The U.S. Brewing Industry: Data and Analysis brings together more than 20 years worth of research by Victor and Carol Tremblay on the United States beer industry from 1950 to the present. As the title advertises, the book offers an incredible wealth of data on nearly all aspects of the beer industry in the latter half of the twentieth century. Any economic historian interested in industrial organization, firm strategy, or alcoholic beverages would benefit from reading this book because of the synthetic account it offers of the evolution and consolidation of the beer industry. Although most of the data cover the period after 1950, for those interested in the nineteenth and early twentieth centuries, the authors include graphs of production and consumption dating back to 1863 (in chapter 1) and brief descriptions of the founding of all of the companies that were prominent in the post-World War II period (in chapter 4).

The book is organized into ten chapters that cover various aspects of the industry including: demand for and cost of producing beer (chapter 2), industry concentration (chapter 3), the leading brewers (chapter 4), imports and specialty brewers (chapter 5), proliferation of products and brands (chapter 6), strategic issues (chapter 7), and performance and policy issues (chapters 8 and 9).

The introduction provides interesting and important background information on how beer is brewed, key segments of the industry today, trends in per capita beer consumption in the United States, and how the United States compares to other countries. The top beer drinking nation in the world in 2001 was the Czech Republic at 41.8 gallons of beer per capita. The Czechs also drank 4.4 gallons of wine and 1 gallon of spirits per capita. The United States ranks eleventh on beer consumption at 22 gallons per capita. Americans also drank two gallons of wine, and 0.5 gallons of spirits. Even at our relatively modest consumption, beer in the United States is big business. “In 2002, the industry accounted for more than $64 billion in sales, employed 850,000 U.S. workers, and paid $8.7 billion in federal and state excise and sales taxes” (p.10). Three companies dominate domestic production—Anheuser-Busch, Miller, and Coors. In 2001 they produced 89 percent of beer brewed in the United States. In 1950 they produced less than 10 percent of the beer brewed in the United States. Thus, much of the book is organized around understanding the rise to dominance of these three companies.

Chapter 2 covers demand and cost. Not surprisingly, demand is relatively inelastic and is driven primarily by income and demographics. One interesting finding is that advertising has little effect on the market demand for beer, although it almost certainly does have an effect on firm-level demand for beer. Thus, most of the expenditures are of the business stealing rather than the market expanding type. This chapter also shows that the minimum efficient scale of production rose significantly from around 100,000 barrels in 1950 to at 4.5 million barrels by 1990. Indeed, in 1990, 79 percent of production occurred in breweries producing at least 18 million barrels and by 2000 the share had increased to 89 percent.

Chapter 3 documents increasing concentration in the industry and argues based on Sutton (1991) and Doraszelski and Markovich (2003) that this change can be attributed to two causes. The first was in the minimum efficient technological scale, which “rose relative to the size of the market” (p. 65). The second was the advent of television. Television advertising led to a preemption race and higher sunk costs in the industry. Initially, the Tremblays show that advertising by the first and second tier producers was similar, although slightly lower for second tier producers. By the mid 1970s, however, expenditures diverged for the two groups, and the first tier was able to use advertising as a tool to expand share at the expense of the second tier.

Chapter 4 offers an interesting and detailed qualitative analysis of the winning and losing producers. Many of the losers were regional producers that never made the leap to large-scale production demanded by minimum efficient scale in production and advertising. Others such as Schlitz, once the leading producer in the United States, stumbled because of quality issues. A similar shakeout occurred in the 1990s with the high entry into the specialty beer segment.

Chapter 5 describes the rise of the specialty beer segment and its evolution together with the increasing importance of imports. From a combined market share of around 5 percent in 1970, they have risen to a market share of more than 13 percent. This chapter, like many of the others, offers a great wealth of detail on these segments.

Chapters 6 and 7 cover strategic issues. Producers have used the standard arsenal of strategies to gain and maintain their market positions. Product proliferation has become increasingly common. Pricing has become increasingly sophisticated, with producers appearing at times to follow mixed pricing and trigger strategies. Advertising has followed a similar path. Mergers and acquisitions played a key role in the growth of Anheuser-Busch and Miller, whereas Coors has largely grown through internal expansion. Exclusive dealing contracts are common.

Chapters 8 and 9 address economic performance and public policy. I found these to be the weakest chapters because of the broad range of issues covered in relatively little depth. Topics include externalities and beer consumption, equity and socially responsible behavior in brewing, price discrimination, and public health issues.

In sum, this is an exceptionally detailed case study of the evolution of a single industry—the United States brewing industry—from 1950 to the present. This is a period of considerable change in which three firms came to dominate the industry. Readers with an interest in industrial organization and firm strategy will find this book to be a useful addition to their libraries.