The Potential Market Opportunities For Lagunitas Brewing Company

“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

The purpose of this research paper is to analyze Sam Adams and the global craft beer market. I will apply microeconomic models to analyze the supply and demand conditions for Sam Adams, its price elasticity of demand for products, cost of production and the overall market. There will be recommendations to maximize future profits and sustain success for Sam Adams. In this paper I will also analyze the craft beer industry and recommend actions for better management of supply and demand, improving the cost of production and the different barriers of entry that Sam Adams can utilize to impact its future in the craft beer industry. Applying the concepts of variable and fixed costs, I will make recommendations for its output decisions and profitability that will help them succeed in a monopolistically competitive market structure. In the conclusion of this paper I will make recommendations to manage future production and sustain its success, as well as evaluate the business structure and effective decision-making strategies. The craft beer industry is a monopolistic competition because it has the ability to allow many firms to produce similar good or services, but it at the same time allows each firm to make independent production decisions and differentiate their product from the competition by creating its own pricing.

A price estimate of a 6-pack of bottle Coors beer today is $5.59, and using the Consumer Price Index for 1990 it was determined that a 6-pack of bottle Coors cost approximately $3.43 (see Appendix A-2). Using Study F Cost of Goods Sold is 77.1% of sales. The contribution margin was then calculated as 22.9%. Fixed costs summed up to be about $250,000 including salaries, equipment & land depreciation, utilities, insurance, taxes, maintenance and janitorial services, and other miscellaneous expenses. Break-even Sales computed from the aforementioned figures turns out to be $1,211,790.39 (see Appendix A-4). Variable Costs per unit were determined using the contribution margin and price variables, and the result came to $2.65 (see Appendix A-4). Break-even quantity then was calculated at around 320,513 units, or gallons in 1990 (see Appendix A-5). A 6-pack of bottle beers holds approximately 72 fluid ounces, this makes up about 0.5625 gallons resulting in a price of roughly $5.35 per gallon (see Appendix A-6). Projected demand of beer in 1990 in South Delaware is about 5,400,397 (see Appendix A-1) and the Coors estimated market share of this demand according to Study C is 8.9% which computes to 480,635 gallons, therefore projected sales of Coors in the 2 county South Delaware distribution area is around $2,573,404.10 in 1990 (see Appendix A-7). The break-even market share of Coors in the 2 county distribution area of

The Coors brewing industry had many ups and downs throughout its history dating back to its start in 1873 (Adolf Coors in the Brewing Industry). There were times of great growth and expansion that would get interrupted by numerous different setbacks. Some were small and some led to extreme changes. It sounds similar to any type of business. However, the different generations of the Coors family seemed to find ways to usually compete with their competitors and maintain the success of the company. It was also very challenging. Different changes had to be made for each new obstacle that came their way. Over a century has gone by since its start in Golden, Colorado, and the business seems to still be available in stores around the world

The Coors brewing industry had many ups and downs throughout its history dating back to its start in 1873 (Adolf Coors in the Brewing Industry). There were times of great growth and expansion that would get interrupted by numerous setbacks. Some were small and some led to extreme changes. It sounds similar to any type of business. However, the different generations of the Coors family seemed to find ways to usually compete with their competitors and maintain the success of the company. It was also very challenging. Different changes had to be made for each new obstacle that came their way. Over a century has gone by since its start in Golden, Colorado, and the business seems to still be available in stores around the world (Adolf Coors in the Brewing Industry).

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 New Belgium Brewing Company (NBB) started out as a small beer brewing concept in 1991, brewing beers out of their basement. Once they determined they had a product that could be marketable, they opened their first brewery in Ft. Collins Colorado and have been growing ever since, becoming the third-largest craft brewer in the country (New Belgium Brewing Company, 2014). But just as any business there is always competition and consumer opinion which allows a business to continue to develop and grow within their market. Competition in the microbrew arena has grown over the last decade and according to the Boulder, Colorado-based Brewers Association, the number of microbreweries has surged in the past five years 73% nationally (Olson, 2014). For the New Belgium Brewing Company, they have used their competitive advantage to continue to grow their business in a market that shows heavy increases of new competition. The concept of competitive advantage is, strengths possessed by the firm or real weaknesses possessed by rival firms (Ferrell & Hartline, 2011).

This trend has continued into present day and has spurred the continued growth of the craft beer market. From 2010 to 2015 the production volume of craft beer increased from 5% to 12.8% and over 2 thousand new microbreweries entered the market (Brewers Association). Production is expanding to keep up with consumer demand. More and more beer market shares is being taken over by craft breweries. Consumers continue to put an emphasis on taste and quality over price making craft beer an obvious choice for more consumers, making them seek alternatives to traditional corporate beers.

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.

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.

The Excellent Beer and Beverage Distribution (EBBD) was advised that the Kentucky Hooch and Brewing Company (KHBC) would reveal another advancement and promoting effort that would put KHBC’s flagship beer, Kentucky Swamp Brew, in the mind of every college student in the Midwest. We are a notable provider of this brewery, as we give it to the vast majority of our retail clients. . In view of this data, and the habits gathered about college students, EBBD anticipated an increase in orders a few weeks after the advertising campaign hit. I accepted accountability of arranging and estimating all requests from

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

Marketing is how a company informs its customer base of its products or services and what to expect from the company currently and in the future. However, as much as a website and social media can help market CoffeeIcon’s business it does not seem to be effectively reaching many local and surrounding area consumers of the great products and services CoffeeIcon has to offer. In a survey conducted by our group revealed that 85% of the people had never heard of CoffeeIcon. We believe this lack of customer awareness is due to the mediums of marketing CoffeeIcon currently applies. According to surveys, websites rank 4th and social media ranks 6th compared to more conventional ways of advertising to target current and potential customers (Berland, E.). We will propose three more conventional types of advertising that will