Economic Trends in the Beer essay

Download this essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from essay:

It is constructed, as its name indicates, on the five forces which define and characterize the competition within the industry. These forces are as follows:

The bargaining power of buyers

The bargaining power of suppliers

The threat of substitute products

The threat of new entrants

The competitive rivalry.

a) the bargaining power of buyers

At an individual level, the buyers do not have a bargaining power in the meaning that they cannot negotiate the price of a beer, nor can their consumption decision influence the company. Nevertheless, when they put up a united front and are considered a group, the bargaining power of the buyers increases significantly.

Throughout the past decades, the bargaining power of the buyers -- as a group -- has gradually increased and their needs and wants have significantly impacted the industry. The information in the previous section is evidence in this sense. For instance, the changing consumption habits have influenced the industry. Regarding the future, it is expected that the collective bargaining power of the buyers continue to increase.

b) the bargaining power of suppliers

Unlike the buyers, the power of the supplier is restricted. The industry is filled with numerous suppliers which strive to retail their commodities. This in essence means that the competition among providers in the beer industry is intense. Subsequently, in a context in which the suppliers compete against each other for market shares and contracts with beer manufacturers, their collective bargaining power is barely existent. The individual bargaining power of suppliers is generally established through a contract signed between vendor and customer, but the power of the supplier is often restricted.

c) the threat of substitute products

The threat of substitute products is the greatest challenge within the industry, with wine being the second choice after beer. As the previous section has shown, women prefer wine to a larger proportion than they prefer beer. Additionally, the past recent years have witnessed an increase in other types of beverages, such as cocktails and non-alcoholic beverages (made popular due to health concerns). In other words then, the threat of substitute products is a highly complex and strong issue within the beer and pub industry and it is expected to intensify its strength within the upcoming period.

d) the threat of new entrants

The threat of new entrants into the beer industry is relatively restricted and this is due to the large costs of entering the industry. For instance, it is estimated that a 4 million barrel brewery costs $250 million, which represents a tremendous investment, and as such an important barrier to entering the industry. Then, the industry is highly competitive and the new entrants will generally be able to compete on small, niche markets, rather than actually pose real competition. It has not been since World War II that a new entrant to the industry has managed to become a top three player within the sector (Lin).

e) the competitive rivalry

In a context in which the same industry players strive to increase their market shares and increase their sales and revenues, but in a market which continually contracts, the competitive rivalry is intense. The beer and pub industry is as such characterized by high levels of competitive rivalry, in which the economic agents are fierce in their attraction of customers. As the industry is continually subjected to change generated by the macro environment, the expectation is for the competitive rivalry to further intensify.

4. Adnams

In a modern day setting in which the beer industry is faced with decreases, Adnams Southwold is defying the patterns and is registering incremental success. The company's goal remains that of any other economic agent, namely the registration of financial revenues. The means in which the firm is attaining this objective is nevertheless different and constitutes the number one reason for their success. In other words, Adnams Southwold owns its success to the stability of its strategic approach in the means that the organization strives to attain its objectives through the multifaceted satisfaction of the needs and wants of the various stakeholder categories, such as customers, employees, business partners, governmental and non-governmental agencies and so on.

And aside from their core operations, the company expands its efforts to ensure that it is both responsible as well as supportive of the development of the communities in which it operates.

"At Adnams, we want to make sure that our impact on society is a positive one. Our company values are rooted in making great products without costing the earth. From working with local farmers and producers who supply our brewery and hotels, through to partnering with a local business to install an anaerobic digestion plant to turn brewery and food waste into biogas, we believe that doing the right thing makes great business sense" (Website of Adnams Southwold, 2011).

The strategic decision to attain steady growth and development in a sustainable manner has created delays in the registration of success. Nevertheless, it has also ensured long-term stability. Through the partnerships it has created with various local partners, Adnams Southwold is able to quickly and efficiently access the necessary resources. It also ensures that the resources are of the utmost highest quality.

Then, the numerous strategic partnerships it has constructed with various parties create a context in which the firm is able to capitalize on the expertise of its partners. It can for instance benefit from the market access of its partners and as such ensure that itself becomes better able to access and serve wider customer markets.

The feature of sustainable growth has also been attained through the massive diversification of the company operations and products. In this order of ideas, in a context in which most players in the industry sell beer exclusively, Adnams Southwold also manufactures and sells wines, spirits and other alcoholic beverages. This strategy ensures that the company would be able to couple a decrease in the demand for beer with an increase in the demand for wine. In other words, the diversification of its product palette allows the company to best respond to the threats in the macro environment and to best seize the opportunities presented by the environment.

Finally, since it constructed its success by supporting the development of the communities in which it operates, Adnams Southwold now enjoys high levels of popularity among the British business community as well as among Britich consumers. This popularity creates a favorable image and a positive public perception, which in turn generates sales through salient marketing. Ultimately then, the sustainable manner in which the company has developed and implemented its strategies, combined with the diversification of its operations, represents the key success factor and is likely to support the company in even further consolidating its competitive position.

5. Conclusions

The modern day community is facing numerous challenges to which it must quickly adapt. The examples in this sense are numerous, to include the opening of boundaries to international trade or the emergence of the informational revolution. In this context, the political or socio-cultural dimensions of life are also impacted and suffer modifications.

The beer and pub industry in the United Kingdom is dramatically influenced by the totality of the changes impacting the modern day society. The concern with this state of events is however raised by the fact that the changes materialize in a decrease in the demand for beer and pubs, and this creates not only economic problems, but also cultural ones, since the pubs are part of the British cultural heritage.

With this argument in mind, the British Beer and Pub Association urges the UK government to readdress its policies which stifle the consumption of beer. The analysis so far conducted nevertheless indicates that it is not the political field alone which generates a decease in the demand for beer. Other major contributors to this trend include the increasing health concerns, the changes in working habits or the increasing presence of women in pubs, and their general preference for other types of alcoholic beverages.

In the context as such presented, the analysis of the industry has continued with its assessment through the lenses of the five forces analysis. This has indicated that the competitive rivalry is highly intense among industry players. The barriers to entry are relatively high, but the threat of substitute products is continually increasing. And while the industry density increases, the fact that the customer base decreases implies incrementally fiercer competition.

But despite these dramatic changes and challenges, these still are some economic agents who manage to succeed. Such is the case of Adnams, who relied on diversity in order to consolidate its position. Adnams Southwold represents a model of success and a lesson for all breweries and pubs in the United Kingdom as well as outside it. Times are changing and the popularity of beer is gradually decreasing. Breweries should not blame the governmental taxes and regulations for these trends, but should observe and adapt to the macro…[continue]

Cite This Essay:

"Economic Trends In The Beer" (2011, March 10) Retrieved October 25, 2016, from

"Economic Trends In The Beer" 10 March 2011. Web.25 October. 2016. <>

"Economic Trends In The Beer", 10 March 2011, Accessed.25 October. 2016,

Other Documents Pertaining To This Topic

  • Beer & Liquor Sales Alcoholic

    We will briefly examine the history of some of these companies to analyze the reasons for their success and failure. Anheuser-Busch Anheuser-Busch is the number one beer company not only in the U.S.A. But in the world. The company was founded more than 150 years ago by a German immigrant, Adolphus Busch. Its flagship product -- Budweiser beer was introduced 120 years ago. The company has survived such traumas in its

  • Brewing Industry Beer

    Brewing Industry The beer brewing industry is an important contributor to many economies of the world including that of the U.S.A. In this paper we shall give an overview of U.S. beer industry. It will contain a brief summary of the current trends in the industry and major players, the effect of the brewing industry on the U.S. economy, external environment facing the beer industry, and the opportunities and the

  • Heineken Beer Company Beer Market

    At the same time, loans and borrowings have decreased in value from 2008 to 2009 with 14%. The decrease is explained in the note 40 to the Heineken N.V. balance sheet: the most important contribution to this is given by the repayment of some of the company's unsecured bank loans: the value of the unsecured bank loans in 2009 was 47.4% lower than in 2008. The approach that Heineken has

  • Microeconomics Economics Which Are the

    The type of configuration that would create such an industry is: having a large number of competitors in the market (with a variety of brands). ("Woolies denies existence of beer price," 2011) Hypothetically, if both firms go through with this strategy and succeeded (i.e. they drive out the remaining competition in retail), what would be a long run concern for at least one of the two firms? (Note, this is

  • International Economic Law

    Exporia's Plea Concerning Ban On Corn Beer Following the unexpected ban of Exporia's corn beer by Imporia, Exporia in this document outlines concerns regarding the action and associated implications. Exporia hereby states that Imporia erred in the imposition of the ban. This is in violation of the Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement") in general; Imporia violated Article 3.3, 5.1, and 5.2 of the SPS

  • Corona Beer Modelo Corona Beer

    Figure 2, 2009 Global beer Products Segmentation provides an analysis of the distribution of 2009 sales of beer by type. Corona is considered a Lager and is in the most crowded area of the market, making differentiation difficult. Grupo Modelo's decision to concentrate on its channel alliances and partnerships is critical for their long-term growth in such a consolidating and challenging market. In a sense Grupo Modelo has chosen

  • Brewing Forecasting Trends

    Forecasting: Kentucky Swamp Brew Forecasting demand within the brewing industry is dependent upon three basic factors: "trends, cycles, and seasonal patterns" (Elfner n.d.). Trends are defined as gradual shifts in demand that permanently affect the demand for the good or service; cycles are repetitious shifts in demand that manifest themselves in cyclical and predictable patters; and seasonal shifts are changes that occur periodically (Elfner n.d.). For example, a trend for Kentucky

Read Full Essay
Copyright 2016 . All Rights Reserved