Consumer proximity and brand loyalty in craft soda marketing: A case study of Ale-8-One

Craft soda has become increasingly popular among consumers. Local manufacturers have opportunities to use a variety of strategies to differentiate their products from nationally recognized brands, including the use of real or natural ingredients, premium ingredients, and locally sourced ingredients, handmade and small batches, and creative taste. Loyal consumers of craft sodas often live within the proximity of the production location, and the manufacturers are normally small with a limited distribution area. From the local manufacturer's standpoint, it is important to segment the market based on the closeness to their distribution territory when studying the market demand, or at least to recognize if such locational preferences exist with a view toward identifying market expansion strategies. In this paper, we focus on the case for a Kentucky local craft soda producer, Ale-8-One. We examine the demand for craft and noncraft soft drinks using Nielsen scanner data to test whether consumer behavior is different in the core markets. The results show that, in this case, craft soda consumers are less price responsive and more brand loyal in the core market, compared with the outside market. [EconLit Citations: C55, D12, Q13].