The Boston Beer Company : An Overview

     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.

“raising the bar for better beer” Samuel Adams sets superior standards for quality craft beers. They insist that the world should only have the finest ingredients to make the best beer possible. They will travel the world to hand select the hops, barely, and other ingredients that go into each brew. Koch, is known for his annual hops selection trip to Bavaria. The hops farmer always would comment on when he would sniff of the hops is what drives him for success. In order to ensure that drinkers enjoy the freshness of Samuel Adams beer, the way the brewers intended. Koch would create an all-natural way of producing his beer. Everything being fresh, within date of expiration with no preservatives.

Coors needed to find a way to solve their problem and get back to performing at the top of their industry. They were a leader in the overall cost leadership strategy, which means that they were minimizing their costs to produce their product ( ). They would do things such as grow their own ingredients for the beer and process it themselves as a way to minimize their cost and overhead. Coors also had a different fermentation process that allowed them to save money and not have to buy different substances to add to their beer. Another way they reduced some of their cost was by not pasteurizing their beer (Adolf Coors in the Brewing Industry). It did have to be refrigerated so the use of energy was the alternative. It did not save much money, but Coors was finding different ways to reduce costs and ultimately be more profitable than its competitors, especially in the west region of the United States. It had a huge plant that was continuing to use most of the beer that was being produced. Coors was in control until much of their competition began to also expand west.

The next project was bottling Gordon Biersch signature beer and retailing it. This had three biggest challenges: this project was entirely Gordon’s baby and demanded time and attention; secondly the freshness of the bottled beer versus the freshly brewed was an issue for which they decided the beer would have a shelf life no longer than three months. Thirdly and the most exciting challenge was the head-to-head competition with other microbreweries and premium beers. Despite the tough competitive environment, Gordon Biersch aimed to achieve 11% of the market in three years (by 1996). This retail venture required huge investment, thus they decided to start small to prove to the investors that they could pull it off.

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

In order to stay on top of the industry, The Boston Beer Company needs to find new, innovative ways of being the most appealing craft beer available to the average consumer. While The Boston Beer Company offers many different varieties of seasonal beer, they should begin to shift their focus to year-round specialty beers, such as a line of regional flavors based on their consumer’s regional taste preferences.

The Boston Beer Company and Samuel Adams have both had a long history. Since the 1870s, six generations of the Koch family have been involved with beer. In the early 1980s, the seventh generations almost turned his back on the family business. After graduating from graduate school, Jim Koch wanted to stray always for the family business and seek a career in management consulting. After a short time in the consulting business, Koch decided that he just could not ignore his destiny to create a new, different beer. In 1984, Koch was on the search for a “better beer”. The only options at the time on the market were pale lagers from mass producers (Company), Koch decided there needed to be a change. In April 1985, Samuel Adams made in bar

The New Belgium Brewery Company divides the importance of profitability and social responsibility to become one of the largest “craft breweries” in the nation. The New Belgium Brewery re-discovered the art of creating an experience matched by too few in the craft beer industry. I, along with many others, have taken vacations to Denver, Colorado and always seem to find myself among the large groups of tourists that visit the famous Ft. Collins, New Belgium Brewery. The core values of the New Belgium Brewery are what drive the innovative streak that has quickly turned this uncommon brew into a household brand customers enjoy daily. In addition, the New Belgium Brewery considers their mission in the craft brew sector to be a decision of purpose

Samuel Adams has long been one of America’s most popular beer companies. The Boston Beer company prides itself on great tasting beer for the consumer, and profitable growth for the company. Although Samuel Adams beer is a popular beer in New England, it only holds just over 1% of the market share of the beer industry. Overwhelmed by popular brews such as Bud, Coors and Corona, Samuel Adams struggles to gain market share. Even with their low market share, they are still a profitable business. Their mission statement reads:

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

• Over saturation of companies claiming to produce “craft beer” “The current exuberance surrounding craft beer is creating a bubble of expansion that will pop and leave behind losers to be picked up on the cheap” (Mount, 2015). • Not fully incorporating green technology into the breweries. (Landi, 2009). External

Current overall strategy. Over the years the Boston Beer Company focused on producing it products as they have in the past by using a time honored traditions of four-vessel brewing process. They use nothing but the best ingredient that they can buy. Brewing the best quality beer remains their focus. The recipe remains the same as when the company started producing its flagship brand, Samuel Adams Boston lager in the 1800s. They still produce beverages that are full flavored, complex, and consistent quality their customer’s desire. They currently focus on promoting the Samuel Adams product line more so than the other brands. They create and offer a variety of traditional and innovative beers and ciders through many product lines. Samuel Adams offers over 30 distinctive styles of beers. Boston Beer Company’s products are considered to be in the Better Beer category. Being in the Better Beer category means it is standard for the products to be more pricy, better quality, and have a better image and taste than other domestic beers. The company is primarily centralized in the United States where approximately ninety six percent of its products are sold. Samuel Adams is considered to be one of the largest brands in the Better Beer category. The Boston Beer Company sells its products to independent beer distributors who then supply the beer to retailers (The Boston Beer Company, Inc., 2014).

Volume decreased for the first time in over twenty years in 1975 by four percent, during that same time Coors started to push out further in an attempt to become a national brand. 1985 marked a major year for the company as it set records in volume sold and revenues from the brewing division. Between 1975 and 1985 there were major changes in the company that eventually led to the company possibly opening its second brewing facility in history in Virginia. Through these years there were many new strategies implemented to foster this growth. In this paper I will diagnose key decisions, analyze potential solutions and show the actions needed to achieve the suggested changes.

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.