...Five Force Analysis: Supplier Power The beer market’s prime suppliers are farmers. Most breweries buy their supplies on the relevant countries’ futures exchange. Hence the branch has an opportunity to diversify its risk by trading futures contracts as well as hedging other risks. Various farmers supply the hops, barley, corn and rice used to produce beer. In 2008, there were 2,053 companies that purchased these ingredients. The overall beer industry sold nearly 206 million barrels of beer in 2009. For major brewers, the volume of ingredients purchased, the large number of farmers available to purchase the ingredients from, low switching costs on the part of the brewer, and inability of the farmers to forward integrate, supplier power in considered low in regard to the major brewers. Craft brewers who purchase fewer ingredients and sometimes more specialized ingredients may cause supplier power for this segment of the industry to be somewhat higher; yet, overall, suppliers have put limited pressure on price and supplier power is LOW. There are only a few large suppliers of aluminium cans, plastic and glass bottles, which increase the supplier’s bargaining power. However, taken into consideration largest brewery companies existing we can assume that the suppliers of those goods have a incentive in taking care those as a customer and will therefore provide them with the best possible price, in order to keep them as a customer. Competitive pressure from supplier bargaining power...
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...Firm’s mission statement, vision and strategies are inherently tied, and constitute the key concepts that allow a firm to obligate such objectives. Along with this, the firm strategy has to be immediately fixed and improved to move in conjunction with the needs of the external environment (Stead et al., 2004). Understanding the importance of strategic management, the report’s purpose is to exploit supplied information from the case study “Global forces and the European brewing industry” to carry out the external environment analysis which uses PESTEL and Five Forces Models. Basing on the achievements from the industry analysis, a further analysis called strategic groups which based from strengths and weaknesses of four brewing firms is made to categorize each kind of firms. References from books, journal articles were used to providing proper prove for supporting the trend in the case. INTRODUCTION The case study reflects how international forces have influence on European brewing industry as well as how such breweries firms has tried to overcome the difficulties. Despite of the fact that the European governments have enforced some restrictions and carried out a campaign against alcohol, these firms still tried their best in order to increase growth rate via alliances, acquisitions and closures within the brewing market. Firms are focusing on broadening their appearances in other marketplaces while several of firms are mustering on innovating...
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...interests of brewing industry of India. Its members account for more than 90% of production and sales of Beer in India. AIBA was formed in the year 1977 and was registered under the Karnataka Societies Registration Act 1960. From membership strength of mere 15, it has now swelled to close to 50 and is India’s leading business support organization. The membership includes leading brewers, malt companies, manufactures of brewing equipment and engineering & technological service providers. United breweries, SABMiller India, Bar Malt India, Alfa Laval, Praj Industries, Briggs of burton are some of its members. AIBA has been at the fore-front of working with the Government and been carrying out a pioneering work in addressing the interests of the beer industry. Besides providing policy support, it also represents the commercial and other interests of the industry with the various State Governments. The association has also been actively engaging both nation and regional media to highlight the immense agricultural and social benefits of encouraging beer in a country weaned on hard spirits The principal functions of AIBA can be summarised as follows: To provide a common platform for its members to discuss issues of mutual interest To work with all stakeholders like Central & State Governments, raw material suppliers , consumers other than the brewing companies on issues affecting the industry To be able to present a common face and voice on industry issues whilst representing...
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...THE COMPETITIVE FORCES AFFECTING INDUSTRY MEMBERS: PORTER’S FIVE-FORCES MODEL FOR ANALYSIS Pressure from Buyer Bargaining Power--High The three components that make up the “buyers” of beer are made up of distributors/wholesales, retailers/restaurants, and consumers. Distributor/wholesalers embody an essential link in the market channel for breweries here in the US given regulations prohibiting the sale of beer directly to both retailers and consumers. Thus, distributors/wholesalers have quite a bit of bargaining power and can impact market share by way of their support, marketing, and promotions depending on the incentives offered by the manufacturer. Retailers and restaurants are another cog of the buyer channel. The main goal of the retailer is to drive traffic through their stores in order to improve sales and, coincidentally, balancing profit margins. As a result, retailers are looking to stock their shelves or bars with the beer products that are selling with a recent focus on more sub-premium brands due to the recent economic situation, as well as supporting their growth of craft beers which have been outgrowing the industry and offer higher average selling prices as well as higher margins. Lastly, consumers ultimately drive the preferences of both the distributor and the retailer channel as they are the end “user” of the beer beverage. With the plethora of beverage choices in the market, both alcoholic and non-alcoholic, along with the consumer becoming increasingly...
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...To brew or not to brew Beer is the world's most widely consumed alcoholic beverage, and is the third-most popular drink overall, after water and tea. It is thought by some to be the oldest fermented beverage. The brewing industry is a global business, consisting of several dominant multinational companies and many thousands of smaller producers. We estimate that the global beer market represented approximately 1.85 billion hectoliters in 2010, producing total global revenue of approximately $160 billion. The most dynamically growing regions have been Asia Pacific and Africa/Middle East, which have seen the highest real GDP growth. The highest density of breweries in the world, most of them microbreweries, exists in the German Region of Franconia, especially in the district of Upper Franconia, which has about 200 breweries. In 2012 the four largest brewing companies controlled 50% of the market: Anheuser-Busch InBev, SABMiller, Heineken International, Carlsberg Group. Using the PESTEL analysis, the political factors are the actions against overconsumption and the restrictions by government (prohibition, taxes), the economical factors are the cost reduction, rise prices of packaging, and economy crisis. The fitness and health, the face of customers drink more wine than before, and the demand for flavered beers are the social factors of beer industry. The technological ones are the new brands and flavors, the innovation in beer production, increase in efficiency, and the centralization...
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...Changing Environment of the Brewing Industry Consumer preferences are changing in the brewing industry. In 1978 total beer sales are as follows: premiums 48%, popular 30%, lights 10%, super premiums 5%, malts and ales 4% and imports 3%. The distribution channels for beer are also changing. 1978 retail sales are food stores 60%, on-premise sales 25%, other retail establishments 9% and liquor stores 8%. The demographics of beer drinkers are also changing with increased sales to women and white-collar workers. The sale of beer in kegs is declining. The top six brewers sell 10% of their beer in kegs. Large brewers that spread fixed costs over higher production dominate the brewing industry. The industry is moving toward vertical integration with brewers growing their own grains and producing their own cans. The break-even point for capacity utilization for breweries is 80%. Hudepohl’s Current Market Situation Hudepohl Brewing has been operating at 40% of its one-million barrel capacity since 1978 and net income had decreased by 35% from the previous year. Hudepohl’s current brewing costs are competitive with the national average. The majority of Hudepohl’s sales were in the city of Cincinnati (55%) and the metropolitan area (80%). Hudepohl markets five brands of beer. Tap, Hudepohl and Burger are popular priced beers and accounted for 80% of Hudepohl’s sales in Cincinnati. Hudy Delight, the Hudepohl’s recent entrant in the light beer field accounted for most of the...
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...brand of beers, has grown to be one of the world’s largest beer companies. China beer market is an increasing market with a huge potential. Anheuser Busch wanted to enter in this market through adquisitions of other Chinese beer companies and finally with Harbin Brewery. As a result of making the adquisitions, AB obtained Harbin’s shares, having reached total holding of 99,66% voting shares. * EXTERNAL ENVIRONMENT SOCIETAL OVERALL P P PEST ANALYSIS OLITICAL / LEGAL * Descentralized power structure. * Influence of provincial and municipal government towards local affairs. * Unstated hierarchy of power. * Transportation restrictions. E E CONOMICAL * Growth of China economy. * Fragmented market. * Low income in the mayority of regions. S S OCIO-CULTURAL * Poor standard of living. * Chinese people don’t have loyalty to a particular brand. * Pub culture emerging. * Price conscious consumer. T T ECHNOLOGICAL * Poor infrastructure. INDUSTRY OVERALL PORTER ANALYSIS * BARGAINING POWER OF BUYERS The power of buyers is high because Chinese people are not loyalty to a specific brand. Also, Chinese beer consumers are poor and live in agricultural heart land and pay extremely attention to the price’s product. * BARGAINING POWER OF SUPPLIERS The power of suppliers is high because it exists around 500 and 1000 firms that manufacture beers in China...
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...Industry Analysis Description of the Industry Since 2010 United States Craft Brewers have been on a steady market share growth. The past five years have transformed the Craft Beer Production industry into one of the fastest growing and most popular alcoholic beverage segments in the United States. Craft brewers have gained over 11% volume shares of the $78 billion beer industry in 2014, producing over 22.2 million barrels valued at $19.6 billion. The last year has seen an increase in breweries with 615 new breweries, while 46 breweries closed, bring the total of craft breweries to 3,464. While most states have seen a steady increase in the number of breweries two states saw declines, North Dakota and Vermont. Vermont saw declines because...
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...of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. 1 The Boston Beer Company, Inc. Making a buck at craft brewing has been as easy as falling off a barstool the last few years. So Wall Street is now bellying up for a couple of IPO brewers. They’d better start chugging; the party won’t last long. The intoxicating roundup of offerings began in August when Redhook Brewing, a specialty beermaker started in Seattle by former wine marketer Paul Shipman and Starbucks co-founder Gordan Bowker, tapped the market. The stock was priced at $17, never traded below $24.75 and was recently at $27.25. Again, investors went on a bender last month when Pete’s Brewing Company hit the market. The stock, priced at $18 a share, closed its first day of trading at $25.25 and hasn’t sold below $23.75 yet. Boston Beer, of Sam Adams fame, will roll out in mid-December; the Northwest’s Hart Brewing, which makes Pyramid Ales, is not far behind. 1 Eileen Gunn Fortune Magazine, December 11, 1995 Company Background History Boston Beer Company (BBC) was founded in 1984 by Jim Koch, who was the sixth generation of his German family to become a brewmeister. During the early 1980’s,...
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...Write Up Prepared by: Claire Liao Case: Heineken, Marketing Management Course Date: 11/11/2015 Heineken is one of the world’s leading brands over 130 years. It is the number 2 imported beer in the U.S and it is number 1 in Europe. Its’s global network of distributors and 115 breweries in more than 65 countries. Premier brands are Heineken are Amstel Light. Heineken aims for sustainable growth as a broad market leader and segment leadership while expanding and optimizing product portfolio. It embraced innovation as a key component of their strategy in the areas of production, marketing, communication and packaging. Heineken’s goal is to grow the business in a sustainable and consistent manner, while constantly improving profitability. There are 4 priority to reach the goal. 1) to accelerate sustainable top –line growth. 2) to accelerate deficiency and cost reduction. 3) to speed up implementation by committing faster decision making and execution. 4) to focus on those markets where they believe they can win. Heineken is losing import beer market share in early 20s. The problem is the maturing competitive beer industry. 37% of U.S adults are beer drinkers and beer is the most widely purchased alcohol beverage, beer industry is projected to grow steadily. The competition within beer industry is very strong, basically it is “eat or be eaten”, and every company is just trying to strengthen their global position any way possible. The biggest rivals include InBev and Grupo Modelo...
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...has caused MMBC’s decline in spite of its strong brand? 3 Should MMBC introduce a light beer? 4 Is MM Light financially feasible for MMBC? 5 Break-Even Point (BEP) Analysis 6 MM Lager Cannibalization 6 MM Light Marketing Strategies 7 Exhibit 1 – SWOT Analysis 9 Exhibit 2 – Financial Data and Assumptions 10 Exhibit 3 – Break-Even Point (BEP) Analysis Calculations 11 Exhibit 4 – MM Lager Cannibalization Calculations 12 Exhibit 5 – MM Light Marketing Strategy 15 What is the current situation? Mountain Man Brewing Company (MMBC) is a family business founded in West Virginia in 1925 by Guntar Prangel. The company is now operated by Guntar’s grandson, Oscar. Oscar’s son, Chris, is slated to inherit the business in five years when his father retires. Mountain Man (MM) Lager is the flagship product and the only beer currently produced by the company. The recipe for the lager was based on a refined family recipe and is known for its flavorful, bitter taste. By the 1960s, the lager had established itself as a legacy beer with a rich history, and the company continues to maintain its independent, family-owned status which appeals to its core drinkers. By 2005, the popularity of MM Lager in the East Central region of the U.S. had grown to generate revenues of just over $50 million, and the beer held the top market position among lagers in West Virginia. MM Lager won “Best Beer in West Virginia” in 2005 for the eighth year in a row. What has made MMBC successful...
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...MRKT 5000 Marketing September 04, 2011 Jim Koch And The Marketing of Samuel Adams Beer Executive Summary Currently, the United States beer market is segmented into many segments. The two largest domestic brewers, brewers located within the United States, are Anheuser-Busch and Miller. These two companies control 50 percent and 29 percent of domestic beer sales, respectively. With 80 percent of the beer market controlled by the two megabrewers the United States is a tough environment for a small craft brewer like Samuel Adams to survive. The U.S. population is over 311 million people, the world’s third largest population after China and India. American consumes nearly 200 million barrels of beer a year, or 20 gallons per person, second only to China which has four times the amount of people the United States. Samuel Adams Boston Lager is brewed by the Boston Beer Company and founded by 1984 by Jim Koch using his great–great–grandfather’s 1870 beer recipe. Due to the economic downturn and other environmental forces the general beer market has been flat in recent years, yet quality craft beers like Samuel Adams has seen double-digit growth. The craft brewing industry has had a strong growth curve over the past decade and Samuel Adams has been positioned perfectly to capture this momentum. Technological advances have been a positive development for the Samuel Adams brewing and packaging...
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...and merged with a lot of beer companies. This practice symbolizes a pillar of the company’s strategy: developing brand portfolio. Nowadays, the company possesses more than 200 brands. Nevertheless, the company has now entered a lot of markets and it is present in the most important countries. In addition, the beer market in Western Europe and US is now mature, even decreasing. Consequently, the big issue for ABInbev it is how can the firm grow in a mature market when it has already possessed the local favorite beers in all countries in which it competes and has bought huge amount of breweries? Problem Statement: How can ABInbev still grow in the long-term view? 2) Analysis of the situation What are the market trends in the beer industry? First of all, we decided to examine the beer industry trends in order to understand better the environment in which ABInbev evolves. We observed that, in terms of supplier revenues, the beer market in USA has fallen from 56.0% in 1999 to 47.8% in 2014 (Distilled Spirits Council of the United States, 2015). This decline is even more evident in the light beer category. In contrast, the spirits or liquor market share has been consistently rising. We observed also that the number of young drinkers who prefer beer was down from 71% in the early 1990s to 41% in 2012–2013 (Distilled Spirits Council of the United States, 2015). This represents a significant issue given that young male adults are the largest beer consumers What about...
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...Background * Chris Prangle…. MBA graduate to manage the mountain man beer company * Guntar Prangle founded Mountain beer 1925. * Family owned business – inherited for 5 years. * Initially was called as West Virginia beer. * In 2005 …generating revenues $ 50 million and selling over 520,000 barrels of mountain man lager. * Price was $ 2.25 for 12-ounces serving and $4.99 for 6 pack in local convenience store. * Was priced similar to premium brands such as Miller and Budweiser. * Chris want to launch “Mountain Man Light” a “Light Beer” formulation of Mountain Man Lager. * Hoping to attract younger drinkers to the brand. * dark brown bottle packaging. * Last 6 years the sales of Light beer has been growing at a annual rate of 4% and traditional beer declining. * Mid 20’s were very supportive of this light beer. * Woman in her early twenties….. I like light beer and passé (outdated) . would like to try Mountain Man Light. * Brand played a critical role in the beer-purchasing decision. * Consumer considered taste, price, the occasion being celebrated, perceived quality, brand image, tradition and local authenticity. * Drink was for blue-collar, middle-to-lower income men over age 45. * Won awards for best beer championship. * Was consumed by working class males in the East central region on Chevrolet and John Deere. * Subjective attributes were – smoothness, % of water content, and drinkability. * Had...
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...International Business & Economics Research Journal Volume 2, Number 9 The Changing Structure Of The Global Wine Industry Michael A. Roberto (E-mail: mroberto@hbs.edu), Harvard Business School Abstract This paper examines the distinctive economic structures that exist in the wine industry in various regions of the world, and it identifies the critical forces driving changes in the structure of this industry. The paper accomplishes these objectives by applying concepts from industrial organization economics, agency theory, and the field of competitive strategy. T he economic structure of an industry affects the intensity of competition and the average profitability of firms in a particular market.1 While strategy scholars have debated the extent to which industry structure explains differences in firm profitability, virtually no one disputes the idea that structural forces have a sizeable impact.2 More recently, researchers have demonstrated that industries exhibit substantial structural differences across various geographic markets around the world. These structural differences are driven by institutional heterogeneity and contrasting patterns of historical development. 3 Over time, the structure of a global industry can change dramatically. In particular, many industries have experienced consolidation in recent years. Industry consolidation raises several important questions for scholars and practitioners. First, why do these structural shifts take place? Second...
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