Question 1 (i): Using the data from the case (and any other source available), carry out for the European brewing industry a PESTEL analysis. What do you conclude?
Beer has been a part of the social fabric of cultures around the world for thousands of years. Even today beer ranks as the third most popular beverage in the world next to water and tea. Considered one of the oldest drinks, the origin of beer dates back to 6000 B.C.
With low-cost strategies and lack of marketing and product innovations all created a very stable situation guaranteeing high returns on investments for most breweries in Europe. However, this situation has been changing dramatically and the industry has witnessed different brewing styles over the last decade. The market entry of large multinational breweries resulted in shrinking demand due to changing consumer preferences, the emergence of more aggressive competitive strategies and rapid changes in important distribution channels have created growing competitive pressures for European breweries. An industry that was used to stability must now find its way in an increasingly turbulent market environment.
First of all, I need to evaluate the macro environment of the industry. The most suitable tool to analyze the broad macro-environment is the PESTEL analysis. In the PESTEL analysis environmental influences are categorized into political, economical, social, technological, environmental/ecological and legal aspects. It helps to identify how future trends might influence an organization and furthermore, to identify the key drivers of change to create scenarios for the possible future.
Political factors:
From the case study I noticed that there is an overall decline of consumption of Beer in the European market as many traditional key markets have been made increasingly aware of the social problems associated with alcohol consumption.