Craft Beer as a Means of Economic Development: An Economic Impact Analysis of the Michigan Value Chain

Round  1

Reviewer 1 Report

General Comments: The manuscript is well written and thoughtful. I believe that this article will generate much interest among the readership of the journal. Most of my concerns are minor and stated below in the “specific comments.” My major suggestion for this article is to better discuss what all of these results mean to state policy makers. It is somewhat talked about, but a more explicit discussion would be very helpful.

Specific Comments:

1.)    Introduction: Define “institutional environment”

a.       This definition will help better frame the overall point of the research.

2.)    Page 2, Line 87: This line is misleading as the U.S. population is, obviously, much larger today as compared to 1873. Restate this or preface the statement.

3.)    Page 3, Lines 96-98: This is a lengthy sentence and would be better to separate the sentence into two sentences.

a.       “…information technologies. In addition, wholesalers…”

4.)    Page 4, Line 152: should be “change”

5.)    Page 4, Line 156: should be “…by which economic impact assessment is generated.”

6.)    Page 4, Line 170: should be “...would likely not be barley for malting.”

7.)    Page 7, Line 276: Need a comma after “Similarly”

8.)    Page 7, Line 287: should be “requires”

9.)    Page 7, Line 302: Suggest rewording to be “…While not shown, the estimated sales prices are $4.79 per pint…”

10.) Page 7, Line 311: Suggested wording to be “…impacts, but increases brewery production contributions.”

11.) Conclusion: The authors state that Michigan-produced beer generates just under $500 million to annual gross state product. What is this in percentage terms of total state product? This would help the reader better frame the impact of the beer industry in Michigan.

12.) Conclusion: As stated before in the general comments; what does all this mean for state policy makers? What should they do to further enhance the beer industry within Michigan?

Author Response

Dear Reviewer,

Thank you for your comments.  We feel they have improved the manuscript and have made it more likely to be cited.  We have also made additional modifications to improve readability and to correct minor typographical errors throughout the text, as well as corrected for some minor bibliographical errors in the draft. Below are our responses to your comments along with your original comments written in italics.

General Comments: The manuscript is well written and thoughtful. I believe that this article will generate much interest among the readership of the journal. Most of my concerns are minor and stated below in the “specific comments.” My major suggestion for this article is to better discuss what all of these results mean to state policy makers. It is somewhat talked about, but a more explicit discussion would be very helpful.

 Specific Comments:

1)     Introduction: Define “institutional environment”

a.          This definition will help better frame the overall point of the research.

We agree with Reviewer 1: Rather than define institutional climate as the business climate for the beer production sector, we opted to reword to “…business climate that is conducive to the growth of the beer value chain.”

Page 2, Line 87: This line is misleading as the U.S. population is, obviously, much larger today as compared to 1873. Restate this or preface the statement.

We reworded this sentence to be more clear, to read “There are about 15.5 breweries per million residents today compared to 96.1 per million in 1873.”

2)     Page 3, Lines 96-98: This is a lengthy sentence and would be better to separate the sentence into two sentences.

a.          “…information technologies. In addition, wholesalers…”

We agree, too many thoughts were placed in this one sentence. We opted to drop the last clause to improve readability. The sentence now reads: “However, the obstacles to reaching new markets are getting smaller through information technologies and wholesalers that can take a product to a national market with little up-front costs to the brewer.”

3)     Page 4, Line 152: should be “change”

Corrected

4)     Page 4, Line 156: should be “…by which economic impact assessment is generated.”

Adopted correction

5)     Page 4, Line 170: should be “...would likely not be barley for malting.”

Adopted correction

6)     Page 7, Line 276: Need a comma after “Similarly”

Added appropriate comma

7)     Page 7, Line 287: should be “requires”

Made appropriate correction

8)     Page 7, Line 302: Suggest rewording to be “…While not shown, the estimated sales prices are $4.79 per pint…”

Adopted suggested change

9)     Page 7, Line 311: Suggested wording to be “…impacts, but increases brewery production contributions.”

Adopted suggested change

10) Conclusion: The authors state that Michigan-produced beer generates just under $500 million to annual gross state product. What is this in percentage terms of total state product? This would help the reader better frame the impact of the beer industry in Michigan.

We agree with Reviewer 1 that our contribution estimate lacks context without a reference. Aggregate GSP may be an overly referent, but GSP made up of the overarching industry sector comprising beer production may have greater contextual relevancy. Text now reads:

“Our findings suggest that Michigan-produced beers generates a sizeable contribution to the state economy, contributing just under $500 million to annual gross state product – a measure of total income generated in the state – or 8.4 percent of the value of Michigan’s Food and beverage and tobacco products manufacturing sector’s annual gross state product(U.S. Department of Commerce 2017; Bureau of Economic Analysis 2019).”

11) Conclusion: As stated before in the general comments; what does all this mean for state policy makers? What should they do to further enhance the beer industry within Michigan?

We agree with Reviewer 1 that the overall conclusion fails to adequately tie in policy implications. We added a brief discussion that motivates the importance of understanding the economic values under regulation and the need to document this in the policy decision-making process. Text added:

 “While beer production has long been regulated at the Federal and State levels, recent changes in federal law has relaxed federal oversight and increased the authority of state regulations over beer production. Recognizing that regulation is a collective choice for managing the affairs of society, regulation without a full understanding of the economic contributions can result in money and opportunities left on the table.”

Author Response File: Author Response.pdf

Reviewer 2 Report

The paper is well written and with a lot of empirical evidence for the I-O analysis and other effects.

The data are processed in IMPLAN (program) and the reader has no chance of really knowing what's going on - it can only be so, and fair enough.

There's a distinction between 'impact' and 'economic contribution' - and the authors notice many of the transactions will till be there in case of absence of the beer industry. This should be made more clear in the last part of the paper - i.e. the analysis is estimating the actvities, turnover, volumes etc of the industry - but this is not a net impact as some other production/consumption activites will take over in case of no beer industry. For example line 350: 'new jobs per year' - line 406: jobs linked to the beer industry. The latter seems more sensible - no conclusion on some net impact but rather a measure of the industry activities (where a no-beer alternative might be just the same - except if 'import substitution' as discussed in the first part of the paper is included). This should be made more clear.  

Author Response

Dear Reviewer,

Thank you for your comments.  We feel they have improved the quality of this manuscript.  Below are our responses to your comments as well as your original review replicated in italics.

The paper is well written and with a lot of empirical evidence for the I-O analysis and other effects.

 The data are processed in IMPLAN (program) and the reader has no chance of really knowing what's going on - it can only be so, and fair enough.

 There's a distinction between 'impact' and 'economic contribution' - and the authors notice many of the transactions will till be there in case of absence of the beer industry. This should be made more clear in the last part of the paper - i.e. the analysis is estimating the actvities, turnover, volumes etc of the industry - but this is not a net impact as some other production/consumption activites will take over in case of no beer industry. For example line 350: 'new jobs per year' - line 406: jobs linked to the beer industry. The latter seems more sensible - no conclusion on some net impact but rather a measure of the industry activities (where a no-beer alternative might be just the same - except if 'import substitution' as discussed in the first part of the paper is included). This should be made more clear. 

We appreciate Reviewer 2’s thoughtful comments and suggestion for improving this manuscript. While we agree that much of the analysis is cloaked in the IMPLAN software, the excessive literature on IMPLAN probably should not be rehashed here. We also fully agree with Reviewer 2 that care must be exercised to avoid overstating the economic contributions measured here. While the distinction between economic impact and contribution was made in the main text, we failed to return to that in the conclusion. We added the following text to the opening paragraph for the conclusion:

“The distinction of measuring economic contribution from economic impacts is important, as an economic impact estimate would assert a change in economic activity in the absence of Michigan’s brewing value chains. Rather than focus on such hypothetical scenarios, our measures detail the contributions of Michigan’s beer production value chains to existing economic activities.”

In addition to this change and that suggested by other Reviewers, we have also made additional modifications to improve readability and to correct minor typographical errors throughout the text, as well as corrected for some minor bibliographical errors in the draft.

Author Response File: Author Response.pdf

Reviewer 3 Report

Solid contribution to the limited academic study of craft beers. This helps to propel us forward in the study of beverages. 

Author Response

Solid contribution to the limited academic study of craft beers. This helps to propel us forward in the study of beverages.

Response: We appreciate Review 3’s comments and support of this researcher effort. In response to other Reviewers and a re-reading of our manuscript, we have made additional modifications to improve readability and to correct minor typographical errors throughout the text, as well as corrected for some minor bibliographical errors in the draft.

Author Response File: Author Response.pdf