Chase Bonner Tristan Dickinson Eric Martin Riley Peterson Christian Walker Competition in the Craft Beer Industry in 2016 1. Conduct a PESTEL analysis of the Macro-environment and summarize the collective impacts of PESTEL The PESTEL model measures a company's political, environmental, sociocultural, technological, environmental, and legal circumstances of continuing operations. For a craft beer or microbrewery company, the company's political environment can present limitations including the determination of its sales and distributing strategies. For example, a brewery known to use a two-tier system, is regulated by politicians to be exempt from being required to distribute through wholesalers. Those wholesalers are relied on by breweries to distribute to retailers, and eventually to the consumer in a three-tier system. However, in a two-tier system, breweries are allowed to directly sell their beer to consumers on site, which additionally improves their ease of exposing themselves to local restaurants and festivals. Federal agencies like the Alcohol and Tobacco Tax and Trade (TTB) enforce the brewery’s products to pass through an approval process for their labels. This lengthens the process of getting the product on the shelf and increases the overall cost of selling, which is detrimental to a micro-company.
The strongest impact that the craft beer boom has is on the economic factors. To sustain a profitable business as a small company with such major competitors, the company must draw a sizable demand in their market. In fact, between the years of 2011 and 2016, the U.S.craft beer industry more than doubled its demand from 11.5 million to 24.5 million barrels of beer produced per year. It was also reported that microbreweries in particular went from 1.5 million barrels produced per year to 4 million barrels between 2011 and 2016. The beer market proves to be impactful as well, reporting a total economic impact of approximately 1.5% of U.S. GDP in 2015. Additionally, the craft beer industry tends to perform better internationally rather than domestically in the U.S. where beer production has declined while global market production of beer has inclined since 2008. The rapid growth of the craft beer industry particularly shows as they have taken over 50% of the top 10 list of the largest breweries in the country. Sociocultural elements of operating a craft beer brewery play a major role of achieving success in its industry. These elements give the craft beer companies an intangible asset over the larger companies. Some consumers are proven to choose a beer brewed from a microbrewery over a largely produced domestic beer because of certain cultural norms and taste preferences. Additionally, certain cultures have created holidays and traditions such as Oktoberfest and St. Patricks Day that promote drinking different styles of beer. The craft beer companies use this advantage to operate in its own niche.
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- Spring '12
- Brewing, Brewery, craft beer industry