...Global forces and the Western European brewing industry Mike Blee and Richard W h i t t i n g t o n ~" s case • Western •:-petitive 5 zausing i-z -.—.nth closures is centred Europe pressure on the European and examines of operating through brewing industry increasingly markets alliances in the how the within global consolidation within acquisitions, This has resulted the industry. reliance of the brewers' upon super-brands. - :~e e a r l y y e a r s of t h e 21st c e n t u r y , E u r o p e a n b r e w e r s ^ : e d a s u r p r i s i n g p a r a d o x . The t r a d i t i o n a l c e n t r e of t h e -=-.-.' i n d u s t r y w o r l d w i d e a n d h o m e to t h e w o r l d ' s l a r g e s t : - = w i n g c o m p a n i e s , E u r o p e , w a s t u r n i n g off b e e r . B e e r : : " s u m p t i o n w a s falling in the largest m a r k e t s of G e r m a n y = r d t h e U n i t e d K i n g d o m , w h i l e b u r g e o n i n g in e m e r g i n g ~ a ~ k e t s a r o u n d t h e w o r l d . In 2008, E u r o p e ' s _ largest a ~ k e t , G e r m a n y , r a n k e d o n l y 5 t h in t h e w o r l d , b e h i n d ~ • ria, t h e U n i t e d S t a t e s , B r a z i l a n d R u s s i a . C h i n a , w i t h I'—, a n n u a l g r o w t h b e t w e e n 2003 and 2008, h a d b e c o m e " r . a r g e s t s i n g l e m a r k e t by v o l u m e , a l o n e a c c o u n t i n g : - 2 3 % of w o r l d c o n s u m p t i o n [ E u r o m o n i t o...
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...ASSIGNMENT 1; GLOBAL FORCES AND THE WESTERN EUROPEAN BREWING INDUSTRY DATE OF SUBMISSION: 09/02/2012 1. (i) PESTEL ANALYSIS OF THE WESTERN EUROPEAN BREWING INDUSTRY The PESTEL framework provides a comprehensive list of influences on the possible success or failure of particular strategies (Johnson et al, 2008, p55). PESTEL stands for Political, Social, Technological, Environmental and Legal. Political- Governments in Europe were campaigning strongly against drunken driving. This affected the propensity to drink beer in pubs and restaurants. Economic- Some low consumption European markets have been showing good growth. Pubs have suffered as a result of large supermarket chains such as Tesco and Carrefour who often use cut price on beer to lure people into their shops. The result was that an average of about 50 pubs closed per week during the recessionary year 2009. Social- There was increasing awareness of the effects of alcohol on health particularly in the UK. This led to a growing hostility to excessive alcohol consumption in pubs. Beer consumption in the UK as well as in Germany began to fall as a result of this. Wines were becoming increasingly popular as Europe was turning off beer. There was an increasing demand for Exotic imported beer more especially in Belgium, Denmark, Finland and the Netherlands according to Table 2 of the case study. (ii) FIVE FORCES ANALYSIS OF THE WESTERN EUROPEAN BREWING INDUSTRY According to Johnson et al...
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...Introduction The purpose of this briefing paper is to analyse the data given from the case study to determine the impact and consequences global forces have, by using the PESTEL framework. This framework is used to help form a strategic analysis of the macro-environment; the outside factors beyond the control of a company. It categorises the environmental influences into six groups: political, economical, socio-cultural, technological, environmental and legal; making up the acronym PESTEL. Analysis Political factors Europe has traditionally been seen as the centre of the beer brewing industry. However, the level of alcohol consumption is gradually declining. This is because many of the key markets within Europe are increasingly more aware of the social and health issues caused by excessive alcohol consumption. Governments are actively campaigning against the abuse of alcohol and the possible consequences of drunk driving, ‘binge drinking’, and the long-term effects related to health. These key factors relate directly to government policies and their decisions towards the European beer market. Economic factors As a result of government intervention, there has been a marked decrease in product sales in public premises. As people are more and more likely to drink at home rather than out to bars, the alcohol sales has shifted from ‘on-trade’, where beer is consumed on public premises, to ‘off-trade’, where beer is purchased by retail and consumed on private property...
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...Western European Brewing Industry Case Study Question: 2. For the breweries outlined above explain: (a) How these trends will impact differently on these different companies; and (b) The relative strengths and weaknesses of each company. (A) Impact of these trends. 1. InBev (Belgium/brazil) • INBev is a merger of two companies Anheuser and Busch and hold the top spot in the world’s top 10 breweries. • INBev is known for being the world’s largest brewing company through mergers and acquisitions and has a 25 percent global market share • By diversifying its enterprise into many countries outside of Europe (where the consumption of beer was increasing), has helped the companies continued success. • INBev are geographically diversified with a balanced exposure to developed and developing markets and leverages the collective strengths of its approximately 155,000 employees based in 25 countries worldwide. • The corporation has a significant position in the Latin American market. • INBev occupies 50% of the US market and 50% of the Mexican market. • The company is established in countries where the consumption of beer is rising. • Revenue of 47 billion US dollars in 2014 • INBev has around 200 beer brands and continues to forge strong connections with consumers. The global brands included are Budweiser, Corona, Stella Artois, Beck’s, Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye...
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...Adolph Coors in the Brewing Industry – Case Study By mid-1970, Adolph Coors Company was extraordinarily successful, posting year-to-year volume gains for the last 23 years and gaining a 16% Return on Sales at its height. However, between 1975 and 1985, performance declined greatly relative to the rest of the brewing industry. In the early 1980’s, Coors faced a key decision, whether to build a second brewery on the east coast. Would an additional brewery improve its position significantly? What else could Coors have done to improve their position? Could Coors have changed their strategy in order to take advantage of the changes in the brewing industry, or were they destined to be the victim of changes in the industry that they could neither control nor remedy? Extraordinary Success into the 1970s Coors was extremely successful prior to 1977. Key to their strategy was a set of unique, co-specialized elements: geographic focus, low-cost production, a differentiated product, and market power over their distribution customers. By managing these aspects well, Coors achieved 21.2% market share in their market, with the lowest relative amount of advertising in the industry. At the same time Coors’ low cost per barrel, at $29, was second only to Heileman Brewery. In spite of their low cost, Coors’ differentiated product allowed them to charge a premium over most of their competitors, giving Coors the highest profit margins in the industry, nearly twice that of their nearest competitor...
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...SABMiller case study 2009. SIAMAK MOULAEIFAR 20207133 Introduction: SABMiller (SAB) plc is the second largest brewers in the world with brewing interests or distribution agreements in over 75 countries across six continents. The group’s brands include premium international beers such as Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as an exceptional range of market leading local brands also SABMiller is one of the world’s largest bottlers of Coca-Cola products. (The SAB Miller, 2009) Exhibit below provides a summary scope of SABMiller operation today. (Below figures refer to year ended 31 March 2009) Source: www.sabmiller.com The purpose of this report is to discuss the strategic position of SABMiller in 2009 (SWOT analysis), the SABMiller acquisition strategy in particular the acquisition of Miller in 2002 along with issues rose in acquisition. It will also set out to recommend a strategic development plan for future. The strategic position of SABMiller in 2009 Understanding the strategic position is concerned with identifying the impact on strategy of the external environment, an organisation’s strategic capability (resource and competent) and the expectations and influence of stakeholders. (Johnson & schools & Whittington, 2008) The strategic position that SABMiller has chosen to follow is to continue to protect and further develop its operations, whilst investing for growth in its international beer business, several...
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...Five Forces in Western European the Brewery Industry Porter’s five forces framework helps identify the attractiveness of an industry. The five forces are as follows; Threat of Entry, Threat of Substitutes, Power of Buyers, Power of Suppliers and the Extent of Rivalry between competitors (Johnson, Whittington and Scholes 2011, p.54). These five forces help to organize an industry’s structure. Originally, the five forces framework helped to identify industry structures that offered good profit potential. This was based on the belief that where the five forces are high, these industries are not attractive to compete in. Firstly, we will provide a brief background to the beer industry in Western Europe and then implement the five forces framework to assist in deciding the attractiveness of the industry. Beer Industry Background There is a long history of beer. As said by Benjamin Franklin; “Beer is proof that God loves us and wants us to be happy”. Beer is one of the world’s oldest alcoholic beverages. It has a lengthy history and can be dated back to when the main method of making beer was by way of home brewing. With no sign in beer declining, it could be presumed that beer is in the mature stage of the product life cycle. We are focusing on the beer industry in Western Europe, choosing to apply the five forces to the larger brewers who have significant operations in the industry; Heineken, Carlsberg and A-B InBev?.... Competitive Rivalry within the Industry This force...
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...position; it is important to carry out its Business external analysis; it is also essential to identify its core competences and capabilities as well as stakeholder expectations in order to successfully identify the company's strategic position. SABMiller's External Analysis: In order to asses SABMiller's external analysis; I have constructed a PESTEL analysis (appendix 1); Porters 5 forces (appendix 2); THE BCG matrix (appendix 3) and its competition Analysis (appendix 4). After conducting Porter's five forces of the Brewing Industry; I have found many interesting outcomes relating to SABMiller as the overall markets of the brewing industry aren't clearly attractive; its performance depends on the ability to expand its market share and exploit opportunities in the emerging markets. However, the brewing industry in growing markets, which SABMiller operates, is highly attractive but not for new entrants; it's especially attractive for the dominant players in the Industry; which in this case SABMiller is one of them. After analysing my Porter's 5 forces; it is conclusive that it would be extremely hard for new entrants to compete in these emerging markets due to the high dominance of the main competitors. I have also observed other good points such as the low level of power within suppliers; however the power of suppliers is increasing especially in USA due to the rising costs of energy and Aluminium but in under developed countries; it is conclusive that SABMiller has the overall power...
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...Case 27: New Belgium Brewing 1) What are the ethical issues in this case? - Ethics is a commonly used term that refers to the ideas and issues of right, wrong, fairness and justice. In regards to business, the concept of ethics refers to the ideas and issues in the commercial industry. In the New Belgium Brewing case study, there are many ethical concepts displayed. A positive ethic in regards to doing right is the company’s mindset that profitability comes second and their commitment to providing a quality product and business for consumers. In addition, all the companies’ decisions are based on a strong set of core values and beliefs that have made them shine in society. Furthermore, New Belgium Brewing (NBB), is ethically sound because they have developed their business around being environmentally friendly. NBB has developed an industry leading process to minimize their environmental footprint from recycling, clean energy sources and cutting back on their CO2 emissions. This is a very ethically sound company and continues to be successful as they continue to grow. 2) What keeps other companies from having the commitment to environmental sustainability that NBB has evidenced? - One piece of evidence that NBB has observed that is keeping other companies in the industry from a commitment to environmental sustainability has to do with the recycling of glass bottles. NBB has attempted to develop an idea for a bill known as the “bottle bill” that would promote...
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...strategy has to be immediately fixed and improved to move in conjunction with the needs of the external environment (Stead et al., 2004). Understanding the importance of strategic management, the report’s purpose is to exploit supplied information from the case study “Global forces and the European brewing industry” to carry out the external environment analysis which uses PESTEL and Five Forces Models. Basing on the achievements from the industry analysis, a further analysis called strategic groups which based from strengths and weaknesses of four brewing firms is made to categorize each kind of firms. References from books, journal articles were used to providing proper prove for supporting the trend in the case. INTRODUCTION The case study reflects how international forces have influence on European brewing industry as well as how such breweries firms has tried to overcome the difficulties. Despite of the fact that the European governments have enforced some restrictions and carried out a campaign against alcohol, these firms still tried their best in order to increase growth rate via alliances, acquisitions and closures within the brewing market. Firms are focusing on broadening their appearances in other marketplaces while several of firms are mustering on innovating and branding their products. Furthermore, they also pay much attention to cut down cots, including...
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...Subject: Business Strategy Executive Summary: Throughout most of its history, the Coors Brewing Company (Coors) has been a regionalized brewer within the United States, specializing in high-quality beer through by virtue of its source water selection, stringent production standards, and cold filtered brewing approach. As the company expanded its distribution to new markets within the U.S. in attempt to gain market share, it made a strategic decision to maintain a majority of its brewing operations at its primary production facility in Golden, Colorado. This decision was based upon the desire to preserve its core production strengths through close family control. However, as the company desires to expand its market presence beyond the U.S. boarders with a goal of becoming the 5th largest brewer by 2008, its historic approach to management and operations provides a detriment to achieving this objective. As seen by the on-going consolidation of top brewers within the beer industry, the competition is fierce as more brewers are competing within a global market with extended product lines and decreased profit margins. Question: How did Coors operating performance change relative to its competitors between 1970 to 1985? Why ? Performance improves from 1970 to 1977: Coors was extremely successful prior to 1977. Key to their strategy was a set of unique, cost specialized elements: geographic focus, low-cost production, a differentiated product, and market power over their...
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...The Carlsberg Group is a Danish brewing company it was founded in 1847 by Jacob Christian Jacobsen mostly known as J.C. Jacobsen. He established his first brewery on a hill outside of Copenhagen. J.C. Jacobsen then, decides to name the brewery after his son Carl and on the bjerg (hill) on which the brewery was built on. Due this innovation, Carlsberg played such a big part of Copenhagen’s history. In 1868, Carlsberg began exporting to other neighboring countries in Eastern Europe. The first barrel of Carlsberg was exported to a grocer in Edinburgh, Scotland. Within that year, the lager became very popular in Scotland and other countries such as India, Singapore, and Hong Kong. Jumping forward a hundreds years, in 1970 Carlsberg and another renowned Danish brewer merge together called Tuborg. Together the breweries developed their business with exporting, licensing agreements, and breweries outside of Denmark. To further their growing export Carlsberg and Tuborg combined under one name becoming the United Brewery’s. This combination has enabled their unique lager for global export as well as continental styles for both domestic and foreign markets. During that profitable time, one of the most important markets to the United Breweries was Great Britain. The United Brewery’s two main brands were at one’s disposal in essentially every European country. Moving into the 1990’s, export sales were declining both on Eastern and Western Europe, yet Carlsberg achieved modest but still...
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...Global forces and the European brewing industry Mike Blee This case is centred on the European brewing industry and examines how the increasingly competitive pressure of operating within global markets is causing consolidation through acquisitions, alliances and closures within the industry. This has resulted in the growth of the brewers’ reliance upon super brands. In the mid 2000s the major centre for production of beer in the world was Europe; its production was twice that of the USA, which in 2003 was the world’s largest beer-producing country. In the alcoholic drinks sector beer sales are dominant: total sales across the world accounted for 74 percent of all alcoholic purchases (Euromonitor 2002). Although the European market as a whole is mature, with beer sales showing slight falls in most markets, Datamonitor 2003 reported that the alcoholic beverage sector grew at an annual rate in value terms by 2.6 per cent year between 1997 and 2002. Table 1 European beer consumption by country and year (000 hectolitres ) |Country | |1980 |1997 |1998 |1999 |2000 |2001 |2002 | | | | | | | | | | | |Austria | |7651 |9145 |8736 |8810 |8762 |8627 |8734 | |Beigium ...
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...Anheuser Busch Inbev SA (BUD) Anheuser-Busch InBev SA/NV, a brewing company, engages in the production, marketing, distribution, and sale of beer. The company offers a portfolio of approximately 200 beer brands. Its international principal brands include Budweiser, Stella Artois, and Beck’s; multi-country brands consist of Leffe and Hoegaarden; and local brands comprise Bud Light, Michelob, Skol, Brahma, Antarctica, Quilmes, Jupiler, Hasseroder, Klinskoye, Sibirskaya Korona, Chernigivske, Harbin, and Sedrin. The company also produces and distributes soft drinks. Anheuser-Busch InBev SA/NV sells its products in 120 countries. The company was founded in 1366 and is headquartered in Leuven, Belgium. Let’s examine its financial info. BUD’s Current Ratio ranges from 0.6 to 1 in five year’s period and Quick Ratio ranges from 0.5 to 0.9. Those figures show BUD’s ability to pay back it short-term liabilities (debt & payables) is not so good, and it is not in good financial health. The company is not very liquidity. Craft Brew ‘s Current Ratio ranges from 0.8 to 1, better than BUD, but its quick ratio is worse, ranging from 0.1 to 0.3, indicating its low liquidity problem. BUD’s Fixed Asset Turnover Ratio ranges from 1.5 to 2.5, indicating that the company has been more effective in using the investment in fixed assets to generate revenues. However, Total Asset Turnover ratio is much lower, ranging from 0.2 to 0.4, indicating it is not effective in using its total assets to...
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...most widely consumed alcoholic beverage, and is the third-most popular drink overall, after water and tea. It is thought by some to be the oldest fermented beverage. The brewing industry is a global business, consisting of several dominant multinational companies and many thousands of smaller producers. We estimate that the global beer market represented approximately 1.85 billion hectoliters in 2010, producing total global revenue of approximately $160 billion. The most dynamically growing regions have been Asia Pacific and Africa/Middle East, which have seen the highest real GDP growth. The highest density of breweries in the world, most of them microbreweries, exists in the German Region of Franconia, especially in the district of Upper Franconia, which has about 200 breweries. In 2012 the four largest brewing companies controlled 50% of the market: Anheuser-Busch InBev, SABMiller, Heineken International, Carlsberg Group. Using the PESTEL analysis, the political factors are the actions against overconsumption and the restrictions by government (prohibition, taxes), the economical factors are the cost reduction, rise prices of packaging, and economy crisis. The fitness and health, the face of customers drink more wine than before, and the demand for flavered beers are the social factors of beer industry. The technological ones are the new brands and flavors, the innovation in beer production, increase in efficiency, and the centralization of production and administration...
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