Stoney Ginger Beer Market 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

Boston Beer Company (BBC) has enjoyed much success with their craft beers with Samuel Adams as their main focus. Being the leader of this segment, overtopping five of their competitors combined (Exhibit 1), the company now must decide how to take advantage of the light beer market. Boston Lightship, their current light beer, had been a small contributor in BBC’s product line. Currently, it is facing dwindling sales with product volumes down from 12 000 cases per month to 3000 cases per month.

Capital Structure. Boston Beer Company is financed almost entirely by shareholder’s equity. The company only had one note payable which was set in June 2012. The note payable is a grant to improve road traffic of the company’s Pennsylvania Brewery. As of December 27, 2014, the total debt, including notes payable, current portion of long-term debt, and long-term debt, was $583,000. According to the company’s balance sheet, as of the end of fiscal year 2014, there were 13,069,730 shares of outstanding common stock, and the price of the stock was $295.74. Thus, the market value of shareholder’s equity was $3,865,241,950 (Boston Beer Co. Inc. and YCharts). The capital structure of Boston Beer is 0.015% debt and 99.985% equity.

The American company Anheuser-Bush (AB) cannot market its beer using their trademark name Budweiser in every country around the world. This is due to the fact that there is an European brewing company that uses the same trademark.

To this date Boston beer company main focus is to expand the Angry Orchard hard cider brand. While continually offering the highest quality products to the U.S. consumer. Due to Boston Beer’s competitive advantage over the other Hard Cider company’s. It should expand it Angry Orchard market division and develop a more west coast/European market base.

The Boston Beer Company, Inc., founded in 1984, is a leading brewer in United States, offering wide variety of high quality full-flavored, handcraftedbeers. It is distinctive due to the time-honored recipe of brewing and authentic, consistent quality of alcoholic beverages. Samuel Adams Boston Lager is the pride of BBC, regular handcrafted beer “stands for quality, inner self-worth, authenticity, and unique New England or Yankee toughness” ( Martin Roper, Chief Operating Officer). Unfortunately, the company experienced the failure of conquering light beer segment

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.

Antigua already had a successful brewery that produced Tigua beer, a popular brand in Antigua and throughout the eastern Caribbean. In 2000, the Antiguan brewery had negotiated a 15-year income tax holiday with the government of Antigua on income earned from sales of Tigua beer. The combination of the central location of Antigua in the eastern Caribbean, the success of the Tigua beer line, and the tax concession on Tigua beer made Antigua a good choice for Gera International; it purchased 75% of the Antiguan brewery, Caribbean Brewers Inc., in 2005. The remaining 25% of the common shares of Caribbean Brewers remained held by senior management and other employees. Caribbean Brewers is one of the many subsidiaries of varying sizes under Gera International’s control. The production facilities of Caribbean Brewers were expanded in 2008, thereby effectively doubling the productive capacity. This expansion was funded through a 10-year amortized loan from Gera International at a fixed interest rate of 10%. All of the production of Gera beer for the eastern Caribbean region was transferred to Caribbean Brewers after the plant expansion. The resulting production figures for Caribbean Brewers are provided in Figure 1.

Boston Beer Company should then conduct regional market studies to determine potential flavors for each specific region based off existing local craft breweries and popular regional flavor combinations. Each smaller market study should be conducted by local consulting firms who already have an understanding of the demographics and culture of the region they are studying. These studies should be

Several attempts have been made by Boston Beer Company to continue on a growth streak but not all attempts have been successful. The main goals for Boston Beer Company are to increase revenue and continue growing in the industry. Boston Beer Company has had trouble growing as barriers of entry are low and competition is high. Even though the market has seen a slight upturn, however Boston Beer’s founder Jim Koch elaborates on the company’s dissatisfaction, “We are disappointed with our depletion trends in 2016, which have remained weak so far in 2017. These trends are affected by the general softening of the craft-beer category and cider category and a more challenging retail environment with a lot of new options for our drinkers”. (https://www.fool.com/investing/2017/02/22/boston-beer-finds-growth-the-hard-way.aspx)

Boston Beer, in response to consumers’ preference changes to more flavorful and bitter tasting brews, was founded in 1894. Boston Beer implements a “quality at any cost” strategy with a strong emphasis on product differentiation and implementing quality ingredients into its products. For instance, Boston Beer was the first company to employ a stamped freshness date on its bottles and ingredients are imported from around the world. Additionally, Boston Beer relies heavily on contract brewing to gain competitive advantages. Boston Beer’s contract brewing strategy results in lower overhead and transportation costs, as well as

House of Fraser was founded in 1891 by James Arthur in Glasgow. Originally a drapery shop, the store quickly expanded and by the end of 1891, the entire Fraser family was investing in the company. At this point, the store was renamed to Frasers & Sons. Over time, the store expanded from selling draperies to selling clothing, shoes and other department store apparel.

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,

The situation can even explode for Export Brands International, as large beers conglomerates with tremendous power, are targeting the same segment and are creating similar beers. We have the real example of Anheuser-Busch new Bud Light Lime which was selling extremely well in the United States attacking Corona position and following the traces of the

Boston Beer Company (SAM) is a brewery in Massachusetts most commonly known for its Samuel Adams line of “craft” beers. The Samuel Adams line of beer was introduced in 1985. Since then the company has grown to do over 580 million dollars in revenue each year. 580 million is a very small piece of the food and beverage industry but the amount of shareholder wealth they are providing is impressive. Boston Beer Company has been named one of the top publically traded businesses to watch in 2013 by Forbes.