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Competition Report on Craft Beer

Report: Craft Beer

Strategically relevant components of the U.S and global craft beer industry macro-environment

With thorough assessment of the U.S as well as global craft beer industry depicts various components those are strategically relevant such as,

  • Increase in the consumption of beer not only in the US but throughout the world.
  • Growing exports to developing as well as developed nations.
  • A gradual shift in preference of consumers to higher value local beer.
  • Deregulation of alcohol distribution as well as retail laws that is intrastate.
  • Because of the employment law there is a possibility of business costs augmentation. 
  • Higher exploitation of social media marketing that gains a free customer exposure.
  • Future and present shortage of 16-oz. Aluminium cans and hops.

Competition in the craft beer industry

Competition is high and strong in the craft beer industry as the preference of the consumers has already shifted to high quality, unique local beer that is crafted. So, an augment can be noticed in the number of the “home brewers” that brew for the commercial sales. The heavy popularity of the craft beer has boosted the industry growth in the US making it grow by 6.7% annually from 2011 to 2016 that has overall reached $39.5 billion. At the second half of the year 2010 the competition in the industry increased due to the fluctuations in the grain price that affected the structures as well as increasing consolidation in the industry of beer. AB InBev’ acquisition of various craft breweries and Grupo Modelo’ pending acquisition of SABMiller of around $104 billion created a market share battle (Beverage Industry, 2016). 
As consumption is increasing around the world it is giving an opportunity for expansion for the craft breweries locally as well as nationally or sometimes internationally. The preference of the consumers are towards the locally brewed unique craft beer has made the market competitive for each brewer creating a competitive pressure to be the best. Besides, potential new entrants in the industry, other industry firms supporting the brewers by offering substitute products and the suppliers are the other factors influencing the competition.
Weakest part is the lowering of the production that has to be matched with the increasing demand. The market is attractive for the new entrants as there is increasing demand of locally made beer with unique taste. In fact, the start up breweries can get a good market share with right strategy and can sell nationally as well. 
 

The local micro-breweries are in the position of profit as there is less competition while the whole market of beer has a great competition among the global brewers and individually has low market share. It shows that though the global brewers has the largest market share as a  whole the local brewers has a great quality and price range while regional brewers come lower in this section of quality and price of the product. So, the most profitable position is acquired by the local brewers. The less profitable position is for the regional ones as they are not great in quality or pricing and even do not have the great market share. 

Key factors to determine the success of the start ups or small breweries

As the craft beer industry is consistently growing and has a good potential in future as well it has various new entrants in the market but for start ups it is very much crucial to be aware of the factors that are essential for their success in this highly competitive market. Incorporating various new technologies in the business is very much important and beneficial in this age of competition and advancement as well as fast growth. Besides, being cautious about and predicting the right amount of growth is important to evade high risks. Maintaining quality and being consistent while also experimenting with the product is also important for establishing any brand. Also, improving the distributor relationships and proper promotion of the product is pretty much important for the start ups (Orchestra, 2016). 

 

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Recommendations

As the craft beer industry is a consistently growing and expanding industry, remain competitive and sustain for long is quite challenging in this industry for a entrant or a smaller brewery. There are lots of risks and challenges that have to be faced by such smaller breweries to keep sustaining in the market and to fight those there are some essential things that they should be careful about. By keep experimenting with new local flavours and verities these breweries can give a wide range of products to the consumers that will increase its demand and popularity in the market but the brewers must be careful about the quality of the product as well. Quality must be good and if possible it must be improved gradually to sustain in this highly competitive market. Besides, maintaining consistency and managing the recipes well is also very important for the sustainability. Also planning ahead to keep up with the demand is very important to serve the consumers professionally. Having a proper goal and growth plan is quit vital as it gives the breweries right way to expand or grow without taking many risks or sometimes with calculative risks (Orchestrated Beer, 2016). 

 

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Bibliography

Beverage Industry. (2016). Beverage Industry. Retrieved June 8, 2020, from https://www.bevindustry.com/: https://www.bevindustry.com/articles/89752-2016-craft-beer-report-craft-beer-market-becoming-increasingly-competitive

Orchestra. (2016, July 27). Orchestra. Retrieved June 8, 2020, from https://www.orchestrasoftware.com: https://www.orchestrasoftware.com/blog/8-key-success-factors-needed-to-be-competitive-in-the-beer-industry/

Orchestrated Beer. (2016). Orchestrated Beer. Retrieved June 8, 2020, from https://www.orchestratedbeer.com/: https://www.orchestratedbeer.com/blog/4-ways-remain-competitive-beer-industry

 

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