company's core brands nationwide we estimate that major capital investment in production is necessary to maintain growth and compete with larger firms in the industry (Figures 9 and 10) Our recommendation is that the BBC should continue their investments at current breweries as well as open or acquire a new brewing facility on the west coast. This brewer will expand their reach in the west coast market which is one of the largest markets for craft beer (Figures 8, 12, and 13) Also, opening a facility on the west coast would allow for access and more cost efficient distribution into foreign markets like China or Japan. The price of a new facility is hard to pinpoint with limited information, but in 2008 the BBC acquired their Pennsylvania brewing facility for $55 million (The Boston Beer Company, Inc. Annual Report, 2014). Vertical integration is another promising opportunity for the Boston Beer Company. Growing demand because of overall industry sales growth as well as poor weather conditions has caused higher prices and crop shortages. “The 2014 crop was well below norms in quality and quantity. Further years of poor crops could cause significant price increases and might create availability risks” (The Boston Beer Company, Inc. Annual Report, 2014). Shortages and price increases will affect smaller producers like the BBC but larger firms in the industry will be largely unaffected because company owned farms supplies a substantial amount of their ingredients. In order to mitigate these risks we recommend that the Boston Beer Company vertically integrate by acquiring farmland and suppliers. Investment in the supply chain will allow the company in the long run to lower costs and have more control over the quantity and quality of their ingredients. The company has already started this process. In 2015 the company purchased an apple orchard and cidery in New York (The Boston Beer Company, Inc. Annual Report, 2014).
Recommendations SWOT For the Boston Beer Company they have the opportunities to build on the financial success they are having and the growth of craft beer in the United States along with growing demand of premium beer in the Asia-Pacific countries. With the demand of craft beer growing in the US, growing from 18% to 20% in 2013 and reportedly 2,768 craft breweries in the United States in 2013 (MarketLine, 2014). With Boston Beer already having the established market dominance they can grow on the annual brewing competition they put on. They can use this by adding the winning beer to be sold in their distribution channels. If it is successful they can add it on continuing their ability to add new craft beer products. The growing beer market in the Asia- Pacific region is an area for them to explore and proceed to get their products in. The region consists of 36 counties with nearly 3.8 billion people in the region (MarketLine, 2014). The increase in demand is driven by the improved lifestyle that allows the affordability of imported and foreign brands. The leverage Boston Beer has is its inherent brewing skills; it could aim to offer customized beers that meet the various local taste preferences of the consumers in the Asia- Pacific region.
- Spring '15
- Business, The American, The Boston Beer Company, Boston Beer Company, Boston Beer, Boston Beer Company, Inc