Transcript File - ERIC JAMES HYDE

Molson Coors & Anheuser Busch InBev
An External Analysis of the Beer Industry
Presentation By:
Emily Horstmann, Eric Hyde, Claudia Ortiz and Megan Walzel
Broad Environmental Trends
o Craft Beer Craze
 Sales from 2008 to 2013 shot up annually
 Losers: No. 1 Bud Light & No. 4 Miller Lite had a decrease in sales
this past year
 Though light beers began declining about five years ago, their
descent has accelerated this year
 Together the two brewers control nearly 97% of the light-beer market
in U.S. (kind of a big deal…)
o Flavored Beverages (Bud Light Lime-A-Rita, Cran-Brrr-Rita)
• (Lackluster ads recently) men drinks vs. women (20%)
• Only one beer campaign has achieved pop-culture acclaim in
recent years-Dos Equis' "Most Interesting Man in the World."
Sociocultural
• Today's 21- to 27-year-olds grew up expecting variety
• Redd's Apple Ale introduction has seen success
• Innovation to compete with liquors as well, which have found
success with flavorful varieties and dessert-inspired vodkas like
Smirnoff Cinna-Sugar Twist (getting out of hand a bit?)
Global
• Developing markets remain
the engine of volume growth
for the global beer industry
• Brazil, Russia, India and China
(BRIC) are recording the
highest rate of market growth
within the global beer
industry, generating almost
$108 billion in 2010
Broad Environment Continued
• Political/Legal
▫ Highly regulated industry with moderate differentiation among
countries
 Less regulation among emerging markets
▫ Faces more sin taxes
• Economic
▫ In the US, adult male unemployment has decreased from 10.4% in Oct.
09 to 7% in June 13
▫ Blue-collar males in their 20s, were battered by an economic downturn
that hammered industries such as construction
▫ Beer sales volume hit disproportionally, dropped significantly during
recession and have recovered slowly since
Technology
Coors Cold Activated
Miller Vortex
So…is Beer Attractive?
• Non-price based rivalry
• There is a lot of product
differentiation within the industry
▫ Beer style is the term used to
differentiate and categorize beers
and meet consumer preferences
 Beer styles can vary depending on
the color, flavor, strength,
ingredients, production
method, recipe, history, or
origin of the beer
• All major companies offer different
variations based off their core product
• Beer is classified as a lager or ale
Five Forces Analysis
Threat of
New
Entrants
MediumLow
Bargaining
Power of
Suppliers
Low
Competitive
Rivalry
within
Industry
Low
Threat of
Substitute
Products
MediumHigh
Bargaining
Power of
Customers
Medium
Five Forces Model Continued
• Competitive Rivalry Within Industry—Low
▫ Variation of products and advertising is low: if one firm launches
a new ad campaign or product, others follow
▫ Mergers and Acquisitions are common
▫ Top 4 brewers worldwide: AB InBev, Molson Coors, Heineken,
and Carlsberg control 50% of global share
• Threat of New Entrants—Medium-Low
▫ Large brewers experience significant economies of scale
▫ Very capital intensive industry to enter and highly regulated
▫ Boom of craft brewers over the last few years
Five Forces Model Continued
• Bargaining Power of Suppliers—Low
▫ The main players in the beer industry take up a majority of their
suppliers’ business
▫ Suppliers are dependent on the beer industry
• Bargaining Power of Customers—Medium
▫ The beer consumer is generally economically sensitive
▫ Consumers are interested in new, trendy craft beers
• Threat of Substitute Products—Medium-High
▫ Wine and spirits industry is gaining market share
▫ Recent poll states: 36% of alcohol drinkers prefer beer, 45%
prefer wine as opposed to 47% preference to beer and 27%
preference to wine in 1992
▫ Beer is perceived as less healthy and less classy than substitutes
Same Strategic Group
• Both operate in broad markets offering a wide
variety of products catering to specific segments
▫ Anheuser-Busch—100+ beer brands
▫ Molson Coors—200+ beer brands
• Both are cost leaders
Is this a good industry to be in?
• Moderate attractiveness (based on Porter’s 5 forces)
• Sales dependent on disposable incomes
• Beer industry tends to have a direct relationship with the state of the
economy
Competition in the same nations
• The majority of operations are conducted in the
same nations including:
▫ The United States
▫ Canada
▫ The United Kingdom
• Other mutual markets include:
▫
▫
▫
▫
▫
China
India
Russia
Spain
Ukraine
Works Cited
Schultz, E.J. "Draft Dodging: Why Big Beer Is Going Flat." Advertising Age 84.32 (2013): 16. Business
Source Complete. Web. 21 Oct. 2013.
"Is Beer a Reflection of the World Economy?." Wealth Wire - Investing News. N.p., n.d. Web. 22 Oct.
2013. <http://www.wealthwire.com/news/global/3591>.
"The Wall Street Flaneur." The Wall Street Flaneur. N.p., n.d. Web. 22 Oct. 2013
Kurtzleben, Danielle. "Poll: More Americans Ditching Beer for Wine." US News. U.S.News & World
Report, 02 Aug. 2013. Web. 22 Oct. 2013.
"Factors That Affect the Beer Industry." Factors That Affect the Beer Industry. N.p., n.d. Web. 22 Oct.
2013.
"About Us." Molson-Coors. Molson-Coors Brewing Company, n.d. Web. 22 Oct. 2013.
"Anheuser-Busch InBev - About AB InBev -." Anheuser-Busch InBev - Home. N.p., n.d. Web. 22 Oct.
2013.