Economies of scale exist in the industry since the size of the breweries varies

Economies of scale exist in the industry since the

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requirements are very low, starting at around $100. Economies of scale exist in the industry since the size of the breweries varies a lot. Bargaining Power of Suppliers globally and in the United States is low. Ingredients use to produce craft beer are very common and easy to find. In the case of Michigan and West
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Michigan, there is actually an oversupply of hops. Breweries in the state are able to gather a wide variety of them, so farmers focus instead of the price of hops; therefore, suppliers don’t have the power to increase prices. Bargaining Power of Buyers is moderate globally and in the United States. Wholesalers and retailers have a low to moderate buying power. On the other hand, consumers possess a high buying power. With more than ten thousand craft breweries in the world, consumers have a wide variety of options. In the US there are around 5,000 of those, and about 300 in Michigan, with West Michigan having the majority of them concentrated in the area. Thus, it can be determined that there is a high buying power in West Michigan. But interestingly prices are not being bargained since the market here is dominated primarily by two breweries. Finally, Threats of Substitute Products exists. And actually, it is very high, in the entire world including Michigan and West Michigan. The main threats of the industry are non-craft beers, wine, liquor, and non-alcoholic beverages.
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References Baker, J. (2018, April 18). BA Releases 2017 Craft Brewing Growth Report. Retrieved from by-the-brewers-association Boomgaard, J. (2018, May 26). Craft brewers continue to eke out growth despite increased
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  • Winter '11
  • Woudstra
  • Brewing, Brewery, Microbrewery, tremblay-carol

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