Firstly, political factors; there is a big decline of beer consumption in the market due to numerous factors. The government increases the awareness of the impact of the alcohol consumption. Also they banned drink beer in restaurants, pubs, and bars. Also in the UK there is a mounting hostility in the direction of "Binge drinking" alcohol use in clubs. Because of this, countries like Denmark, Belgium, UK, Spain in 2005 they discontinue to consume alcohol. Table 1 portrays the consumptions in various countries. On 1980's all the countries in Europe consumes alcohol. Soon after, each and every country diminishes to drink alcohol due to government regulation. Furthermore, the government introduced high penalties to people who consume alcohol and disturb public.
Second, Economic Factor; During the European Economic period the demand of the beer was declined. Government restriction on beer consumption decreases, the sales in pubs and clubs. Due to this, the growth in economic rapidly dropped. Also government limits to supply beers in supermarkets, not in other places like clubs. And brewing companies introduced higher priced premium products to grow their market. Also they introduced new strategies to attract consumers through providing fruit flavored beers. They offered cut price on beer also, and they try to attain economies of scale through cost reduction.
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Next, in view of Social Factor; consumers pay more concentration on their health and fitness because of government regulation. It's more influence in the social factor. Also, drinking pattern of the people made a great impact on the European culture. Also industry introduced new flavor beers according to customers' taste. Next, Technological factor the brewing industry uses high technology in manufacturing products and this high technology helps to produce best quality of products.
Finally, European brewing industry plays major role in environmental factor. They did all the progression to avoid environmental pollution. The industry doesn't put the wastages on the path. They recycle their waste and reuse it. When it comes to Legal Factor; the country had many regulations to control public. There are restricted to drinking and smoke on the road. If they do consumers must pay higher amounts. Also government introduced high taxation to beer product.
However PESTEL analysis helps to identify the long term drivers of the organization and it is the one of the main strengths of the organization. The European brewing company strongly believes in their product and effect of the beer and alcohol on behavior and health fitness. And they consider about culture, social factor when launch product.
Five Forces Analysis
Porters Five Forces analysis assists to understand the industry thread of new entrants, Buyer Power, Supplier power, Threat of substitution. When it comes to the threat of new entrants, the European brewing company has very low new entry threat as a result of licensing, Acquisition and strategic alliances. Also brewing industry has a strong brand image and reliability of customers in Europe so it's not easy to compete with the brewing company for new entrants.
Next, the Buyers power of the European brewing company was high, because of packing style. And industry changes their product style due to the customer satisfaction.
Finally, Suppliers power European brewing industry has high supplier power. Also they have numerous numbers of suppliers. But this industry better to change suppliers to reach more customers. Then they can buy new items to make their product more attractive. Also the switching cost will be low. Not only in packing style. Next Threat of substitution there are many various types of beer in the market. In this case study the use of wines increased rather than beer. The consumption of beer is very low in countries like Ireland, Norway etc. And the import of beer also declined in 2004 in Denmark, Greece, and Spain. The Table 2 shows the consumption of the beer product. From that we can understand most of the countries move into wine production. So the European brewing company should consider in substitute products in the market.
In my conclusion European brewing company present more concentration on Substitute products and supplier range and new entrants. Also brewing company should follow differentiation strategies on their product line. It will give more impact on their brand.
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For the Four breweries outlined above (or breweries of your own choice) explain :
How these trends will impact differently on these different companies? And
The relative strengths and weaknesses of each company.
Heineken is the biggest company in European brewery business. And its brand is Helneken and Amstel. Heineken overall sales were in Asia pacific 5 % and 17% in America.
Heineken strengths were it is a leading European brewing company also it has followed family controlled business, and the brand name of this company is very popular among people. And its brand name was Heineken and Amstel. Also company sales in 2006 were 11.8 billion. Although, company uses different strategies to introduce their brand to new markets. Also they have some actions to increase the growth of revenue, improve the efficiency and the cost reduction. Also Heineken think they can win in the market place.
Weakness of the Heineken: in my view I think they made a mistake in the control system of the organization. Because they have family controlled business. It's not good for the industry. So they might stick on one point cause of this they cannot move on to another stage.
Grolsch is the medium size international brewing company. Its key product consists of Grolsch premium lager and new flavored beers. They're most of the sales throughout overseas and export or licensing of production. The core of the company was innovation and branding,
Strength of Grolsch: Their main strength was company introduced new flavored beers namely Grolsch lemon, Grolsch pink grapefruit. These new kind of beers fulfilled the buyer desires; later on Grolsch nationalized its own product to increase efficiency and capacity, to conceive these products "trial" brewery gave a big support to Grolsch.
Weakness of Grolsch: Comparing to Heineken, Grolsch is less than a twentieth of the size also it is a medium size international company. In financial side also it's actually in poor range. Because, Grolsch total sales in 2005 were 313 million.
InBev is established in 2004 in Belgium and Brazil. It is the largest brewers in the world wide. Also they have strong brand name include Beck's and Stella Artois and financial control too. Their turnover in 2006 was 12.3 Billion. Also they are very honest in tactics to build their company in a superior position and become a world most excellent company. Furthermore they should focus on building a strong brand name to increase efficiency. It will help to InBev go further more.
Strength of InBev: They are the largest brewer company in the world with 13.3 Billion turnovers in 2006. Also InBev has a strong global brand name like Beck's and Stella Artois. InBev is the second largest brewer business in china. Also, InBev followed different strategies to become a No 1 company in world wide. They increased their efficiency and brand name. Not only had this InBev shared their practices across sites globally.
Weakness of InBev: They don't have a strong brand name globally. They should think about on that to be a leading market in the worldwide. The main
Scottish and Newcastle
Scottish and Newcastle is a European Focused Brewing Industry. They hold fourth, fifth position country like UK, India, and China.
Strength of Scottish and Newcastle: It holds fourth place in Europe, Also, It is a Market leading company in UK, France, Greece and Finland. In India the largest brewer company was UK breweries. They have strong brand names like John Smiths, Kronenbourg, Kanterbrau, Baltic and Fosters. In the USA second largest Importer of Beers. Also china was the fifth largest brewery company with a 20 percent stake in CBC.
Weakness of Scottish and Newcastle: From financial data Scottish and Newcastle have a lower financial stable compared to the other country statement. (Ex: Heineken total sales were 11.8 Billion but Scottish and Newcastle Turnover was 3.9 Billion)