Competition in the Craft Beer Industry

Competition in the Craft Beer Industry

Overview

The appeal of locally-produced or regional craft beers during the early-2010s had given a dramatic boost to the long-mature beer industry. Craft breweries, which by definition sold fewer than 6 million barrels (bbls) per year, had expanded rapidly with the deregulation of intrastate alcohol distribution and retail laws and a change in consumer preferences toward unique and high-quality beers. The growing popularity of craft beers had allowed the total beer industry in the United States to increase by 6.7 percent annually between 2011 and 2016 to reach $39.5 billion. The production of U.S. craft breweries had more than doubled from 11.5 million bbls per year to about 24.5 million bbls per year during that time. In addition, production by microbreweries, which produced less than 15,000 bbls per year, had almost tripled to 4 million bbls from 1.5 million bbls between 2011 and 2016. Much of this impressive industry growth had come at the expense of such well-known brands as Budweiser, Miller, Coors, and Bud Light, which experienced sluggish sales during the early-2010s because of a growing perception of mediocre taste.

Objectives:

This case is meant to provide the opportunity to explore competition within an established, yet growing market as found in craft beer. Many facets of competition and business may be found within, including expansion attributed to smaller, entrepreneurial brewers (referred to as nano- and micro- breweries) as well as acquisitions and consolidation by incumbent competitors. The case describes the market size both through production and segmentation. It also provides a brief overview as to the process of brewing beer. It should be noted that the case introduces production and brewing to illustrate how beer may be both mass produced, as well as highly differentiated-two aspects that resonate well when discussing strategic positioning. The case then discusses macro-environmental factors, specifically the legal environment and suppliers. Finally, the case closes with discussion of consolidation and profiles of competitors.

Assignment:

In a written report of 3 full pages (excluding the reference and cover page) Answer the following:

Anheuser-Busch InBev is considering you for an entry-level brand management position. You have been asked to prepare an analysis of the U.S. craft beer industry as part of the selection process. Please prepare a full 3 page report that includes a description of the industry’s strategically relevant macro-environmental components, evaluates competition in the industry, assesses drivers of change and industry dynamics, and lists industry key success factors. The company’s management also asks that you propose the basic elements of a strategic action plan that will allow the company to improve its competitive position in the market for craft beer. You must provide a heading in your report for each of the required elements of the assignment.  In addition include at least three (3) recent journal publications to support your action plan (Journal publications must be USA based and have free access, no subscriptions required).