Foreign Market Entry and Diversification
Johnnie Farmer
Dr. Travis O. Davidson
Strategic Management – BUS 599
November 7, 2011

Identify and discuss the trends in the global beer market Even though the United States has the largest beer market China surpassed them in 2003. Americans are drinking more beer and the consumption per capita remained almost six times higher in the United States than it is in China. There are three brewers controlling 80% of the U.S. market, Anheuser Busch with 45%, Miller Brew with 23% and Adolph Coors with 10%. There were also 300 regional craft breweries that struggled to make a profit because of vertical integration and economies of scale which were drivers of operating margins [ (Thompson, Strickland, & Gamble, 2009, pp. C-250) ] Mexico is one of the largest beer markets in the world. They have a variety of brands with lots of different taste. Even with the mix of taste, Mexico is split between two producers and few microbreweries. These companies are FEMSA and Grupo Modelo. Grupo Modelo captured 62.8 % of the Mexican market in 2007 while FEMSA captured the remaining 37.2% [ (Thompson, Strickland, & Gamble, 2009, pp. C-251) ]. As a whole, the beer industry is expected to post a third consecutive year of declining sales in the U.S. for the first time in more than 50 years. . Shipments from beer manufacturers to wholesalers, a standard industry measure, are expected to fall by as much as 2 percent in 2011, according to Beer Marketer's Insights [ (York, 2011) ].
“In June [2004], a commercial agreement was signed with Heineken [by FEMSA] to commercialize [their] beer brands in the United States. Under the terms and conditions of this agreement, Heineken USA takes responsibility for the promotion, selling and distribution of the following brands: Tecate, Dos Equis, Sol, Carta Blanca, and Bohemia among US Territory,