The United States Beer Industry
นางสาวภัทริ
น หาอุ
ปละ 5782020026
Closing Case 2: The United States Beer Industry
1.Why has the United States brewing industry become more concentrated over the last two decades?
● Over last two decades, the US brewing industry has changed in three ways. First, due to the growing popularity of substitutes such as wine and spirits, beer consumption decreased. Second, market share for massmarket brewers dropped because of high advertising cost. Last, as a result of a combination of technological change in canning and distribution and increased advertising cost, the size the a massmarket brewer has to attain to reap all economies of scale increased.
2. Analyze the competitive structure of the industry using Porter’s five force model. ● Threat of new entrants.
It was hard to enter this market since this industry needs much money to spend in production technology and high advertising cost. Some pubs and bars who sell beers with subscription contract became parts of distribution channels. If there was a newcomer, it would be hard to find new connection.
Moreover, when a newcomer could sign contract with a bar, customers who like old brand might be not satisfy with a new one causing switching cost to the shop.
● Rivalry among existing firms.
The competition in this mass market was aggressive in terms of pricing, brand royalty, distribution channels and national advertising cost. For niche market, they emphasized on the quality and taste.
● Bargaining power of buyers.
For individuals, they could buy only in a small number.
For retailers, they would have higher bargaining power of buyers due to higher purchase volume.
● Bargaining power of suppliers.
Due to the fact that beer was made from malted barley, the ingredient was grown in many states throughout US causing low bargaining power of supplier. ● Threat of substitute products or services.
There were two majors substitute product: wine and spirits. This affected on a declining of
น หาอุ
ปละ 5782020026
Closing Case 2: The United States Beer Industry
1.Why has the United States brewing industry become more concentrated over the last two decades?
● Over last two decades, the US brewing industry has changed in three ways. First, due to the growing popularity of substitutes such as wine and spirits, beer consumption decreased. Second, market share for massmarket brewers dropped because of high advertising cost. Last, as a result of a combination of technological change in canning and distribution and increased advertising cost, the size the a massmarket brewer has to attain to reap all economies of scale increased.
2. Analyze the competitive structure of the industry using Porter’s five force model. ● Threat of new entrants.
It was hard to enter this market since this industry needs much money to spend in production technology and high advertising cost. Some pubs and bars who sell beers with subscription contract became parts of distribution channels. If there was a newcomer, it would be hard to find new connection.
Moreover, when a newcomer could sign contract with a bar, customers who like old brand might be not satisfy with a new one causing switching cost to the shop.
● Rivalry among existing firms.
The competition in this mass market was aggressive in terms of pricing, brand royalty, distribution channels and national advertising cost. For niche market, they emphasized on the quality and taste.
● Bargaining power of buyers.
For individuals, they could buy only in a small number.
For retailers, they would have higher bargaining power of buyers due to higher purchase volume.
● Bargaining power of suppliers.
Due to the fact that beer was made from malted barley, the ingredient was grown in many states throughout US causing low bargaining power of supplier. ● Threat of substitute products or services.
There were two majors substitute product: wine and spirits. This affected on a declining of