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Brewing with Distinction: the Implications of a Quality Symbol for the Craft Beer Industry of British Columbia

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Brewing with Distinction: the Implications of a Quality Symbol for the Craft Beer Industry of British Columbia BREWING WITH DISTINCTION: THE IMPLICATIONS OF A QUALITY SYMBOL FOR THE CRAFT BEER INDUSTRY OF BRITISH COLUMBIA by Leonardo Manuel Oppenheimer BSc. University of Alberta, 2003 PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In the Faculty of Business Administration © Leonardo Manuel Oppenheimer, 2008 SIMON FRASER UNIVERSITY Summer 2008 All rights reserved. This work may not be reproduced in whole or in part, by photocopy or other means, without permission of the author. APPROVAL Name: Leonardo Manuel Oppenheimer Degree: Master of Business Administration Title of Project: Brewing with Distinction: The Implications of a Quality Symbol for the Craft Beer Industry of British Columbia Supervisory Committee: ________________________________________ Dr. Judy Zaichkowsky Senior Supervisor Professor of Marketing Faculty of Business Administration Simon Fraser University ________________________________________ Dr. Pek-Hooi Soh Second Reader Assistant Professor Faculty of Business Administration Simon Fraser University Date Approved: ________________________________________ ii ABSTRACT A growing segment of the Canadian beer market is the microbrew/craft beer segment. For the palates of many beer connoisseurs, craft beer has a taste that distinguishes it from other beers, thus setting it apart from the mass-marketed products of the giant commercial breweries. However, a large proportion of beer consumers in Canada remain oblivious to the virtues and properties that make craft beer unique. This study examines the feasibility of creating a quality symbol of distinction as a means of raising consumer awareness about craft beer, with a particular focus placed on the craft brewing industry of British Columbia. Evidence of the positive impact that a quality symbol has had on the wine industry in British Columbia has prompted initial research on a quality label for the craft brewers of this province. Seventy-two beer consumers were surveyed, at the Canada Cup of Beer festival and the Simon Fraser University downtown campus in Vancouver, BC, to examine the impact that a quality symbol of distinction might have in raising consumer awareness about the craft brewing industry in BC. The results from this study show that the creation of such a symbol of distinction may lead to an increase in consumer awareness about craft beer in BC. The two factors found to be most important, in determining whether a craft beer would receive a quality symbol, were the overall quality of the beer ingredients (e.g., barley, hops, and yeast) and the source of the brewing supply of water. Additional research among the members of the Craft Brewers Association of BC and the provincial liquor control board (BCLDB) is iii warranted, in order to further examine the feasibility of creating a quality symbol of distinction and setting provincial standards of quality. iv DEDICATION I would like to dedicate this research project to my lovely fiancée Lisa for all of her support, encouragement, and companionship, especially during the months I spent researching and writing this study. I could not have done it without you, sweetheart! v ACKNOWLEDGEMENTS I would like to express my gratitude and appreciation to my senior supervisor, Dr. Judy Zaichkowsky, for her valuable advice and feedback, as well as her support during this endeavour. I would also like to thank my second reader, Dr. Pek-Hooi Soh, for her comments and suggestions. Special thanks go to all of the survey respondents who took the time to answer the questionnaire. Lastly, but not least, I would like to thank my family in Buenos Aires, Argentina, for giving me the opportunity to pursue both my undergraduate and graduate studies here in Canada. vi TABLE OF CONTENTS Approval ............................................................................................................................ ii Abstract............................................................................................................................. iii Dedication ...........................................................................................................................v Acknowledgements .......................................................................................................... vi Table of Contents ............................................................................................................ vii List of Figures................................................................................................................... ix List of Tables ......................................................................................................................x Glossary ............................................................................................................................ xi 1: Introduction ...................................................................................................................1 2: Relevant Literature .......................................................................................................3 2.1 State of the Domestic Beer Market in Canada ................................................3 2.2 Sales and Per Capita Consumption of Beer in Canada....................................4 2.3 Craft Beer Gains a Foothold in the Canadian Market .....................................5 2.4 The Impact of a Quality Symbol on the Wine Industry in BC........................6 2.5 The Bavarian Purity Law of 1516 – The Reinheitsgebot ................................7 2.6 Standards for Beer Brewing Worldwide .........................................................8 2.6.1 The Campaign for Real Ale (CAMRA).......................................................8 2.6.2 European Beer Consumers Union (EBCU) .................................................9 2.6.3 The Campaign for Real Ale in BC (CAMRA BC)......................................9 2.6.4 The Craft Brewers Associations of BC and Ontario .................................10 2.7 Factors Influencing the Consumption of Beer...............................................11 2.7.1 Consumer Thirst for Variety......................................................................13 2.7.2 Beer Quality and the Importance of Visual Cues ......................................14 2.8 Regulation of the Brewing Industry in Canada .............................................15 2.8.1 The Canadian Food Inspection Agency (CFIA)........................................15 2.8.2 Federal and Provincial Legislation ............................................................15 2.8.3 Pricing and Taxing Policies.......................................................................16 2.9 Future Challenges for Canadian Brewers......................................................18 2.10 Summary of Literature Review .....................................................................19 3: Methodology.................................................................................................................21 3.1 Research Questions .......................................................................................21 3.2 The Study.......................................................................................................21 3.3 The Questionnaire .........................................................................................22 vii 4: Results...........................................................................................................................23 4.1 Importance of Beer Attributes.......................................................................24 4.2 Awareness......................................................................................................28 4.2.1 Consumer Awareness of Craft Beer ..........................................................28 4.2.2 Consumer Awareness of the VQA Symbol for Wines ..............................29 4.3 Determinants of a Quality Symbol for Craft Beer.........................................30 5: Discussion .....................................................................................................................33 6: Managerial Implications .............................................................................................37 7: Limitations and Implications for Further Studies ...................................................38 8: Appendices ...................................................................................................................40 8.1 Appendix 1: Craft Brewers Association of BC - Members...........................40 8.2 Appendix 2: Ontario Craft Brewers – Members ...........................................41 8.3 Appendix 3: The Questionnaire.....................................................................42 9: Reference List ..............................................................................................................45 viii LIST OF FIGURES Figure 1. Share of Canadian and Imported Beer Sales........................................................3 Figure 2. Adult Male per capita Weekly Consumption of Beer.........................................12 Figure 3. Canadian Beer Taxes 2nd Highest in the World..................................................17 Figure 4. Profile Plot of Beer Attributes Upon Selection of Beer.....................................26 ix LIST OF TABLES Table 1. Beer Consumption per capita.................................................................................4 Table 2. Demographic
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