Comparative advantage and strategy at Boston Beer Company

Strategic Business Management

Over the last few years, there has been a transformation occurring inside the bear industry. What is happening is consumer tastes have shifted away from purchasing beer that is manufactured by the large producers (i.e. Anheuser Busch and Molson Coors). Instead, there has been a focus on buying the brands that are produced by the small micro-breweries. These are producers that manufacture less than 2 million barrels per year. Since the beginning of the recession in 2008, these companies are seeing an increase in sales with this segment accounting for $7 billion in sales annually. (Toscono, 2010)

One of the more popular brands is Samuel Adams. Owned by the Boston Beer Company, Samuel Adams has a unique following of beer drinkers that prefer this lager over others. The biggest reason why is from the unique flavors that are customized for specific times of year. This is helping to give Samuel Adams that one of a kind taste, which beer drinkers are looking for. These elements have helped to make Boston Beer into the largest micro producer in the United States (manufacturing 1. 8 million barrels per year). ("Boston Beer Company," 2010) to fully understand the comparative advantages of the firm requires looking at the strengths / weaknesses and risks. Together these different elements will provide the greatest insights as to what makes Boston Beer so competitive.

What is Boston Beer (Samuel Adams) comparative advantage? What impact does this have on the strategies? How does your firm manage its strategies?

A comparative advantage is when a firm has specific areas that are giving them the ability to increase their market share with all other factors being equal. Like what was stated previously, to understand the comparative advantage requires examining the strengths / weakness in contrast to the risks. This will helps us to comprehend what factors have made the company so successful. ("Comparative Advantage," 2012)

Strengths / Weaknesses

In the case of Samuel Adams, the biggest comparative advantage that the company has is their ability offer a unique product. This is based on the firm creating specific brands that are geared towards select segments of the population. For example, Boston Beer markets a number of brands under the Samuel Adams line. In some cases, there are lower amounts of alcohol content and the beer is allowed to ferment over shorter time frames (i.e. The core family of beers). While at other times, there are higher amounts of alcohol and unique ingredients which are used to give the beer a unique taste (i.e. extreme beers). This is different from many of the micro and traditional brewers in the industry with a larger selection that is offered. ("Comparative Advantage," 2012)

The biggest weaknesses for Boston Beer are the threat of new imports and the lack of advertising / global market penetration. The American market is a major target for beer producers. This is because there is a history of consistent sales over the years. Since the 1980s, a number of foreign producers have been marketing their beer inside the U.S. This has caused the entire industry to face increasing amounts of competition. In the case of Samuel Adams, new producers could quickly enter the market with similar tastes and styles. They could then, quietly promote themselves as the cheaper alternative in comparison with micro brewers. Moreover, the firm does not have the advertising leverage to aggressively promote their products in an ever changing market. This can hurt the company's ability to reach out to consumers. (Berghoff, 2009)

Conclusion

Clearly, what makes the Boston Beer Company so competitive is their ability to market Samuel Adams to a unique demographic of consumers. At the same time, they have been able to reach out to new customers by offering them a larger selection and different tastes. In the last few years, this has allowed the firm to dominate the sector while other competitors are facing tremendous challenges. The way that this is impacting their strategies is to focus managers on adjusting with these transformations. This is from the firm monitoring what kinds of tastes customers are looking for and providing it to them. Over the course of time, this has helped Samuel Adams to redefine the beer market.