The European Brewing Industry
The European Brewing Industry: Surviving a Downturn
Executive summary
Created by:
Daniel Bognár, Péter Szesztay, Tímea Nagy, Zoltán Szebényi
Cases on Business Economics
Teacher: Tamás Kopányi
Corvinus University of Budapest
2011
Introduction
According to analysis, the world’s major beer consumer region, Europe is turning off the brew. There is an ongoing rivalry between the leading companies of the industry; the suppliers are trying to reach even better bargaining positions. Within these circumstances, there are few prospects for the four market players in the focus of our essay (Heineken, Grolsch, InBev, Scottish and Newcastle); in the following summary we will show these possible strategies. Beforehand, we consider the thorough analysis of the macro environment and the industry necessary for drawing such conclusions.
PESTEL analysis
First of all, we need to evaluate the macro environment of the industry. The PESTEL analysis is the most suitable method for this. We will review all the letters of the abbreviation and highlight the important ones. The political and legal background of the brewing industry is characterised by more extensive regulations (in terms of regulations on underage drinking and binge drinking on the premises). From the economical point of view, one could say that the conditions are pretty favourable. Beer is not considered to be a luxury good. Even though the recession brought a bit of a decline in consumption (see figure 1 and http://www.brewersofeurope.org, Beer statistics, 2010) - as an In-Bev spokesman pointed out -, ‘the overall beer industry has demonstrated resilience in tough economic times’ due to the fact that ‘income elasticity of beer is extremely low’. (http://www.redorbit.com/news/business/1360241/ recession_isnt_causing_brewers_to_cry_in_their_beer/). The social opinion have changed in the past few years, there is a growing awareness on health issues. There are other aspects such as cultural differences (eg.
Executive summary
Created by:
Daniel Bognár, Péter Szesztay, Tímea Nagy, Zoltán Szebényi
Cases on Business Economics
Teacher: Tamás Kopányi
Corvinus University of Budapest
2011
Introduction
According to analysis, the world’s major beer consumer region, Europe is turning off the brew. There is an ongoing rivalry between the leading companies of the industry; the suppliers are trying to reach even better bargaining positions. Within these circumstances, there are few prospects for the four market players in the focus of our essay (Heineken, Grolsch, InBev, Scottish and Newcastle); in the following summary we will show these possible strategies. Beforehand, we consider the thorough analysis of the macro environment and the industry necessary for drawing such conclusions.
PESTEL analysis
First of all, we need to evaluate the macro environment of the industry. The PESTEL analysis is the most suitable method for this. We will review all the letters of the abbreviation and highlight the important ones. The political and legal background of the brewing industry is characterised by more extensive regulations (in terms of regulations on underage drinking and binge drinking on the premises). From the economical point of view, one could say that the conditions are pretty favourable. Beer is not considered to be a luxury good. Even though the recession brought a bit of a decline in consumption (see figure 1 and http://www.brewersofeurope.org, Beer statistics, 2010) - as an In-Bev spokesman pointed out -, ‘the overall beer industry has demonstrated resilience in tough economic times’ due to the fact that ‘income elasticity of beer is extremely low’. (http://www.redorbit.com/news/business/1360241/ recession_isnt_causing_brewers_to_cry_in_their_beer/). The social opinion have changed in the past few years, there is a growing awareness on health issues. There are other aspects such as cultural differences (eg.