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  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

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Primary research was conducted through a qualitative interview on craft beer to analysis the industry environment and internal capabilities of the brewery Fortune Favours. The objective of the interview was to complete primary research that will be used to help complete an analysis of the market and fill in gaps where there is no secondary information available.

Key findings from qualitative research:

• Craft beer consumers purchase the beverage for the “experience”, unlike other acholic beverages where the aim is to get drunk.

• Consumers want to relax, socialise and experience something new.  

• Quality over quantity.

• Happy to pay more for a beer that taste better, locally made and incorporates premium ingredients.

• Relies on recommendations from friends

• Taste and packing is important

Near environment:

A graph from Euromonitor predicts a steady increase in total beers sales from 2017 until 2022. This data supports the increasing number of craft beer breweries from 96 in 2014 to 194 brewers in 2017.

Porters five forces model can be used to show the future market attractiveness of craft beer. Where there has been considerate threat of new entrants entering and saturating the craft beer industry. Suppliers such as supermarkets, liquor store and restaurants hold large bargaining power of craft beer companies. As they decide if they want the product to be stocked on their shelves. Considering the large amounts of competition for other companies a lot of effort needs to be put into showing the target market, past and future sales. Bargaining power for buyers is also extremely high, as there are a lot of other craft beers to choose from. Consumers taste, spending habits and preference are also constantly changing. Craft beer is also considerably more expensive than other forms of alcoholic beverages. Lastly, threat of substitutes products is a high concern for craft beer brewers. Wine and pre-mixed drinks have become popular for consumers to purchase.

Customer analysis

Segmentation

A study done by Nielsen Consumer and Media Insights in 2017 revealed almost halve a million kiwis now call craft beer their preferred drink. An increase of 18% from 2016. The study observed the average age of a craft beer drinker to be 21 to 35. With an average personal income of $61,200.

The report found that traditionally beer has been known as a “guys drink.” The report found men make up over two thirds (71%) of the population of craft beer consumers; however, females (29%) are becoming more interested. The vast majority of the beer drinking community is Caucasian (85%). Price has an impact on consumption as craft beer has a higher price point than mass-produced beer. Those who are middle and upper-income clearly have greater discretionary funds to enjoy any beer they desire; whereas individuals at lower income levels will occasionally reward themselves with craft beers.

The shared benefits of drinking craft beer were experiential and social interaction benefits. Other benefits that were hinted at were supporting local business and having an interest in the Science of brewery process and knowledge from staff members. There was a higher cost to purchase benefit which was overweighed by a perceived higher quality. Shared attributes include a preference to flavour, taste, variety and quality.

Consumers are most likely to purchase craft beer in a supermarket, liquor store or at their local brewery. Breweries find it difficult to distribute their products into stores. As New World and some liquor stores are independently owned and operated. Therefore, they have a lot of power in terms of what to stock.  

Internal Capabilities

Financial position

McKinsey's 7S's of organisational effectiveness that relate best to Fortune Favours is their passionate and knowledgeable staff. The founder Shannon and sales manager Regan have over 15 years' industry experience. Their shared values of being bold, taking risks and trying new things is also hugely important.

Fortunes Favours strategic positioning is Porter's Generic differentiation focused strategy. Where they are in a niche market, craft beer, which has a small total market share of the acholic beverage industry. They can not be cost focused as they are selling a premium product. Therefore, they need to stand out from the crowd by offering consumers something extra.

Fortune Favours value creation in terms of their product line is on the smaller side compared to their main competitor Garage Project. Their brand awareness and product recall are really low. In terms of value delivery and customer management; they have a few loyal customers that regularly purchase their beers and a few consumers that stumble upon their brand. Fortune Flavours values not being a “wanker beer”, where anyone can come in and try their ranges (including females). They also put a lot of effort into being fresh, modern, fun and premium.

There are unmet needs exist within female beer consumers, where they feel the packaging and marketing of beer is predominately targeted at males.

Customer perception of Fortune Favours is limited, as there are a number of small craft breweries in Wellington and plenty of craft beer options in super markets to choose from. When shown Fortune Favours beer can packaging, consumers were left feeling underwhelmed. Especially compared to the packing of their main competitor Garage Project, where the cans unique designs looked like collectable items.

Fortune Favours has a medium presence and engagement with consumers online. They have over two thousand Instagram followers, over two and a half thousand likes of Facebook and a star rating of four point eight out of five.

Problems and opportunities

Fortune Favours has opportunities in increasing the market share of the acholic industry by converting export beer drinkers to craft beer drinks. There's an untapped market which plenty of potential by converting female drinks to craft beer.

Fortune Favours needs to develop their social media and branding presences to encourage more brand recall. There's also opportunities to produce prestigious merchandise and collaborate with artists to create limited addition packaging.

In order to maintain future success, the companies need to be constantly aware of Porter's Five Forces. Threats of new entrants, distributions declining to stock their products and consumer buyer power are essential.

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