Pricing & Competition in the Beer Industry:

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Abstract: The beer industry in the United States is continually changing and therefore companies in this industry must be versatile. Their versatility comes in a variety of forms, from changing their product offering, to changing their strategic goals, and finally, recognizing opportunities and threats. This paper explores many aspects of the industry though the use of Porter's five forces model. I will analyze the internal rivalry present in the industry, any buyer or supplier power that is present, entry barriers that exist, and any substitutes and threats that face the industry. Furthermore, I will closely analyze the effect that craft brewers and microbreweries have had on the industry. It is my contention that craft brewers have…show more content…
Anheuser-Busch has been a publicly traded company since 1875 and today is still a staple of the New York Stock Exchange. Anheuser-Bush has consistently outperformed the S&P 500, as can be seen in Chart 4. Its return on equity in 2003 was 78.7% while the industry and the S&P 500 were 24.2 and 13.7 respectively.3 Anheuser-Busch outperforms the industry and the S&P 500 on many other levels as well. Anheuser-Busch currently enjoys a net income growth rate of 10.5% over the last three years while the industry lags at 7.5%. The S&P 500 experienced a negative growth rate for the last three years. Anheuser-Busch also enjoys larger profit margins than the industry and the S&P 500. Financial information not covered in this portion of this paper is provided by Valueline in the Appendix under table 3.
Anheuser-Busch obviously outperforms the industry and the S&P 500 in most facets of the market place. Its sales, currently above $16 billion, are unmatched in the industry. It has continued to be innovative in all the businesses they own, which is made apparent later in this paper. This has allowed them to grow faster than competitors and stay ahead of the pack by large margins. Anheuser-Busch is the benchmark around which this paper is built.

Porter's Five Forces Model and Market Structure
This paper focuses heavily on Porter's five forces model for evaluating the beer industry. The Porter model consists of five variables that

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