Craft Brewing Economic Analysis

     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 a world where large, corporate breweries rule the market, craft beer is created to please an audience that applauds the styles, techniques and flavors. Though craft beer can be purchased through several different outlets, the best place to thoroughly enjoy the entire experience of the specially made beer is in the brewery where it was made. The article titled, “In Lean Times, a Stout Dream” in The Wall Street Journal1 states that, despite the hard economic times and consequent consumer cutbacks, sales of craft beer, the industry 's fastest-growing segment, rose

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.

Strives to be the leader in micro brewing while maintaining the core values it started with and had employee buy in even before it went” 100 % employee owned in2013” (Gorski, 2013).

Earlier in this class I had put together a power point presentation to the Board of Directors of

The craft beer story is interesting because of how quickly the craft beer trend has caught on in the food service industry. The story would focus on how bars, restaurants, and grocery stores are adapting to the increased demand of craft beers. The first source for the story would be Frederique Boudouani who is the owner of Abu Nawas Beverage Company. The Abu Nawas Beverage Company is a craft beer wholesaler and sells beer from countries across the globe. The second source of the story would be the owner of Drew’s Sports Bar and Grille in Elkader, Andrew Armstrong. Armstrong would provide valuable information on how craft beer sells in small towns and insight into how bar owners decide what beverages to sell. The third source would be Zachary Ingles who works as a night manager at John’s Grocery in Iowa City. John’s Grocery has a wide selection of craft beer and Ingles regularly attends beer tasting events to help John’s decide which beer to stock. The fourth source would be an employee at an actual craft beer brewing company, Neil Blair. Blair would provide insight into how craft brewing companies operate and how the companies go about selling their

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.

The brewing industry can be characterized by Porter’s Five Forces framework. New entries to brewing have a relative ease in creating home micro-breweries, which is aided by

The craft breweries on the other hand are only specialized in beers, a famous one is the Harpoon Brewery which is located in Boston. (http://www.cnbc.com/id/39233398/page/2) , (http://www.nomorefreebeer.com/index.php/the-facts/anheuser-beer-list/)

of a microbrewery is a brewer that produces less than 10,000-15,000 barrels per year. This

Within the craft beer market, consumers have many products to chose. A product is anything offered within a market that which fulfills a want or need (Armstrong & Kotler, 2015). In 2012, over 1,750 breweries operated in the United States (U.S.), with over 1,920 the following year (Brewers,

Craft beer should not only be sold as premium beer among graduates and people with income of more than 75000 USD but also to people with moderate income.

Since 2011, the craft brewing business has exploded from 1,776 breweries to 3,739 and pumped more than $55 billion into the U.S. economy according to the Brewers Association. While the majority of micro brews create traditional American Lagers and IPAs, which are infused with carbon dioxide, some progressive, innovative brewers are taking a page from famed Irishman Arthur Guinness’ recipe book and using nitrogen to create a frothy brew.

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

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