Competitive Forces in the Craft Brew Industry - Page 59 TO BREW OR NOT TO BREWTHAT IS THE QUESTION AN ANALYSIS OF COMPETITIVE FORCES IN THE CRAFT BREW

Competitive Forces in the Craft Brew Industry - Page 59 TO...

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Page 59 Journal of the International Academy for Case Studies, Volume 18, Number 3, 2012 TO BREW, OR NOT TO BREW—THAT IS THE QUESTION: AN ANALYSIS OF COMPETITIVE FORCES IN THE CRAFT BREW INDUSTRY Jack Kleban, Barry University Inge Nickerson, Barry University CASE DESCRIPTION The primary subject matter of this case is a competitive analysis of the craft brewing industry in the U.S. The case is appropriate for courses in strategic management and entrepreneurship. The case has a difficulty level of three or four. The case is designed to be taught in 1 – 2 class hours. ABSTRACT This case analyzes the craft brewing industry in the U.S. It encompasses a description of what defines craft brewers, the different categories of craft breweries depending on size in the U.S. and the major competitors in the industry according to annual volume output of craft beer. Recent growth in the craft beer industry compared to the general U.S. beer industry is detailed. In addition to craft beer brewer characteristics, the case outlines market structure, competition, and business strategies of craft breweries. Also considered are branding and social media marketing and social responsibility considerations, followed by distribution, and regulation and taxation of the craft brewing segment of the beer and beverage industry . INTRODUCTION Craft breweries’ operations are small, and they are considered to be traditional and independent. Traditional in the sense that they produce a malt flagship or brew full- bodied beers which many are made from recipes taken from German or English brewing origins. The malt is high grade, the brewing process is relatively slow and the production is small scale. The main differentiating factors of craft brewers are their unique styles of brewing which can lead to enhanced flavor and taste (). The craft brewery industry in the U.S. is experiencing rapid growth. In 2008, craft breweries sold a combined 8.5 million barrels of beer, and in 2009 they sold over 9 million barrels of beer. Although the general beer sales in the U.S. experienced a decline in sales by volume of 2.7% in the first half of 2010, and sales of imported beer were down by 9.8%
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Page 60 Journal of the International Academy for Case Studies, Volume 18, Number 3, 2012 in 2009, craft breweries were able to increase their sales by volume in the U.S. by 9%. In 2006, the reported number of craft breweries in the U.S. was 1370, and in 2010, 1625 craft breweries were reported. This represents a growth of over 18% in less than five years, the highest growth rate in U.S. history since before the prohibition era (). As evidenced, craft beer production and its consumption in the U.S. is on the rise. This case provides an in-depth look at the industry and its potential for growth in the near future. We also provide information about the industry’s market structure, including competition within the sector.
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