Global Brewing Industry Has Taken

Global brewing industry has taken a significant hit over the last 20 years as a result of the entrance of new players in the field. Product diversification, with new specialty microbrews becoming exceedingly popular has taken some previously loyal buyers from the mass market that held a tight hold on sales for many years. (Goldberg, 2000, p.1) ("Sultan of Suds' Stock," 2005, p. D6)

The major story in American brewing from 1933 into the early 1980s was the ever-decreasing number of brewers, and the ever-increasing size of the giants who remained. In 1911, the three largest brewers produced 7 per cent of the country's beer; in 1914 this had increased to 14 per cent; in 1971 they held a 52.7 per cent market share. By 1978 the top eleven companies sold 91 per cent of the beer. By 1996 Anheuser-Busch had so surpassed all rivals that it looked uncatchable for the foreseeable future and destined to remain the world's largest brewer...In the mid-1980s a trend developed which is revolutionary and has dominated the consciousness of the public for a decade or more.... This is the trend to very small (micro) breweries and very small breweries that retail the beer on the premises (brew pubs). (Ronnenberg, 1998, p. 202-209)

(Ronnenberg, 1998, p. 202) the answer for many was to further invest in global markets, some held by traditional regional small firms or industry giants and some new to the beer production game. (Ali, 2004, p.40) Internationally, the leaders are now in a global competition to stay in the lead, with mergers and market share dominance the goal of all involved. (Ali, 2004, p.40) ("International Brewing Giants Prepare," 2006, p. 9)the industry will be analyzed utilizing Porter's five forces model to determine the present state of the market and to provide a view of the potential growth of the future, recognized industry leaders being InBev, Anheuser-Busch, SAB-Miller and Heineken.

Threat of New Entrants:

The global beer market is a numbers game with relatively high cost production, ease of only small market players to enter the market. In the domestic beer market the threat of small companies entering the game is greater as the investment in production is intense for large scale producers such as the four leaders mentioned above. For this reason the four leaders have been very active in seeking to partner with and acquire small international markets, (Ali, 2004, p.40) ("International Brewing Giants Prepare," 2006, p. 9) with a great deal of the activity taking place in the African countries, as well as Australia. ("International Brewing Giants Prepare," 2006, p. 9) Though propriety is of high value in the global brewing market, as individual beers have specified and long standing formulas with keeps newcomers out, as beer tastes become more refined and the market grows internationally smaller firms are in high demand, this has created a need for the giants to diversify and create signature formulas, that are guised to meet the micro-brew demand. ("Bank Shares Surge amid," 2006, p. 109) Another tactic currently being used is buying in to smaller firms that have well established formulas in the micro-market. (Peron & Allen, 1988, p. 403) (Benson-Armer, Leibowitz & Ramachandran, 1999, p. 3) This trend increases working capital requirements though it keeps the big guys on top. The distribution of top brands is well established in the global brewing industry, but new markets are constantly being sought to counter competition a retaliatory tactic.

Suppliers:

As beer is produced from mostly raw agricultural supplies the industry is relatively dependant upon suppliers, as apposed to having suppliers dependant upon them. Though the quantity of raw materials procured by brewers does shift this burden slightly and there are also specific ingredients such as hops that are produced almost exclusively for the brewing industry, again a balance in the supplier market. (Benson-Armer, Leibowitz & Ramachandran, 1999, p. 3) (Merrett, 1998, p. 238) the larger companies seem to have an endless level of access to labor and capital, creating a stable situation, as they often seek marginalized areas with easy access to supplies that are otherwise labor rich, but job poor. (Merrett, 1998, p. 238)

Buyers:

Buyers are significant only in that, buyers for beer are in every corner of every market, tough they play a much more significant role in cutting into mass market sales by substituting with products perceived as higher quality. For most buyers of beer, other than those who have a problem beer is a luxury item that does not constitute a large portion of their total purchases, such as the case would be with fuel, this is one reason why price does not always determine buyer choice. In the global beer market the diversification of products and the micro-brew/specialty brew trend has create a situation where buyers see their beer choice as an image choice. In a sense it has become un-cool to buy major brand beer, unless as Goldberg puts it you are somehow making a statement against the micro-trend. (Goldberg, 2000, p.1) This has driven beer sales, internationally as some of the major international markets consider the big guys, still as novelty imported products.

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