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Economic Perspectives on Craft Beer pp 161–182Cite as

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Entry, Survival, and Profits: The Emergence of Microbreweries in Denmark

Abstract

The first wave of entry into the Danish microbrew industry took place from the beginning of the millennium. The first movers had a high focus on finding a market niche and profit perspectives, whereas later entrants had relatively more focus on motives like making the perfect beer. A survey including 45 Danish microbreweries shows that the share of breweries established until 2004 with positive earnings does not seem to be higher than the share of breweries in later cohorts. Using information on all breweries that existed from 2009, a survival analysis using a censored regression model shows that survival is inversely related to the year of entry, suggesting that learning-by-doing effects may have been present especially for the first cohorts of entrants.

Keywords

  • Danish Microbrew
  • Greenfield Entry
  • Survival analysis

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Fig. 6.1

Source Association of Danish Breweries (2015), www.beerticker.dk

Fig. 6.2

Source Association of Danish Breweries (2015), www.beerticker.dk

Fig. 6.3

Source Association of Danish Breweries (2015), www.beerticker.dk

Fig. 6.4

Source Association of Danish Breweries (2015), www.beerticker.dk

Fig. 6.5
Fig. 6.6
Fig. 6.7

Source Orbis database of accounting information for Danish firms

Notes

  1. 1.

    The per liter price of microbrew was three times the price of a standard premium beer, signaling a luxury product.

  2. 2.

    See Colen and Swinnen (2011) for an overview of trends in global beer consumption.

  3. 3.

    A significant part of the sale of microbrews takes place at restaurants, cafés, etc. Of the total turnover of beer, 75% comes from shops and direct sale to consumers and 25% is consumption in cafés and restaurants.

  4. 4.

    See Kirzner (1973), Benzing and Chu (2009), Harada (2003), Vivarelli (2004), Audretsch and Vivarelli (2007).

  5. 5.

    Premand et al. (2012).

  6. 6.

    See Sönmetz (2013), who gives a literature survey on firm entry, survival, and exit. See also Siegfried and Evans (1994) for a classical empirical study and the seminal article by Geroski (1995).

  7. 7.

    See Quatraro and Vivarelli (2014) for a general discussion of entrepreneurial and industrial factors influencing entry and post-entry performance.

  8. 8.

    However, the perception of the importance of various entry barriers may of course be non-independent for the respondent, and this was also confirmed by the abovementioned factor analysis; that is, the motives and the respondents’ answers to the topics in Table 6.1 are inter-related.

  9. 9.

    see also Quatraro and Vivarello (2014).

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Authors and Affiliations

  1. Aarhus University, Aarhus, Denmark

    Jan Bentzen & Valdemar Smith

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  1. Jan Bentzen
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  2. Valdemar Smith
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Correspondence to Jan Bentzen .

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Editors and Affiliations

  1. University of Milano-Bicocca and Bocconi University, Milan, Italy

    Dr. Christian Garavaglia

  2. Centre for European Policy Studies, KU Leuven, Leuven, Belgium

    Prof. Johan Swinnen

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Bentzen, J., Smith, V. (2018). Entry, Survival, and Profits: The Emergence of Microbreweries in Denmark. In: Garavaglia, C., Swinnen, J. (eds) Economic Perspectives on Craft Beer. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-58235-1_6

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