Corona Beer Case Study Essay

• The demand of American beer has been increased in Europe, Asia and South America.

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

     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

Boston Beer’s strategy is primarily focused on growth through differentiation. The sources of its competitive advantage can be classified as a company that provides high quality beer with unique flavors, a market driven approach, and a very efficient contract brewing strategy.

Per capita beer consumption in the country had been stable for many years. In order to find new opportunities

Political –Governments tend to exercise significant control over beer as it contains alcohol which has caused many problems in society and has addicted people. This attention from the government will affect Heineken in sale volume in the market. Many governments have imposed heavy taxes on liquor and beer imports, and with globalisation many brewers are looking for new markets where they can gain maximal profits. This proves to be a threat for Heineken. Heineken must conduct thorough research on countries policies on alcohol such as drinking in public, alcohol contents in drinks, legal drinking ages and must strategically plan their integration into these markets based on the research.

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.

iii. Import beer companies: These companies include Beck’s(Germany), Heineken (Holland) and Corona (Mexico). They control about 12% of the region’s market. However, these companies are seen to operate at disadvantage due to higher shipping costs, weaker distribution networks and an inability to control product freshness

Corona had a success of almost one decade in the Japanese market also due to the clear and structured partnership between Modelo, Export Brands International and

As the world’s largest brewer, AB Inbev has the ability to compete in new and foreign markets as a strong threat. Due to their enormous capital and expansion-based strategy, they can enter any market as a challenger and shutdown competition to become the leading brewer in this market. As an aggregated note we can also see this in domestic or already dominated markets because due to economics of scale they can achieve differentiated products at a low cost.

Although sales of premium brands have fallen in a steady response to the growing popularity of the craft beer. The industry revenue has been stable over the past 5 years. As a result, from 2011 to 2016 the industry revenue is expected an increase and growth annually at 6.7 percent over the five years,with a total of $39.5 billion . (IBISWorld iExpert) In the long-term, these numbers are expected that grow 0.9 percent annually within the next five years. The potential growth will be seen in the traditional and premium beer sector. As a response, the giant companies in the industry Anheuser-Busch InBev and MillerCoors look forward into the merges and acquisitions as a strategy to maintain market dominance. The strategy is based on the

The right international strategy for Grolsch going forward is a transnational strategy, though there are strong elements pushing this toward a global strategy. In reviewing strategy within the beer industry, either generally or through frameworks (see exhibits), it appears the optimal path currently involves both multi-domestic elements and global

Despite the dominance of Carlsberg, in its annual report BGD could lay claim to being the largest Scandinavian beer exporter. This was because Carlsberg placed emphasis on licensing agreements or local production for its foreign markets, while BGD’s strategy was export led: ‘Eighty-three out of every hundred bottles of beer that we produce are sold in foreign markets.’ By 1995 the percentage of export sales by region of the world was as follows: western Europe 63 per cent, the Americas 10 per cent, eastern Europe 22 per cent, others 5 per cent. The development of BGD’s operations in some of these markets is now reviewed.

When looking at the economic aspects affecting the industry and Diageo the main concern is the market saturation reached in many of the developed economies worldwide. With demand remaining constant and competition increasing it is important for firms to identify new markets to invest in, with particular focus placed on Emerging markets. Another important development is the growth patterns in the alcoholic beverage market with the demand for beer increasing by 2.7% with particularly strong growth in the premium brands market. In contrast there has been a decline in demand for wine and spirits which are the industries that Diageo has a large market share. There has also been a recent reduction in operating profit of Diageo in Europe, which can largely be explained by the higher taxes imposed by governments who are striving to reduce alcohol consumption.

SWOT analysis basically entails identifying and outlining the organization’s strong attributes that are helpful to achieving the objectives(strengths); weak attributes of the organization that are harmful to achieving its objectives (weaknesses); external opportune conditions that are helpful to achieving the organization’s objectives (Opportunities); external conditions that are harmful to achieving the organizations objectives(threats). Basically the organization identifies and strategizes on how to use each strength, stop each weakness, exploit each opportunity and defend itself against each threat in order to maximally achieve their objectives.