An economist might have selected Hopportunity Cost as the name for her new beer.
But a marketing expert could have a better suggestion.
Craft Beer Names
The conventional wisdom in marketing says that our positive emotions matter when naming a new product. For craft beer, though, it’s just the opposite. According to a recent study, names like Gumball Head and Apex Predator resonate. Associated with a rebellious authenticity, craft beer names say we care about our customers and love our beer. In the names study, the most negative names got the highest ratings and reviews. Called “reverse emotional contagion,” positive names generated a negative consumer response.
Then, completing the naming picture, we do have a silly selection that includes Little Critters Brewing Company and New Belgium’s Salted Caramel Brownie Brown Ale. Meanwhile, at Cisco Breweries on the island of Nantucket, of course they produce Whale’s Tale Pale Ale:
As a result, the growth of craft beer, at 7.9 percent in 2021 far exceeded the entire industry’s 1 percent. Dominated by a duopoly shared by Anheuser-Busch InBev and MillerCoors, concentration in the beer industry created the incentive to become creative with tastes and names. It reflected a branding trend that brought soaring sales to the small producers. It meant beng “playful and irreverent” and distinguishing yourself from the big guys were what mattered.
Our Bottom Line: Brand Capital
As economists, we can say that the craft brewers have built their brand capital. By using their names to teach consumers what they stand for, the craft beer brewers have created valuable intangible capital.
In a 2022 paper on brand capital, reseachers tell us that branding can create positive externalities when it generates information. As a result, knowledgeable consumers make markets more competitive while they reduce their search costs. By contrast, branding also has a negative side when it elevates a firm’s market power and creates consumer loyalty that diminishes their price response. We could even say that through branding, craft beer makers have imposed a negative externality on the larger firms by decreasing their market share.
So yes, while marketing is more complex than a name, today, let’s just recognize its value.
And for a final smile, do take a look at this top 25 list from 52brews’s 275 funny beer names. Maybe we should return to Hopportunity Cost. I would:
My sources and more: Thanks to The Hustle newsletter for inspiring today’s post. From there, this summary of a recent beer names study was helpful as was The Atlantic. But most crucially, for the academic perspective, I recemmend this paper on brand capital. And also, in a past econlife post, we looked at the craft beer name shortage while here, we considered the dollar value of a brand.