An analysis of the macro and micro marketing environment for ‘Brewgooder' (Craft Beer Market)
Introduction p 3
Macro-Environment Scan p 3
Micro-Environment Scan p
SWOT Analysis p
Strategic Recommendations p
Reference List p
Personal Reflection p
‘Brewgooder' is a British social enterprise which operates within the ‘Craft Beer' market in the United Kingdom. The founders of Brewgooder (Mahon, 2017) stated that they started their company with the idea that “the social power inherent in a good pint of beer enjoyed by people was probably one of the most powerful forces on earth” and in the hope that they could collaborate the enjoyment of drinking beer with helping the needs of others. In early 2016, co-founders Alan Mahon and Josh Littlejohn set out with a simple mission for their company, which was to provide clean water and sanitation for 1,000,000 people through the power of craft beer by donating 100% of our profits to clean water charities.' So far, Brewgooder has ‘helped over 40,000 people across Malawi gain access to clean water and has plans to expand its project into Ghana in 2019.'
(((The craft beer industry revenue is ‘expected to rise further as the craft beer trends continue' )***
The Macro-Environment Scan
The craft beer market in the UK is quite a niche focussed market crowded with smaller, independent brands, which is shown by 26% of people are not interested in trying a craft-style beer from a large brewer or brand (Wisson, 2015) . The craft beer market is also a market that is growing rapidly, in 2016 craft beer sales in the UK grew by 23% , displaying that it is an attractive market to be competing within.
Despite levels of youth drinking in the U.K. being the lowest ever recorded with only around 17% of eight to 15-year olds admitting to drinking alcohol , public health experts are calling for a ban on the advertisement of alcoholic products in the UK, due to new research claiming that the marketing practices carried out within the industry is encouraging underage people to drink alcohol . As a result, these current and potential future changes in regulation regarding alcoholic drinks has and will impact upon the availability and marketing of alcoholic drinks, including craft beer.
As explained in the IBISWorld UK industry report for Beer Production, the result of the UK exiting the European Union could mean that the government could liberalise business and excise duty rates within the beer and craft beer markets, which could potentially give rise to the potential benefits for small-scale brewers within the industry.
According to the IBISWorld industry performance report for beer production, beer is considered a discretionary purchase. When the unemployment rates are high and weak wage growth is apparent, the expenditure on beer and associated products has been impacted. However, according to IBISWorld, in 2018-19 real household disposable income is expected to rise by a slight amount, following the decline as a result of the European Union referendum. The craft beer industry revenue is ‘expected to rise further as the craft beer trends continue' (Falconer, 2018). This comes to rise as it was established that the general beer market is a mature market with a flat market growth, (IBISWorld), meaning that it is a difficult market to grow in, unless a differentiation strategy is undertaken (Porter's generic strategies).
In recent years the alcohol consumption per capita in the UK has fallen quite dramatically from 8.9 litres in 2009 to 7.4 litres in 2018 (IBISWorld, 2018), and is projected to fall even more in coming years, however this is at a slower rate than in previous years. This may be as a result of the growth in health concerns regarding around the consumption of alcohol, and therefore affecting the demand for alcoholic drinks in the
UK market. There is no ‘safe' level of alcohol consumption (NHS, 2016), and it's now stated by the NHS that ‘consuming more than 14 units of alcohol a week is risking damaging your health', and those who do consume over this unsafe level are putting themselves at risk of various cancer types, stroke, liver and heart disease, brain damage and damage to the nervous
system 10 to 20 years after consuming over 14 units a week regularly. A significant proportion of consumers in the UK are now buying and drinking alcohol in moderation due to the rise in the stated health concerns, which has subsequently led to suppressed beer sales (EBSCOhost, 2011).
Another key factor in the decline in consumption per capita and the decline in on-trade drinking of craft beer is due to the shift from the on-trade purchase of craft beer to the off-trade purchase. According to EBSCOhost, this is due to the economic saving to be had when purchasing craft beer off-trade in economically different times, during the Brexit vote for example.
There are innovations within the craft beer market in order to find a solution to the health concerns revolving around alcohol consumption, resulting in the increase in non-alcoholic and low-percentage alcoholic beers.
The Micro-Environment Scan
According to Brewgooder's financial statements for 2017 and 2018, there was a 50% increase in their marketing costs, which could mean that in the past financial year they focussed on establishing their brand in order to compete against the big players in the market, such as AB InBev, who are growing at rapid rates and are also targeting a lot of their research and development but also marketing into targeting and penetrating the evolving craft beer market (AB InBev, 2017).
Big players in the current growing and evolving craft beer market are expanding into the craft beer niche of the larger beer market. As shown in figure 2 (Bain & Company, 2017), companies such as AB InBev and Heineken are growing at fast rates, both being growing at rates faster than 3% from 2012-2017 in regard to global organic revenue growth. These same big players within the market are creating separate business entities, so that they can detach themselves from the larger brand image, as new consumer wants include purchasing from smaller companies. But these large companies with separate smaller businesses have the funds for research and development, enough capital to establish a brand, and marketing skills which enables them to have an advantage over smaller, independent brewers such as Brewgooder.
Large competitors in the market also compete on the basis of sustainability, which is Brewgooder's main purpose, being a social enterprise. Heineken's 2017 annual report states that the company is attending to eight out of the 17 UN Sustainable Development Goals (SDGs), and most importantly are also (adhering?) to the water crises that are apparent across the globe, meaning that it may not be a competitive advantage for Brewgooder as other businesses are also attending to this matter.
Company – 1 product (diversify product range – Ansoff's matrix)
Competitors – big players in the market
Intermediaries – asda, tesco, brewdog – Walmart Sainsburys merger they will try to squeeze margins of supplies meaning that brewdog will make less money on each sale
SWOT – W – advertising alcoholism too much, trying to do good by funding clean water projects but its negatively impacting their customers by advertising and giving the option to subscribe to a monthly beer subscription. – stigma around alcohol etc
Personal Reflection – 500 words DONE
Before I began the BS1528 marketing module I wasn't entirely sure what to expect from university standard education, but what I did expect was to be taught content similar to what I was taught at A Level, however in a lot more depth and detail. So far, I found this to be true, and all of what we have learned this semester has enabled me to fully understand the marketing assignment. It was laid out in a way that I could understand and that was self-explanatory, so I wasn't clueless as to what was being asked of me. I believe that I was fully prepared, and the instructions given were clear for me to understand. I have found certain aspects of the course quite challenging admittedly, but it is more to do with the intensity of the work, such as doing a large amount of reading around the subject and getting the balance correct in regards to my other modules and actually getting to grips with being a university student this semester, but I do think as the weeks have progressed I have been able to find a method of working that has enabled me to stay on top of work and complete tasks to the best of my ability. At times, especially at the beginning of the semester, admittedly I should have spent more time on the extra reading that is set at the end of each lecture, as I think it becomes a lot more beneficial and enables me to come to lectures prepared and have an understanding on what we are going to learn. Since the beginning of the semester I believe that I have gained a multitude of skills that have enabled me to learn in a more mature way. The skills that I have acquired during this semester include how I am more confident and able in approaching and doing more in depth analyses, and also how I can now structure an assignment, and answer each section of the assignment with equal strength, as at the beginning when the assignment was first introduced I worried that I wouldn't be able to, especially with the strategic recommendations, however the lectures that we have had leading up to the assignment has helped me massively and I can now approach this section of the assignment with no problems at all. The assignment itself has taught me many things too, for example how to structure a marketing report and how to write an assignment at university level, as when I came to university I was not entirely sure how to write one as while doing A Levels it was more exam based rather than coursework. At first, I found the referencing aspect of the assignment challenging, however there were really good resources provided by the university which I used in order to combat this.
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