A Little Dose Will Do You

“The beer industry in the United States generates $75 Billion in annual sales.” (Abelli, 4)

New Belgium Brewing Co. (NBB) is a craft beer leader that embraces sustainability and corporate responsibility. For New Belgium, social, ethical, and environmental responsibilities are as important to the company’s operations as profitability. For New Belgium, business is as much about improving the local community as it is about making beer.

     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

In order to grow, Boston Beer must continue to increase its market share in the overall beer market. The market continues to be dominated by the large scale breweries like Anheuser Busch, Adolph Coors Co, and Miller Brewing Co. Craft Breweries are beginning to increase their share in the overall market. It is expected that craft breweries will account for 5% of the overall beer market in 2000, up from 1.4%. However, there is increased competition in the craft beer market. There were 165 new craft brewers in 1994. This increased the total of craft breweries in the US to 750. Boston Beer will be competing with these 750 breweries for 5% of the 5 billion in US beer revenues.

Consumer demand for robust ale was not being fulfilled with the current beers on the market. In 1991 Jeff Lebesch and his wife Kim started the company out of their basement. They focused on the rich flavor and unique concept. Their focus on social and environmental responsibility has set them apart from brewing companies on the market. Jeff and his wife wanted to promote a product while being innovative and socially responsible. They designed their core values and mission statement while hiking in a national park (Ferrell, 2010). In addition they wanted to promote the brand and corporate citizenship (Ferrell, 2010). Although the product is alcohol they encourage consumers to be responsible. Also, they have sponsored events, dinners and philanthropic causes to help gain consumer loyalty. In 2013, USA named NBB as 6 out of 15 best brewing companies (Franklin, 2013). Also, the company has increased is competitive advantage with is stance on environmental conscience brewing. They were the first brewery to utilize wind power generator, even with an increase cost of .025 per kilowatt (Asher, Bidner and Greene, 2003). Also, they utilize light tunnels, windows and recycled steam to reduce their carbon footprint (Gorski, 2013). In 2002 NBB participated in the LEED-EB pilot program (Ferrell, 2010). Furthermore, the company donates $1 for every barrel of beer sold to each of the 26 states territories and distributed $700,000 in 2012 (What we are about, 2013). Despite

By eliminating Lightship and introducing a new beer, it will signal to consumers that a real change has occurred with BBC’s product offering. It will show consumers that the new beer is a “fresh and improved” version that is the best in the light beer market. Additionally, it will be able to escape any of the negative connotations Lightship had while on the market. However, this alternative includes high risks, as BBC will be introducing a new product onto the market.

The purpose of this research paper is to analyze Sam Adams and the global craft beer market. I will apply microeconomic models to analyze the supply and demand conditions for Sam Adams, its price elasticity of demand for products, cost of production and the overall market. There will be recommendations to maximize future profits and sustain success for Sam Adams. In this paper I will also analyze the craft beer industry and recommend actions for better management of supply and demand, improving the cost of production and the different barriers of entry that Sam Adams can utilize to impact its future in the craft beer industry. Applying the concepts of variable and fixed costs, I will make recommendations for its output decisions and profitability that will help them succeed in a monopolistically competitive market structure. In the conclusion of this paper I will make recommendations to manage future production and sustain its success, as well as evaluate the business structure and effective decision-making strategies. The craft beer industry is a monopolistic competition because it has the ability to allow many firms to produce similar good or services, but it at the same time allows each firm to make independent production decisions and differentiate their product from the competition by creating its own pricing.

“raising the bar for better beer” Samuel Adams sets superior standards for quality craft beers. They insist that the world should only have the finest ingredients to make the best beer possible. They will travel the world to hand select the hops, barely, and other ingredients that go into each brew. Koch, is known for his annual hops selection trip to Bavaria. The hops farmer always would comment on when he would sniff of the hops is what drives him for success. In order to ensure that drinkers enjoy the freshness of Samuel Adams beer, the way the brewers intended. Koch would create an all-natural way of producing his beer. Everything being fresh, within date of expiration with no preservatives.

According to Boston Beer Portfolio (1997) showing that Boston Lager and Seasonals have grown by 5% and 10% respectively since 1996. Moreover, if we take a look at Exhibit 7 showing men preferences over regular beer we will see that 45% of weekly servings are SAM (Boston Beer Product). People may rely on their past experience of drinking regular beer by BBC and take a chance to try light beer by the same company, switching from Bud and Amstel to Lightship.

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.

| Weaknesses * Many consumers consider the taste to “watered down”. * Challenge of expanding internationally due to the stigma of an American beer.

New Belgium Brewing strives to reduce it’s impact on the environment. NBB invested in a wind turbine, making it the first fully wind powered brewery in the United States. NBB has also incorporated a steam condenser that captures and reuses hot

NBB try to reduce negative impact on environment by using cost-efficient energy-saving alternatives. NBB invests in a wind turbine, making it the first fully wind powered brewery in the United States. NBB has also used a steam condenser that captures and reuses hot water used for boiling barley and hops in the production process to start the next brew. The steam is redirected to heat the floor tiles and de-ice the loading docks in cold weather. NBB also purchased an energy efficient brew kettle that

Competitive brewers will introduce newer styles of beers to meet beer drinkers’ new preferences, more specifically lighter beers. However, both styles will be kept under the same brand

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).