Boston Beer Company
Assignment #1:
1. Evaluate the attractiveness of the craft beer segment relative to the market space occupied by the traditional "Big Three". (tip: use the Five Forces framework).
a. High Threat of new competition: over 600 of specialty beer companies were founded over the past five years, approximately 40% growth each years. In addition, the existence of contract brewing companies lead to low entry cost.
b. High substitution: The attractiveness of craft brewing industry are majorly based on unique styles and flavors of beer. there are many different brands and styles of beer so the actual threat of substitutes is high.
c. The intensity of competitive rivalry is also high: while there is a major growth of new entry, the market size shows little growth. This creates tremendous competitive pressures among the industry.
d. Bargaining power of buyers: Switching cost for buyers are low, as there are many different substitution and options. companies has to consistently maintain high quality in order to retain customers.
e. Bargaining power of suppliers: switching cost for suppliers are high for the traditional Big Three, as their supplies are tied to their own brewies. Craft brewing companies has the option of switch breweries in a relatively low cost, as the suppliers know they have options to supply other breweries. This allows them to charge higher prices than the big three.
2. Evaluate Boston Beer's business model relative to Redhook and Pete's, comparing their business models with respect to specific activities such as procurement, brewing, distribution, and marketing.
BBC’s strategy of producing the highest quality of products, the company pursued four initiatives: high quality standards, contract brewing, intensive sales and marketing, and product line innovations.
Unlike BBC and Pete’s, redhook relies on its own breweries. Redhook also established a strategic alliance with Anheuser-Busch whereby Redhook products were sold through the nation-wide
1. Evaluate the attractiveness of the craft beer segment relative to the market space occupied by the traditional "Big Three". (tip: use the Five Forces framework).
a. High Threat of new competition: over 600 of specialty beer companies were founded over the past five years, approximately 40% growth each years. In addition, the existence of contract brewing companies lead to low entry cost.
b. High substitution: The attractiveness of craft brewing industry are majorly based on unique styles and flavors of beer. there are many different brands and styles of beer so the actual threat of substitutes is high.
c. The intensity of competitive rivalry is also high: while there is a major growth of new entry, the market size shows little growth. This creates tremendous competitive pressures among the industry.
d. Bargaining power of buyers: Switching cost for buyers are low, as there are many different substitution and options. companies has to consistently maintain high quality in order to retain customers.
e. Bargaining power of suppliers: switching cost for suppliers are high for the traditional Big Three, as their supplies are tied to their own brewies. Craft brewing companies has the option of switch breweries in a relatively low cost, as the suppliers know they have options to supply other breweries. This allows them to charge higher prices than the big three.
2. Evaluate Boston Beer's business model relative to Redhook and Pete's, comparing their business models with respect to specific activities such as procurement, brewing, distribution, and marketing.
BBC’s strategy of producing the highest quality of products, the company pursued four initiatives: high quality standards, contract brewing, intensive sales and marketing, and product line innovations.
Unlike BBC and Pete’s, redhook relies on its own breweries. Redhook also established a strategic alliance with Anheuser-Busch whereby Redhook products were sold through the nation-wide