The Business of Beer - Coursework Example

The Business of Beer Table of Contents Introduction 2 The Top Breweries 3 The Success of Samuel Adams 5 The Role of Consumers' Taste 6 Works Cited Introduction Beer might possibly be one of the things that we don't mind delving into history about. For most of us in the legal age, it is a quite familiar presence. We know about it, we see it, we drink it and we like it. In ancient Egypt, beer was a staple drink both for adults and children, as well as rich and poor alike. In present Japan, it is the most popular alcoholic drink, even threatening the sales of the famous, local rice wine-sake. Different cultures also used a variety of grains as an ingredient in manufacturing their beer: cassava in Africa, persimmon in North America, corn in South America, wheat in China, rye in Russia, barley in Egypt (Raley, 1998). It must be stated then, that beer has a prominent place both in history and the present culture. Given its popularity and significance in society, it was only a matter of time before the profit-driven human being made a business out of this widespread drink. According to Wikipedia, the first breweries in history were actually the brewers' homes, specifically their kitchens.1 When brewing became industrialized, breweries were built as a different construction from the house. The brewery, Weihenstephan (in Germany) is believed to be the longest-standing brewery. While in Manhattan, Adrian Block and Hans Christiansen were the ones who established the first brewery in the New World. The year was 1612. The Top Breweries Today, there is a long list of the current top breweries of beer. The Webtender index cites the following in its top 5: Aldaris, Anheuser-Busch Companies Inc. (brewer of Budweiser, Michelob and Busch beers), UK's Aston Manor brewery, BO's Brewery and Bistro and Brewerania. The success of beer companies in the U.S. shows how the country is a favorable market for the beer industry. Paul Gatza, director of Brewers Association, states: "The craft beer segment has grown steadily over the past ten years, but in 2004 it showed its biggest increase since 1996. The strong growth in craft beer sales shows American consumers' continuing interest in flavorful American beers." Below is the table2 of the Top 10 craft brewers in the United States: We can see the Boston Beer Co leading the pack of the top breweries. Headed by Jim Coch, the Boston Beer Company is the award-winning brewer of the popular Samuel Adams Lager among its many styles of beer. The Success of Samuel Adams The company's interactive annual report in 2003 gave us a preview of the tactics used by a powerful beer brewery to further solidify its place in the industry. First, it is important to establish what kind of beer does the company specialize in. In the case of the Boston Beer Co, the answer is Better Beer. Simply put, the Better Beer category is defined as the opposite of the regular, mass-produced beer. We can identify Better Beer by its contrast from the rest of the market-usually it is imported, highly advertised and more expensive. The Boston Beer Co aims to lock the top position in this product category. Innovation, commitment and meticulous evaluation have paved the way to success of the company. The company put fervent focus on its products and its marketability. Its flagship brand, Samuel Adams Boston Lager and Sam Adams Light are the company's standards, already guaranteed to appeal to the consumers because of its reputation and having passed the test of time. Then like a special treat, the company also came up with its "Limited Edition Beers", this includes Samuel Adams Chocolate Bock, Samuel Adams Triple Bock and Samuel Adams Utopias. These products were sold at a higher price due to its "in short supply" appeal. These strategies, along with venturing to other innovations (i.e. Twisted Tea), have helped the Boston Beer Co guarantee its place in the Better Beer competition. Having established its standard products (Samuel Adams Boston Lager and Sam Adams Light), the company is now assured that it has a safe bet in the game. This is due to the fact that the consumers are in turn assured of the quality of a beer that they can trust. After the company has instituted itself as a trusted and excellent brewery, it became an appealing idea to try its hand next on being a pioneering and inventive one-hence, the new styles of beer. Basically, the company took a chance. Every novelty has an equal chance of success as well as failure. But the company carried out this chancy move admirably. It carefully tested and evaluated the quality of the new product, then went ahead to put in the market with confidence. Instead of introducing the new product with "Try this new product, you might like it or you might not", the company posed its merchandise as "something limited, so come now and grab it". The Role of Consumer's Taste Of course, the success of the company cannot rely on product quality and advertisement alone. Its distributing and marketing partners also play an important role. Breweries are not only fighting over the consumers but also for the distributors that will make their products available to the consumers. Of course, no matter how profitable a business is, eventually it will come across obstacles. 2003 posed problems such as the dwindling economy and war for the industry. Sales decreased and the Boston Beer Co had to call on its advertising prowess to again boost the sales. In the end, the industry's safest bet is to conform to the consumers' taste. An example would be the article that appeared in April 29, 2005 in Realbeer.com. London's Datamonitor performed the research about how women are contributing to the improvement of beer sales. According to Nicci Pugh, a consumer analyst, ""The shift in an increasing number of women drinking beer is not solely representative of consumer tastes but also of a change in lifestyles, with the number of affluent single women increasing." This only shows how essential it is for the companies to mold its products to the shape of the consumer's taste. It is easy to notice that women are not only helping the beer industry by being consumers of it, but also by being promoters of it. Beer advertisements and campaigns usually include attractive, female models or spokesperson. This has been clearly an effective idea, since it appeals to the male majority of beer consumers. What appeals to the consumer, the business, provides. The success of light beer is a major example. America's fascination with weight loss has caused beer drinkers to search for alcoholic drinks that have less calories and carbs. Because of this, the beer industries promptly acted to cater to its consumer's needs. But even this catering and conforming does not guarantee the best sales. Beer is beginning to see some competition, not only from other beers, but also by the fast growing industry of wines. Despite these barriers and competition, it cannot be denied that the beer market in the U.S. continues to be a busy one as the table3 below shows. TABLE: Production, Supply, and Demand in the Top Six Global Import Markets* (based on dollar import values) Country Production (mn liters) Imports (mn liters) Exports (mn liters) Apparent Consumption (mn liters) Population (000s) Per Capita Consumption (Liters) United States* 23,390.9 2,537.7 287.1 25,641.5 276,555 92.7 United Kingdom 5,667.2 647.7 319.4 5,906.4 59,591 99.1 Italy 1,259.2 443.7 68.9 1,634.0 57,875 28.2 France 1,811.7 480.2 229.0 2,062.9 59,344 34.7 Canada* 2,391.7 167.8 438.1 2,121.3 30,807 68.8 Spain 2,760.0 360.8 75.2 3,045.6 39,527 77.0 This table promptly shows that the beer industry, in the U.S. or globally, is at best a stable industry. The Boston Beer Co is not only a success in itself, but is also an asset of the macro-economic view of the beer industry of the States. The U.S. has sealed a very large part of the production and distribution of beer, and this allows the respective breweries to concentrate on its quality and sales improvement. With a company like the Boston Beer, who is enjoying one of the top slots in the leading U.S. beer breweries, the only issues to worry about at this point is its competition with other Better Beer brands and the wine industry. It seems that the company, with its mainstream and all-American product Samuel Adams Boston Lager, capitalized on its most impressive asset. It is not the innovation, the advertising or the marketing, but rather the successful capturing of the Americans' taste and trust. And if the company continually commits itself to this project, then their company's value statement holds true: "We are The Boston Beer Company. We make the Best Beer in America." Works Cited Brewers Association. "Top 50 American Breweries Reflect the Diversity of American Beer". citybrewery.com. 14 Mar 2005. 17 Jun 2006.http://www.citybrewery.com/images/ top50.pdf Kunze, Wolfgang. "Brewery". Wikipedia. 10 Jun 2006. 17 Jun 2006. Raley, Linda. "Beer History". Beerhistory.com 1998. Texas Tech University. 17 Jun 2006. http://www.beerhistory.com/library/holdings/raley_timetable.shtml Samuel Adams, "2003 Annual Report". Mobular.net. 2003. 17 Jun 2006. http://ccbn.mobular.net/ccbn/7/570/619/ USDA Foreign Agricultural Service. "Prospects in The Global Beer Market". Dec 2004. 17 Jun 2006. http://www.fas.usda.gov/agx/ISMG/ISMGProspectsintheGlobalMarket 012004.doc Webtender, The. "Top Beer Breweries". 17 Jun 2006. http://www.webtender.com/index/ Beer/Breweries Read More