Fewer Calories, More Drinkers: Did the Initial Ultra-Light Beers Attract New Drinkers?

This paper estimates the demand for beer in the U.S. from 2001 until 2006 using a multinomial logit discrete-choice model of product differentiation. Using grocery store scanner data from Information Resources Incorporated (IRI), demand estimates are used to evaluate the extent to which two new beer brandsMichelob Ultra and Bud Selectattracted new drinkers. The possible corresponding impacts on public welfare, with particular attention to the public health consequences of the over-consumption of alcohol, represent an unexplored aspect to the study of new brands. Counterfactual results based on a single market suggest that 68% of sales of Bud Select and 74% of sales of Michelob Ultra were due to new drinkers. Additionally, new drinkers of Bud Select seemed to prefer larger package sizes--specifically 12-packs over 6-packs--whereas the reverse held for Michelob Ultra.