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Global Forces and the European Brewing Industry

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Introduction

Case Study Global Forces and the European Brewing Industry Questions; 1. Using the data from the case study (and any other sources available), carry out for the European brewing industry; i. PESTEL analysis ii. A five forces analysis What do you conclude? 2. For the four breweries outlined above explain; a. How these trends will impact differently on these different companies b. The relative strengths and weaknesses of each company. 1) Introduction Refering to the case study on page 91, (Exploring Corporate Stragey, Johnson, Scholes and Whittington) an analysis has been carried out using PESTEL analysis and Porter's five forces. PESTEL Analysis PESTEL is a method of analysing the macro-environment of an organisation. It stands for political, economic, social, technological, environmental and legal. Each of these areas is explored and the data gathered is used to identify the key drivers of change. Political Recent campaign by the government to reduce drink driving and binge drinking have resulted in a decline in beer consumption. Also, the introduction of the 'No Smoking in public buildings' law would have an impact on people drinking in pubs. ...read more.

Middle

The power of the buyer With a considerable number of products on the market the end user has the power to switch product without any incurred costs. However, with the increase in 'off-trade' sales and the large supermarket chains offering big discounts and special offers to get customers through the door, the consumer could stay loyal to their brand. The power of the supplier The main suppliers for the brewing industry are for packaging (accounting for around half of non-labour costs) and raw materials such as barley, and energy. In Europe the packaging industry is dominated by international companies such as Crown for cans and Owens-Illinois for glass bottles. In 2006 these costs increased dramatically. Heineken complained of an 11% rise in their packaging costs. To change the packaging supplier could be a high risk. Packaging is crucial to the supply chain. Any disruption could be costly. The extent of rivalry With 50% of the market share being controlled by the top 10 brewing companies, as showing in the table below, competition between these companies will be high. ...read more.

Conclusion

Strenghts; > Strong brand with distinct bottle tops > Establish 1615 - stood the test of time > Good innovation with premium lager and flavoured beer > Holds the rights for the sale and distribution of the US Milller brand > Centralised production; increased efficiency Weaknesses; > Medium sized company with sales of 313m Euros in 2005. Therefore less financial power than the bigger breweries > Single production plant - If problems occur this could impact of production. InBev InBev are in a strong financial position. Recent acquisitions to enter into new growing markets have proved successful. Strenghts; > Sales in 2006 13.3bn Euro's Largest in world > No 1 or No 2 position in 20 countries > 2nd largest in China through a series of acquisitions > Well known brands; Stella Weaknesses; > Along with the acquisition came plant. There is a need to centralise the production to gain tighter control and efficiencies > Lack of innovation Scottish and Newcastle (UK) Scottish and Newcastle was acquired by Heineken in November 2009. Strenghts > Market leader in UK, France and Russia > Fourth largest brewer in Europe in terms of volume > Emphasis on innovation > Invest in growing oversee markets early Weakness; > They are closing down inefficient breweries. ...read more.

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