The global beer market is growing around 36% year on year, however Chahal, (2013) states that sales in the UK beer market are decreasing by 4.8% year on year, forcing the industry to invest in more advertising to stem the flow.
According to WSTA, (2013) there are 204,684 licensed premises in the UK and around 26 million people visit regularly on-trade premises. However one of the reasons for UK sales decline is due to consumer off-trade spending preference as there is more alcohol beverage variety and people are more encouraged to stay at home. (MarketWatch, 2010; Datamonitor, 2010)
The beer market competes with many different other alcoholic beverages and Lager is operating in a very difficult market in the UK.
Barriers to Entry
According to Casey’s beer, (2013) to start a new successfully brewery will probably need around half a million pounds to start with, however some people have managed to start breweries with a budget of £60,000 it all depends on the size of the new business. There are a number of legal requirements that new breweries need, for example, local licenses. Also growing a recognizable brand within the beer market can take a long time. (Perleberg and O’Brien, 2012)
There is a high barrier to open a new brewery, because successful large chains, which have economies of scale, dominate this market in the UK, such as Heineken together with other brewers like Bass plc, SaBMiller, AB InBev, Guiness, Scottish Courage and Carlsberg, each of these provide a portfolio of very well known brands. (Jones et al, 2013)
According to Wood, (1999) the central approach to increase barriers of entry is for companies to gain market power with high brand equity, such a Heineken with its very well known core brand Heineken, built with a set of assets and liabilities that add value to the
