Chief Economic Traits of the Beer Industry

3467 Words Apr 4th, 2008 14 Pages
Industry & Competitive Analysis CHIEF ECONOMIC TRAITS OF THE BEER INDUSTRY The market size of the beer industry is incredible. The wholesale volume in the beer industry is approxiametly $13.7 billion. The industry employes almost 40,000 people. The average worker is paid about $18.27 an hour. As you can see, this is a very large industry which provides many jobs to the american workforce. The market consists of many competitors, some being very large and some operating on a very small scale. The competitive rivalry is broken up into three segments, Natiional, Regional , and Microbrewers. National competitors have a wide market coverage and generally a large company. Regional competitors are smaller than National in the fact that they only …show more content…
ex. Light beer, Amber beer, Low Alcohol, And Malt Liquor. Imports are perceived to be better quality: when in fact, they are really not. Because of this perception, Import beer costs more than domestic beer does. Imports are differentiated by taste and packaging. Small brewers offer a superpremium product that is not very differentiated. The main differences can be attributed to the brewing process, price, and packaging. Scale economies is high among national companies due to their large size. Their ability to distribute fixed costs is easily done because of the large volume that is produced. Their is also economies of scale in product extension and brand proliferation. Regional companies have moderate economies of scale. Regionals do not produce as much as larger natioanal companies but, they can still spread some of there costs over their moderate volumes. Local brewers have low economies of scale. Production is so small that it is very difficult to distribute costs. A local brewer cannot spread the cost of advertising over their product without having to raise the price of their product considerably. Capacity utilization in the U.S. Beer industry is between 75% and 85%. The beer industry is suffering from overcapacity. Despite this, a few companies are still expanding while others are closing down some operations. Because of flat sales, their is no need to overproduce. Industry
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