Competition in the Craft Beer Industry in 2016 Case 05 Integrated Strategic MGMT MBA 699 September 24, 2018 General Environment 1
Political Factors Distribution regulations for direct sales, two tier and three tier systems also typically includes requirements and limitations on volumes sold to consumers. Specific product label requirements for beers approved by the Federal Drug Administration. Economic Conditions Grain price fluctuations impacted beer producer cost margins. Economic growth was 1.5 percent of the total U.S GDP. Barrels of beer produced in the United States from 2006 was 198 and 191 in 2015. Resulting in stagnant growth in jobs within beer production. Sociocultural forces Cultural considerations that increase beer consumption, for example the German tradition Oktoberfest. Health consciousness and low carb diet trends cause demand fluctuations. Technological Forces Increased utilization of automatic brewing equipment to help increase production volumes while decreasing labor costs. Contract brewing space capacity utilized to produce beer under contract for sale for private labelling. Environmental forces Barley farming and beer production are the largest consumers of water. Energy consumption significantly higher in aluminum can production compared to glass bottle manufacturing. States with recycling or reusable bottle mandates have lower environment impact causes by glass manufacturing. Legal and Regulatory Factors Affordable Care Act and changes to the Fair Labor Standards Act could result in increased labor costs for craft beer producers. Industry Environment Industry Segmentation There are four main craft beer industry market segments microbrewery, brewpub, contract brewing and regional craft breweries. Microbreweries produce less than 15,000 barrels per year. Microbreweries utilize the three-tier, two-tier and direct sale distribution channels. 2
Brew pubs double as a restaurant and brewer that produces and sell 25% of beer produced onsite.
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