New Demands for Beer: Feral Brewery in Australia - Research Proposal Example

? New Demands for Beer: Feral Brewery in Australia Number Email Table of Contents Executive Summary The breweries that are currently in Australia are reaching high levels of competition with the social demand for beer continuing to move further forward. The Feral Brewery is one of the breweries known in Perth, Australia. The brewery contains a variety of high quality beers that are offered by crafted recipes others don’t hold. The brewery is currently in need of expansion of the market with new tactics used to offer the beer to the larger population in the region. This report will examine the current status with breweries in Australia while defining a strategy that is required for the Feral Brewery to continue moving forward with the specialized and high quality beers that are currently a part of the market. The main approach is to combine the products and events offered by Feral with specialized segments of the market to begin gathering an alternative reputation within the market. Background Description Feral Brewing Company began in 2002 in Perth, Australia. It is recognized as one of the areas for beer that is interested in offering high quality beer that is identified by the Australian region and styles. The beer began by two friends creating a stronger taste with beers while creating recipes based on the craft of the beer. Today, the beer is continuing to expand throughout the Australian region with a variety of beers that are brewed. This includes over 12 tastes of beer offered by the brewing company and versions that have been upgraded from the past. The brewery combines the variety of beers with a brewery location for individuals to enjoy their drinking experience. The brewery restaurant offers events, such as Sunday fun day and the Oztober Fest. They have further expanded their market with products and merchandise about the Feral Brewing Company combined with outlets which offer the same beer as the company (Feral Brewing Company, 2011). Corporate Vision, Mission Statement and Corporate Goals The vision of the Feral Brewing Company is to provide high quality beer that has a taste which differs through the hand – crafted recipes used. The brewery has created a taste of beer that is not offered in other locations and which is based on the Australian market that has a specific taste for the beers offered. The mission statement of the company is to provide high quality beer and an experience with the brewery that creates the necessary memories. The corporate goals combine with this by offering world class beers, award winning tastes and to cater to those interested in having a complete experience with the beer. This builds a different association with the ability to produce the various styles of beer while standing out from other breweries by taste and quality. It is expected that from the years of 2011 – 2015, there will be a growth of 7% in demand for the beer as well as an expansion into a second brewery to meet the demands of the current market. This combines with Ansoff’s matrix with new product development through the new brewery, diversification of products for the new brewery and the development of the current market for more demand with the products (Feral Brewing Company, 2011). Environmental Analysis The current situation with breweries in Australia is noting a continuous rise and stability with those interested in beer. The years from 2009 – 2010 examined a growth for the demand of beer from 3% to 4%. This was similar to the growth for demand in beer from years before. An average of 85% of purchases was for Lager followed by low or non – alcoholic beer at 10%. Dark beer and stout were lower than 1% of all purchases. The two breweries which are currently dominating the Australian market are Foster’s Group and Kirin Brewery. It is also noted that the years between 20100 – 2015 will continue to grow; however the amount of growth is expected to be dependent on the economic recovery of Australia and the expectations which are associated with the household capacities to continue to have the necessary entertainment with beer as one of the drinks used for the casual occasions (Euromonitor International, 2011). The continuous fluctuation of the market is one which is followed by the demographics which have the strongest appeal to the beer market. On average, 62% of adults in Australia consume beer at least one time per week with the average amount of alcohol per week continuing to rise. The majority of individuals which drink most are between the ages of 25 – 50 with a larger percentage of males drinking than females. It has been noted that with the main demographic groups, most men prefer beer while women drink more of wine or sparkling wine as the main choice for consumption. However, it is noted that this alters according to the occasion and the area which the individuals are at (ABS, 2011). The individuals that come to the brewery are inclusive of the same target market noted in Australia. Most are between the ages of 18 – 30; however, a secondary market of ages 25 – 50 is also noted. The main interest is with those who are interested in the crafted beer, as opposed to main brand name beers. The visitor arrivals usually begin in the mid afternoon to evening as an entertainment arena after the work day or for the weekend. The waves of visitor arrivals came first between the hours of 5 – 7, most which expected to stay for dinner with the attached restaurant. The second group came in later hours with the focus on entertainment and drinking. The arrivals on weekends sometimes also included afternoon visits because of the flexibility with entertainment available. Many would stay for longer hours to enjoy more of the drinks and entertainment provided. PESTEL Analysis The PESTEL analysis further examines the environment of Australia and how this links to the main associations with those visiting the brewery. Each of the examined areas show a direct correlation with the overall rise in drinking beer and visiting breweries with the changes which occurred with the PESTEL analysis. Political The political association with breweries in Australia is one which weakens the capacity of those who are involved with breweries. The regulations with politics begin with the need to stop underage drinking or too much consumption of alcohol. The relationship alcohol has to being an anti – depressant or drug and the relationship that it carries with the immobility of individuals when driving creates a different association with who drinks and what the limits should be. Currently, the Australian policies are extending to higher taxation on alcoholic beverages, specifically to regulate the potential dangers with breweries. The debate which is arising is leading to reforms with what is available, the price associated with alcoholic beverages and the decision for many to drink or not to be a part of the specific scenes anymore. This comes from the RTD national strategy to regulate the problems and alter what is occurring with consumers who are believed to consume too much. The regulations not only move into taxation but policies that are now required within breweries in relation to consuming too much in relation to the expectations (Vandenberg, Livingston, Hamilton, 2008, 579). For the Feral Brewery, the political arena becomes a difficulty which is looked into. While the main objective is to have a variety of different brews available for those who are interested in consumption, the political expectations often limit who drinks and how much is available. The complexity which is created with the political agenda is one which is promoting for the breweries and consumption of alcohol to be limited. However, the brewery combines this with the restaurant and other entertainment as a secondary alternative. This creates a different outlook that balances the political regulations and policies which are currently moving into the reforms occurring in Australia. Economic The economic structure with breweries is one of the aspects to consider, combined with the economic fluctuations in Australia. The average pricing for beer is $65 per box. This is divided by a variety of concepts which are needed for the processing and packaging of the beer before sale. This causes the profit to be in lower margins while creating a lower amount of profits for those that are involved in making beer. The results can be seen in Figure 1. Figure 1: Processing Prices for Beer As can be seen from these figures, the cost and craft of beer is one which can’t fluctuate economically and which requires continuous demand for the production of a variety of beers. Without this, there is the inability to create the right alternatives with the economic needs. If there are continuous economic fluctuations in the Australian market and for consumption, then producing as much beer becomes difficult with little to no return from the amount required for the production of the drink (Cameron, 2010). For Feral Brewery, the combination of cost with the demand then becomes the most important aspects, specifically which ties into the macroeconomy and the fluctuations which are currently a part of the market. Social While there are some restraints with the political and economic fluctuations, the social advantages allow breweries in Australia to continue to remain in demand. The social influences begin with the history of Australia, specifically which links to the belief that beer has been a staple for the ancestors which have settled in Australia. Today, the same social phenomena continue with most creating a belief that Australia is a part of the culture and identity of those living in the region. According to the substantive theory, there is a direct relationship to beer consumption that links to both the emotional and cognitive processes for beer. This relates first to the image which those who drink beer hold and the link of how this creates a direct emotional and cognitive response. The communication of beer to the public is one which defines the culture and the individual which is working in society and that needs to relax or take a break. The beer turns into a form of entertainment and into a way of expressing an identity outside of the working class stigma and the emotions and thoughts which are a part of this (Pettigrew, 2002, 112). The link to Feral Brewery is one which offers more positive results because of the social stigma for drinking and the popularity of the current brews. The link to crafted beers from personalized recipes adds into the social demand while creating a specific identity interested in the quality of beer available. Technological There are two components to the technology which is used for brewing in Australia. The first is with changes in the manufacturing process that allows for more beer production at a lower cost, combined with expectations in how the beer is crafted. Many of the larger breweries are using the manufacturing process, as opposed to handcrafted options, to produce more beer and to create an alternative with those that are a part of the brewing. This is combined with technology which is being used for advertising and to expand the market for the breweries. Using technology for social media and other associations is one of the growing areas for those who have breweries, specifically to spread the brand name and to change the amount of demand available. These two facets are changing the way in which many look at breweries and is altering the social stigma and impression of what it means to have beer and to be a part of the ideologies from the breweries (Riese, Eslinger, 2009, 6). The Feral Brewery can use this as an advantage, specifically because technology for manufacturing doesn’t interfere with the homemade brewing process. This allows those who are interested in a different process and taste for beer to be interested in Feral. More important, the technology for advertising already has a basis and can be expanded for a larger interest in the beer. Environmental The environmental components are based on a variety of changes which are now occurring. The environmental components of those who are a part of consumption of alcohol are divided into those who strongly oppose the breweries because of the belief that it is hazardous to health. This is combined with others who are a part of the environment as a part of identity and the social stigma around breweries and drinking. The concept of the environment is a part of the consumption model which shows that the more in which can identify those interested in the consumption of breweries also are able to change the levels of interest with the breweries. The environmental concerns link directly to the social stigma that is surrounding those who are interested in alcohol and the beliefs that are associated with consumption of beer (Lees et al, 2009, 1). Feral needs to create the right approach in terms of the environment around beer consumption, specifically to attract the right individuals. Legal The legalities with breweries is one which continues to be examined because of the complexities of policies. The ability to have certain crafted beer is one which is regulated by the government of Australia. This is combined with trademarks and expectations for the brewery to create the beer that is given to others. The legal aspects are now continuing with ethical considerations for the brews and whether those who are making beer are looking at the health effects and problems that may arise. When making different brews, breweries are required to move through legislation while ensuring that the alcohol consumption won’t break the ethics or legal complexities within the region. Legal actions against breweries are common in Australia, specifically because of these reasons, leading to law suits and acts based on protecting the over – consumption of alcohol or brews which may become harmful (Lessing, 2006, 7). The craft which Feral is associated with allows for strength as all beers have been trademarked and are known as a special brew. However, the legalities may alter with complexities or changes in ethics which arise from law suits and demands currently being made by others in society. Guarding against this should be a priority for the brewery. Competitor Audit Currently, there are 135 breweries that are located throughout Australia. There are two main competitors that are taking the main market, including Carlton and Fosters. Lion Nathan is recognized as one of the top competitors with the three holding almost 40% of the market. This is followed by James Boag and Coopers. After this point, the breweries divide into smaller brands that are known in local breweries. The indications of the competitors are seen in figure 2. Figure 2: Brewery Competitors With the products available, are also other competitors which are continuing to come into the market. International brands are now recognized among those in the industry. There are also more alternatives with substitute products of the main brands which are becoming prevalent throughout Australia. The popularity of beer in Australia also leads to a strong rivalry, specifically among the top competitors, to find the top quality and price with the beer products. For other breweries, this makes it difficult for expansion and growth into the main market and at an international level (Starmedia, 2011). SWOT The strengths of the Ferel Brewery are based on the main vision and objectives of the company. The brewery has been in business for 10 years with the approach of offering a crafted beer that has alternative tastes to others. This allows them to remain apart from their competitors while associating with a specific identity which is interested in the beer. This is furthered with the strengths with the main brewery, including the restaurant additions and the events which are a part of the brewery. The brewery is able to cater to the social stigma and ideologies of consumption which are a part of the consumption of beer and the lasting traditions that are associated with Australia. Currently, this combines with the re-emergence of pub brewing and the association which this has with the identity of those in Australia (Stubbs, 2005, 3). The specialized ingredients and mixtures and the recognized quality is one of the large advantages for the smaller brewery. While the Feral Brewery has the right products and associations with others that are interested in the culture of beer, there are also weaknesses with the beer and the way in which it is presented to others. The specialized attraction to the brewery and the beer is one which is not consistent with the product quality and what is offered. Unless one is familiar with the beer, there is the inability to create an understanding of what is available as a part of the brewery. Those who know the beer are able to add in practical applications as a part of the beer. However, there is the inability for others to create a direct link to the identity of the beer and whether this is better than the competitors. Since the pub is smaller there is the need to create a stronger identity. Advertising this through current portals and adding in ways to compete with other larger breweries then provides the company with an alternative way to creating a stronger impression with the beer. The opportunities that are a part of the business are based on the capacity to expand and grow the market with what has been established. Currently, the brewery has an advantage with the unique quality of the beer and the distribution of the beer. The events and other merchandise offered by the company also provide opportunities for the corporation. Expanding the target market and identity will create a better approach to those who are interested in the beer and provide more opportunity for growth. The brewery is currently in a position where they can expand their market and create a different alternative to allow individuals to have the right target market advantage. Furthering this with expanding the advertising portals and what is already established with events and the locality can easily lead to expansion of the brewery while creating a stronger response from those who are interested in the beer. The main threats with the company are from the external environment and the associations which are created. One which is a continuous threat is with the political policies, information opposing beer and the changes in the environment toward health and in stopping the consumption of alcohol. If legalities become associated with the brewery then it can hinder the ability for the company to grow. The threats continue with the larger competitors, specifically with the top three that are taking up to 85 % of the market. This is creating difficulties in allowing the brewery to show the quality that it has to the beer and poses problems which show that the company has not created a strong enough market based on the identity and social stigma surrounding breweries and quality beer. Target Markets The target markets for Feral Brewery include an expansion of the current market. This is inclusive of individuals between the ages of 25 – 50 that are interested in beer as a part of entertainment. A change which needs to be made is with the target market of families. This is an event that has been made through the brewery with children fun days on Sundays. While this may offer more opportunities, it also promotes beer in the wrong manner and may have difficulties if policies and politics begin to see this as a threat for family education. Changing out of this target market then allows the Feral Brewery to find other activities and options which may help to increase those interested in the brewery and the main outlooks of expanding the market. To expand the target market, Feral Brewery needs to take the various brews and divide them into the identity which fits into each of those interested in the beer. This begins with understanding of social – cause. The cause for those drinking is based on entertainment and relaxation at various times. Tapping into the market for weekends, entertainment and other sources of relaxation may be one of the ways to tap into and expand the current demographics and market. The social cause also expands into heritage and the association which many have with beer as identity (Bloom et al, 2006, 49). The expansion of the market for Feral Brewery includes changing the identity of some of the brews. For instance, the target market of 50 + can be added in with brews that link to the heritage of Australia and which show a different level of class, as opposed to weekend entertainment. Adding in this image allows a new segment to be introduced to the market while changing the identity which is seen through the brews to attract those who want to look at the quality of beer from an alternative perspective. Services Marketing Mix Strategy The marketing mix consists of the 7 Ps for marketing, including product, price, place, promotion, people, process and physical evidence as seen in Figure 3. Figure 3: Marketing Mix (Rafiq, 2005, 61). The consideration o the 7 Ps will be defined around expanding the product to people. It should be noted that the price is determined from the economics of the time and manufacturing, giving little flexibility in what should be changed. This particular aspect also relates to the product and the distinction that is made with the breweries that are already established. The place of the brewery is also maintained, showing little need to change the expectations unless mixing with technology or other solutions for expanding the market through the evaluation of people. The people link to physical evidence and promotion that will create the main strategy for the brewery. The main strategy implemented for the brewery making the people the central area that is lacking in development. The first aspect to be considered by the brewery is through the craft and quality of the beer. There are many in the population that is not interested in beer because the manufacturing has caused a lack of quality and has built bitter beer that is not as enjoyable. The advantage that can be added into the initiatives is to attract those who are interested in the older craft of beer. Finding those who are looking for high – quality taste is then the first strategy to take. The beer identity can be added in with making statements about the taste. The product can be altered to reflect the quality while adding in the ideas of quality taste with the product and with the promotion. This will attract anyone who is interested in a different beer taste that hasn’t been created without quality because of manufacturing (Vaughan, 2009, 6). The second approach which the Brewery can take is on additional segments for the brewery. Adding in new brews that are based on segments of the population provides more opportunities to enjoy the brewery experience with different alternatives. The environment can be altered to attract those of different populations and segments. The segments are first defined by the 25 – 50 year olds that are currently interested in the beer. Adding in more events and interests for this target market will introduce more options for those interested in the brewery. The 50 + group can combine into other forms of events on weekdays or with an alternative environment. Products that reflect this may be inclusive of beers that identify smoother tastes or unique styles for the Australian market. The advertising and promotion would then show the 50 + group enjoying a different taste of beer related to the culture. The combination of events and reflecting products by segments then allows for endless expansion of the brewery depending on the most popular segments in the region. The last approach to the strategy by Feral Brewery is to expand into the technological components. Changing the website, expanding the media use and creating an identity with the advertisements will help with the expansion of the products. Currently, Feral Brewery is using technology, such as social media, for their products. However, these are limited by basic advertisements and are based on those already familiar with the brewery. Adding in events, attracting new individuals and combining the new demographic segments allow the brewery to offer even more with the brewery. The main approach will be to communicate through even more methods with what is needed. Combining this with new approaches for the target market that start with the communication of advertisements and lead to a stronger invitation for the quality beer will then offer an expansion of the products by the brewery. Currently, there is no product production of the brewery. Adding this in with target markets will then help with the expansion of the interest in the brewery. Implementation and Evaluation The implementation and evaluation of the brewery will follow phases for re-examining the current product and process then changing this with the advertising campaigns. The implementation will include the following steps and milestones, shown by week: 1 2 3 4 5 6 7 8 9 10 11 Examination of current products XX Re-define target markets XX Combine target markets with products XX Advertising campaign built w/ products + target markets XX XX XX XX Event campaign w/ products + target markets XX XX XX XX Monitoring of events, advertising campaign, change in interest XX XX XX XX XX XX Evaluation and change w/ new ad initialized XX XX The evaluation that will be used will be based on combining the various activities that have changed in the brewery. The target market that is coming into the brewery will first be evaluated. This will continue with monitoring what the main demands are for beer and how this relates to the general population coming in for the beer. There is also the need to evaluate the events and how this correlates with the advertising which takes place. These will be evaluated with the changes in budget and what occurs with the main activity, events and expectations through the brewery. The monitoring and evaluation will then lead into ways to improve the target market and work toward expansion (Malaviya, 2007, 32). As this cycle continues, there will be the ability to expand the products into a second brewery. It was noted that the brewery currently had difficulty with not producing enough of the demand and needed to open a second brewery. While initializing the campaign, a second brewery will be invested in. This will not only enhance performance but will allow the brewery to expand the target market, selection of brews and to work with new events that are based on the segments being created for the brewery. This will provide a different outlook with those who are interested in the product but which fall under a different market segment. References ABS. 2011 Alcohol Consumption in Australia: A Snapshot, 2004 – 2005. Retrieved October 4, 2011 from: http://abs.gov.au/AUSSTATS/abs@.nsf/mf/4832.0.55.001/. Bloom, Paul, Steve Hoeffler, Kevin Keller, Carlos Meza. 2006. How Social Cause Marketing Affects Consumer Perceptions. MIT Sloan Management Review47 (2), 49 – 55. Cameron, Neal. 2010. ‘The Economics of Microbrrewing. Retrieved October 4, 2011 from: http://www.brewsnews.com.au/2010/03/the-economics-of-microbrewing/. Coll, C. 2009. Brew Guru: Geoff Scharer. Beer and Brewer Australia 8 (1). Euromonitor International. 2011. Beer in Australia. Retrieved October 4, 2011 from: http://www.euromonitor.com/beer-in-australia/report. Feral Brewing Company. 2011. About Our Beer. Retrieved October 4, 2011 from: http://www.feralbrewing.com.au/. Hansen, F. 2007. Emotions, Advertising and Consumer Choice. UK: Wiley and Sons. Kirkegaard, M. 2009. Weekend Away: Take the High Road. Beer and Brewer Australia 81 (2). Lees, M, R Ellen, P Brodie, M Steffens, B Newell, D Wilkey. 2009. “A Utilities Consumption Model for Real – Time Load Identification in a Brewery.” Industrial Technology (9), 1-6. IEEE Explore. http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=4939642 (accessed October 5, 2011). Lessing, JPG. 2006. Resisting a Hostile Takeover: the Lion Nathan Bid for Coopers Brewery. Law Papers 17 (2), 1-7. Malaviya, Prashant. 2007. The Moderating Influence of Advertising Context on Ad Repetition Effects: The Role of Amount and Type of Elaboration. Journal of Consumer Research (34), 32 – 39. Pettigrew, Simone. 2002. “A Grounded Theory of Beer Consumption in Australia” Qualitative Market Research: An International Journal 5 (2), 112-122. Emerald. http://www.emeraldinsight.com/journals.htm?articleid=858425&show=abstract (accessed October 5, 2011). Rafiq, M. 2005. Using the 7Ps as a Generic Marketing Mix. Marketing Intelligence and Planning 71 (8), 83-93. Riese, Jens, Hans Michael Eslinger. 2009. World Beer Market. Handbook of Brewing: Processes, Technology, Markets. UK: Wiley. Starmedia. 2011. Industry Services in Australia. Retrieved October 5, 2011 from: http://html.rincondelvago.com/industria-cervecera-en-australia.html. Stubbs, B. 2005. Small Scale Breweries on the Up Down Under: the Sail and Anchor and the Reemergence of Pub Brewing in Australia. Brewer and Distiller 17 (2), 17-21. Stubbs, B. 2008. New Breweries. Beer and Brewer Australia 7 (1). Vandenberg, Brian, Michael Livingston, Margaret Hamilton. 2008. Beyond Cheap Shots: Reforming Alcohol Taxation in Australia. Drug and Alcohol Review 27 (6), 579 – 583. Wiley Online Library. http://onlinelibrary.wiley.com/doi/10.1080/09595230802491600/abstract. (accessed October 5, 2011). Vaughan, Alexis. 2009. Bitter Harvest, Bitter Beer: The Impact of Beer Production and Consumption on People and the Environment. Food Facts (7). Williams, A. 2008. A Weekend Away. Beer and Brewer Australia. 17 (1). Read More