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Group 9 (Craft Beer)

Group 9 analyzed the craft beer industry. They found that: 1) The craft beer industry is growing in the US and globally, increasing market share by 6.7% per year between 2011-2016. 2) Smaller craft breweries face challenges from regulations, distribution challenges due to their small size, and competition from larger breweries. 3) For new entrants to succeed, they must focus on constant innovation, developing economies of scale, and mitigating risks through proper resource allocation and partnerships.

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Harsh Gandhi
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168 views6 pages

Group 9 (Craft Beer)

Group 9 analyzed the craft beer industry. They found that: 1) The craft beer industry is growing in the US and globally, increasing market share by 6.7% per year between 2011-2016. 2) Smaller craft breweries face challenges from regulations, distribution challenges due to their small size, and competition from larger breweries. 3) For new entrants to succeed, they must focus on constant innovation, developing economies of scale, and mitigating risks through proper resource allocation and partnerships.

Uploaded by

Harsh Gandhi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Group - 9

Division D

Submitted by -
Mitesh Baheti | D008
Harsh Gandhi | D018
Swati Jain | D027
Saurav Mansingka | D037
Ashutosh Singh | D053

Craft Beer Industry


What are the strategically relevant components of the U.S. and global craft beer industry macro-
environment?
What is Craft Beer ?
Beer Industry had a Global
share of 1.5% of US GDP
Breweries selling less
than 6 million barrels Increasing Market by
per year & more than 6.7% per year between Introduction of new
flavours in existing
75% ownership 2011 - 2016
market, which helped in
US Several acquisitions by big expansion – Addition of
Why are they gaining popularity ? brands to stay relevant in local flavoured beers
declining market
Change in consumer Demographic expansion
preferences Increase of production from of Beer Market, which
&Deregulation of 11.5 to 24.5 bbl’s per year happened due to craft
beers which easily
Interstate and retail penetrated market due to
US production declined but Global
laws Consumption was rising its taste

Craft Beer Industry


What is Competition like in the craft beer industry? Which of the five competitive forces is strongest?

Since the Craft Beer market is still comparatively Bargaining power of Buyers is Strongest for
new and growing there is Little competition in Craft Beer as -
the market. These companies are generally small in nature,
Since Craft beers are defined by the taste and smell thus they cant do marketing of their products
of beer, it boils down to consumer preference. Beer and have legal restrictions, thus they have to
as a product has varieties which can be Seasonal depend on Buyers (in this case Wholesalers,
specific or brand specific. Companies have come up retailers, Hotels etc) for projection of their
with new flavours, new ways of fermenting and products.
brewing to differentiate their product.
Marketing & Distribution remains the biggest Which is weakest?
challenge for these companies. Due to small size, Threat of Substitutes
they often cannot opt for marketing strategies like Since products in this Industry is of high quality
big brands, and if they go for expansive methods, & high differentiation in terms of taste and
consumers then no longer perceive them as a craft availability there is less threat from substitutes.
beer brand like in the case of Boston Beer Company Its uniqueness in its taste and local touch gives
them the competitive edge.

Craft Beer Industry


What competitive forces seem to have the greatest effect on industry attractiveness and the
potential profitability of new entrants?
Employment laws were other major
problem as many states and municipalities
passed or were considering passing
Government Regulations – There were strict increase in minimum wages. This could
government regulations with respect to deciding on lead to increase in business cost which as a
the distributional channel or requirement for the result would impact their profitability
breweries to have labels for beers approved by the
federal government. The length of approval process
sometimes could take several months which could
cause delay in sales. So for the new entrants this Big players in the market would mass
could potentially impact their cash flow produce and compete using economics
of scale and established distribution
systems. So for the new breweries, they
need to invest heavily in automated
bottling capacities to expand their
capacity
What key factors may determine the success of a start-up or smaller, craft brewery?

Legal Developing Constant


Environ economies Innovati
of scale on
ment
●
Since there are restriction ●
For small Craft beer Craft Beers have
●

as to how they can reach companies, they need to have generated interest and
out to people, If they are an eye for scaling up things become successful due
allowed to sell directly, and not just remain home to its Uniqueness. New
brewers to become companies should look
they would generate more
successful.
revenue. ●
They need to scale up so that
to constantly work on
●
If there are less they can expand to other innovation in their –
restrictions to market the demographics and be feasible Taste, Packaging,
product, they would be ●
In longer run to reduce Distribution etc to get
able to reach out to large prices, they need to achieve the edge over other craft
number of customers. Economies of scale
beers.

Craft Beer Industry


What recommendations would you make to a smaller, craft brewery to improve its
competitiveness in the market while mitigating any current and future risks?
Proper Resource
Allocation and
having responsible
Budget figures.

Experiment – with
flavours
Diffrentiate – from
competition
Automate – your process

Smart integration with Continuous Innovation


suppliers and other in the Products,
Supplement Packaging &
Companies ie Strong Communication that
Partners are being launched

Craft Beer Industry

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