U.S. Beer Industry
October 5, 2018
This case study will be about examination of the U.S. beer industry and the Samuel Adams beer company. The craft beer industry is a subsection of the alcohol industry. Sam Adams brewer Boston Beer helped expand the craft beer movement when it first opened up in 1984. The Boston Brewing Company (BBC) brews over 30 styles of beer, and Hardcore Cider but are most known for Samuel Adams beer. They are an American Craft Brewer, which means they are defined as being small, independent, and traditional. They distribute locally through a network of 400 wholesalers and then to Canada, Europe, Israel, Mexico, the Caribbean, and the Pacific Rim. They are the number one craft brewer in the US and are now the largest American owned brewery. Their products are available in all 50 states and more than 20 foreign countries, but the US accounts for more than 99% of their sales.
• Award winning heritage recipe/most decorated brewery in American history
• Samuel Adams has outstanding Brand Loyalty
• Wide range of flavors & products
• Pioneer leaders in using spirit barrels to age its product which has become a norm that other companies have incorporated in using for their products
• Strong relationship with both suppliers and distributors
• Strong competition in craft beers
• Competes with other brewers for distributors attention and selling efforts
• Poor Marketing - Sam Adams, has historically focused on close and personal interactions with consumers, thereby allowing the quality and taste of its offerings to establish the superiority of its beer-drinking experience via word of mouth advertising
• Entirely dependent on male consumers and the domestic market
• United States is second in the highest amount of beer consumption
• Crafts brews/premium brews are forecasted to have the greatest growth in the upcoming years • Large fluctuation in supply prices, due to the fact that they outsource from other countries to acquire high quality ingredients
• Increasing popularity of independent brewers
• Consumer taste shifts into wines and spirits instead of beer
• Environmental Regulations
Political – The United States has a zero tolerance when it comes to crimes such as drinking and driving. They also have high taxes. A recent study showed that the taxes on alcohol represents 40.8% of the retail price whereas the total taxes for all other products in the United States is at 24.2%. However, since the Boston Brewery Company (BBC) is a craft brewery they pay a $7 excise tax on the first 60,000 barrels produced and $18 per barrel thereafter, large breweries pay $18 for every barrel produced which saves the BBC approximately $660,000 dollars a year.
Economic - The U.S beer market has proven to be recession proof over time, however some consumers have switched from premium beers to a less expensive domestic beer. Since the Boston Brewer Company (BBC) only uses the highest quality ingredients they have to travel all across the world to get the best hops.
Social - Beer is the third most popular beverage in the world. While alcohol can have some negative side effects if consumed in bulk, it is accepted as a social norm and the US is second in the world in beer consumption.
Technological – In addition to focusing on the high-quality beer, Sam Adams has also found ways to optimize the beer-drinking experience with the creation of a specially designed pint beer glass that reduces the heat transfer from the consumer's hand as they drink the beer. The Boston Beer Company has also developed a can that would optimize the taste and flavor of Sam Adams.
Environmental – The new can that they designed opened new avenues of distribution for the product, by allowing Sam Adams' beer to be consumed on airplanes, golf courses, beaches, and numerous other venues that prohibit glass bottles.
Legal – To ensure that their sale distributors liquor licenses don't get revoked the BBC and the US lawmakers enforce strict laws that only allow them to target people 21 and over.
Samuel Adams has already established itself a generic strategy of diversity focus. Within their narrow segment they have achieved differentiation by establishing themselves as the highest quality domestic beer. This enables Samuel Adams to not have to worry as much on price and put more effort and focus on acquiring the highest quality ingredients and their own creativity during the brewing process. With an industry that is flooded with unlimited options and Samuel Adams having no way to compete with other domestics through pricing, their focus on quality, creativity, and freshness enables them to achieve differentiation and be successful. There really is no need to implement a more strategic plan except for the company to just keep dumping money into its marketing campaigns by using social media. The US beer industry has already solidified itself to be recession proof.
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