Global Beer Industry Case Study Essay

The beer industry can be considered a monopoly since large national brewers maintain economies of scale in brewing, better distribution tactics, spend heavily on advertisement, and create barriers of entry for other smaller brands.

     In this paper I will be talking about the U.S. beer industry and in short an overview of the brewing industry worldwide. I will talk about the barriers to entry, economies of scale, government intervention, pricing, current market trends, product differentiation, and imports. The focus being mainly on the U.S. brewing industry oligopoly. The U.S. brewing industry has three major players: Anheuser-Busch, SAB Miller, and Coors/Molson. Anheuser-Busch is currently the largest brewer in the world, producing over 100 million barrels a year. Anheuser-Busch currently owns over 50% of the market in the United States, with Miller trailing behind at 20% and Coors at about 11% with the rest of the market occupied by imports and craft breweries. When analyzing any industry, how easy it is for newcomers to enter the market is a great importance. If there are high barriers to entry

A documentary film made in 2009, Beer wars features and describes the American beer industry distinguishing between the large and small breweries. The large breweries feature some main corporate companies like Coors Brewing Company, Anheuser-Busch, and Miller Brewing Company whereas the small breweries include craft beer producers like Moonshot 69, Stone Brewing Company, Dogfish Head Brewery, Yuengling, and others. The documentary shows how the beer market is controlled through advertising and lobbying, which is harmful for the competition in the market. There is a reason why the small companies are falling behind and the large corporates are controlling the market, which in turn makes it essentially oligopoly economy.

Anheuser-Busch Inc. is a dominating global leader in the beer industry, specifically in the United States. Its roots can be traced all the way back to 1852 from the Bavarian Brewery in St. Louis MO when Adolphus Busch traveled from Germany to join his father-in-law. In 1876 Budweiser was founded and rooted its brand in values, ethics, and quality. These core staples of the company evolved all the way to 1982 when Bud Light was introduced. Today Bud Light is the best selling beer in the U.S. and the #1 beer sold by volume in the world. Let’s take a look into the marketing mix that makes this product so successful.

Despite the strong brand and strategic position that MMBC created, the company experienced a decline in revenue of 2% in 2005 (Abelli, 2007, p. 4). The decline is due to changes in beer drinking patterns, markets, and demographics in the region as well as the U.S. in general. The change in beer drinking in 2005 included a decrease in intake of beer in general. This was due to competition from wine and spirits as well as new national health recommendations to decrease alcohol consumption for improved health (Abelli, 2007, p. 4). Premium beer consumption was down 4%, but light beer use was up 4% (Abelli, 2007, p. 10). This movement of consumer purchasing practice, makes adding a light beer product attractive. Overall beer consumption was down in the U.S., and this trend was true in MMBC’s region as well. See Figure 1. This graph shows beer consumption in West Virginia, MMBC’s home state,

The competitive market of producing beer has reached a new level of global monopoly. Anheuser-Busch is no longer an “American” owned beer producer since InBev transnational bought the American company in 2008 (Larson, 2017). But Anheuser-Busch wasn’t the only brew company to merger across borders. In 2007, Miller and Coors merged under South African Breweries, making beer loving Americans subject to an oligopoly, running the beer industry further and further away from American soil. Additionally, according to SABMiller, in 2012 only four firms accounted for approximately half of the global sales of beer, and 70% of revenues (SABMiller, 2012). The beer industries is achieving global dominance due to apparent strategic changes including: expansion of market share, economies of scale and leverage on market prices.

Miller Brewing Company is an American beer brewing company founded in 1855. It is owned by SABmiller, which is the second largest brewer in the world behind Anheuser-Busch. The company is most famous for its Miller brand beer, and its varieties. The most popular one is Miller Lite, followed by Miller Genuine Draft, Miller 64, and Miller High Life. In addition to these four popular ones they have ten different more beers. The company currently has seven main brewing locations around the United States. These locations are: Milwaukee, Wisconsin (which also serves as its headquarters); Albany, Georgia; Irwindale, California; Fort Worth, Texas; Eden, North Carolina; Trenton, Ohio; and Chippewa Falls,

Smaller independent brewers and regional breweries may face increasing competition from multinational giants as the international beer business continues to grow. The four largest brewers, (See Exhibit 1) produce roughly half the world's volume. The appeal of growing markets could also create opportunities for joint venture partnerships or acquisitions in those regions. Anheuser-Busch InBev boosted its market share in Mexico by acquiring Grupo Modelo in 2013, while SABMiller expanded its presence in Asia and Australia through its 2011 purchase of Foster's.

With the millennial generation racing to the craft beer industry, it has helped change it into something unique and appealing. The craft beer industry appeals to the millennials adventurous side as well as being made from all natural ingredients. With the vast number of beer options has led to an entirely new experience. Over the last decade craft breweries have made themselves serious contenders in the beer industry. As the number of craft brewery’s increase and the millennial’s taking to the industry, the craft brew market has a great future ahead of

Beer has a long history. In 2000 B.C.E., Sumerians had prepared eight different beer types, ranging from “strong,” “red brown,” and “good dark” (Mauk, 2013). Breweries have created their own recipes, brewed their own beers—some with alcohol, some without. Over the past few years, craft beer gained steady market share away from the national and international breweries (Murray & O 'Neill, 2012). Separating one beer from the next is the product itself, and what the product has to offer. Competition is ferocious due to more informed, sophisticated consumers, as well as globalization and the spread of technology (Murray & O 'Neill, 2012).

One of the largest brewers in the world, Interbrew grew rapidly in the 1990s from its home market in Belgium to a global presence in markets around the world. As this essay will demonstrate, Interbrew 's global strategy of consolidation and market penetration has been balanced between a respect for local autonomy and beer culture with efforts to adapt the flagship brand of Stella Artois to these cultures.

When an industry has been around as long as the beer brewing industry has, it is no secret that it has reached a pinnacle. At the same time, it shows no signs of decline, therefore

Approximately, 100 billion liters of beer are consumed around the world every year (Olfir, 2007). The worldwide growth rate of beer consumption has been recorded for the past 19 years (Kirin Holdings, 2005). This, however, is not to say that the beer consumption around the world is alike. The alcoholic beverage consumption levels around the world and the rates at which these increase vary from one country to another. For example, in India the annual consumption of beer is .5 litters per capita (Gupta, 2007), where as in Czech Republic, the consumption of beer is 156.9 liters per capita per year

This assignment is based on the case example ‘Global forces and the European brewing industry’ and relates to two questions raised in chapter 2 at the end of the case example (Johnson et al. 2008, p. 91) of the book ‘Exploring Corporate Strategy: Text and Cases’ by Johnson, Scholes and Whittington.

Source: Loizos Heracleous (2001)When Local Beat Global: The Chinese Beer Industry. Business Strategy Review, 2001, Volume 12 Issue 3, pp 37-45. Available at: http://onlinelibrary.wiley.com/doi/10.1111/1467-8616.00182/pdf.