This research investigates the economic contributions of Michigan’s growing hard cider industry while accounting for demand changes for its substitute products which are beer, wine, hard seltzer, and mixed drinks. Pooling responses across those instructed to consider on premise and off premise consumption, our discrete choice experiment (DCE) reveals average consumer willingness to pay for a 12 oz unit of hard cider to be $6.98, with an additional $1.41 when it is locally produced. The... Show moreThis research investigates the economic contributions of Michigan’s growing hard cider industry while accounting for demand changes for its substitute products which are beer, wine, hard seltzer, and mixed drinks. Pooling responses across those instructed to consider on premise and off premise consumption, our discrete choice experiment (DCE) reveals average consumer willingness to pay for a 12 oz unit of hard cider to be $6.98, with an additional $1.41 when it is locally produced. The Michigan cider value-chain is identified and assessed to estimate the economic contribution of in-state cider production and sales. Supply chain modeling is facilitated using a modified regional social account matrix depicting local supply chains of hard cider production. We estimate that the gross economic impact of Michigan’s hard cider production on the state’s economy is $35.1 million in terms of additional Gross State Product. Should in-state cider demand increase in response to, for example, a concerted marketing effort, the expected economic impact will be moderated by substitution, or reduced sales of competing products. Using substitutability insight from the DCE model, we find that a doubling of Michigan cider sales will result in a net economic impact of $30.2 million to Michigan’s Gross State Product. This work is the first estimate to our knowledge of the economic contribution or impact of the budding hard cider industry. While few consumer demand studies on hard ciders have been completed, this report also applies a DCE model to establish willingness to pay benchmarks, including that of local branding, with the additional novelty of incorporating the model results in the economic contribution analysis. The findings have implications for local stakeholders as well as state policymakers. Show less
