centre at the University of Leuven, could easily have come at the beginning of this volume, as it sets out to explain what this new term ?Beeronomics? encompasses.? As it turns out, a whole lot: ?economic history, development, supply and demand, geography, trade, investment, technology, health and nutrition, quantity and quality, industrial organization, competition, science and innovation, taxation, regulation, political economy? (p. 335).?

While space limitations preclude discussing each essay, there were several pieces that will be of particular interest to EH.Net readers.? From the first section titled ?History,? the opening essay by? Poelmans and Swinnen ? ?A Brief Economic History of Beer? ? does a thorough job of summarizing the complex role beer has played in the ancient Middle East, in Europe (from the ancient Greeks and Romans through the early Middle Ages, to the present),? and in North America.? Richard Unger, well known for two earlier books on beer and history, provides a fascinating look at beer production during the Renaissance in his chapter titled ?Beer Production, Profits and Public Authorities in the Renaissance.?? In the essay ?Belgian Beers: Where History Meets Globalization,? Persyn, Swinnen, and Vanormelingen examine the confluence of beer styles, consumption, production, and globalization as it relates to Belgium, a relatively small country that has a played an oversized role in the economic history of beer.

In the section headed ?Consumption,? the chapter ?Beer-Drinking Nations: The Determinants of Global Beer Consumption? provides some of the most interesting data in the entire volume.? Here, Colen and Swinnen show that: a) world beer consumption has greatly outpaced world wine and spirit consumption between 1960-2002 (p. 127); b) that the epicenter of the world beer industry is moving from Europe and the United States towards developing countries such as China, which overtook the U.S. in the early 2000s to become the world?s largest beer consuming and producing nation (p 129); and c) shares of beer, wine and spirit consumption have changed dramatically in a number of countries over the past 50 years: traditional beer consuming countries such as the UK have seen beer consumption fall and wine consumption increase, while traditional wine and spirit countries such as Spain and Poland have seen beer consumption soar (p. 131).?

From the ?Industrial Organization? section, Adams, in his chapter titled ?Determinants of the Concentration of Beer Markets in Germany and the United States: 1950-2005,? extends some of his earlier work and presents an excellent example of how detailed institutional and cultural analysis is needed to flesh out traditional neoclassical industry structure explanations that tend to be technologically deterministic.? Adams? essay is a welcome respite from the mantra of ?minimum efficient scale? that dominates so much work on industrial organization and the beer industry.?

In the last section, ?New Beer Markets,? the essay on China by Bai, Huang, Rozelle, and Boswell and the chapter on Russia by Deconinck and Swinnen examine two of the largest beer markets in the world today.? Both essays discuss the bewildering array of changing consumer preferences, increasing competition between local and global breweries, and government policies that have simultaneously stimulated and impeded industry development.

While this book is a welcome addition to the underdeveloped but growing literature on beer and the brewing industry, there are some weaknesses.? As is common in edited volumes, the quality of writing varies greatly and several essays meander around in search of an overarching theme.? However, the most significant weakness concerns what has been included at the expense of what has been left out.? The essay on the brewing industry in India was interesting; however, a compelling case could surely have been made for including an essay on Brazil ? the fifth largest beer market in world according to a table on p. 129.? (In fact, this table shows that tiny Belgium consumed several times more beer than all of India.)? More generally, the book is tilted too heavily towards consumption and production in Western Europe and the United States, especially since several of the essays highlight how growth in the world beer market is being driven primarily by increases in demand in Latin America, sub-Saharan Africa, and Asia.? Finally, while the section on Industrial Organization has several fine chapters, it is interesting to note that all of these essays focus on individual countries, while during the last 10-15 years, the most significant changes are occurring through global brewery consolidation, a topic that barely merits a mention in any of these essays.?

Yet, despite these shortcomings, this volume is an important step forward for the popularization and professionalization of beer and brewing research.? Just be warned: readers of this volume may find themselves becoming thirstier and thirstier, and not just for knowledge.

Reference:
Steven Hales, editor, Beer and Philosophy: The Unexamined Beer Isn?t Worth Drinking, Oxford, UK: Blackwell Press, 2007.

Martin Stack is a Professor of Management at the Helzberg School of Management, Rockhurst University.? He is the author of ?Was Big Beautiful? The Rise of National Breweries in America?s Pre-Prohibition Brewing Industry,? Journal of Macromarketing and he is currently working on a project regarding expansion strategies in the global beer industry.

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Subject(s):Household, Family and Consumer History
Industry: Manufacturing and Construction
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative