1) Conduct a 5 forces analysis of the brewery industry and explain why it’s a good or bad industry? 2) Why are true (not owned by a conglomerate) craft breweries experience disadvantages from the 5 forces perspective compared to larger industry rivals? 3) How do you control supplier costs? 4) How does the general environment, such as demographic, socio-cultural etc., environments impact the brewery industry? 5) What is the importance of the craft brewery alliance?

Full Question:

1) Conduct a 5 forces analysis of the brewery industry and explain why it’s a good or bad industry

2) Why has the beer industry been historically profitable? How are profits allocated among the “mega breweries?

3) How do you control supplier costs?

Answers:

1 Five Forces Analysis:

2. The U.S. Beer market is one of the most complex industries. It has two product-segments: Lager and Ale, with lager being the overwhelmingly dominant segment. Historically,   the   industry   has   been   profitable  with more Profits   being allocated   among   the  mega breweries.

3. Controlling Supplier Costs:

Given the bargaining power of suppliers, the only to control them given their limited availability is through moral suasion or via legislative means limiting their powers.

Another way would be to get government to subsidise their cost of operations.

4. The effect of the general environment (such as demographic, socio-cultural etc)  on the brewery industry:

Economic factors affect the industry in determining price point and demand; Craft beer is more popular in already developed countries as those consumers can afford the higher price. Cultural factors are also a component; some cultures drink more beer as cultural experiences/ normality’s, while others are just beginning to develop a taste for the beverage. The climate in different places can also impact the type of beer consumed, warm weather lending to light beer, and tastes changing with every season, opening markets to a wider range of brews. Lastly, the industry is subject to political factors such as laws   and regulations about the  quantity, distribution, and packaging of  craft beers.

5. The importance of the craft brewery alliance is :

Craft   breweries   are   having   larger   growth   rates,   mega   breweries  are   growing   in   developing countries. Mega breweries still  have the largest profits,  but crafts are within  the top 10 for production volume. Craft breweries has high revenue due to higher price points.

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