Address the following questions:
Identify and assess the key factors in the macro environment that have, or might, affect the UK beer industry. (30 Marks)
Present a Five Forces analysis of the competitive environment of the UK beer industry and discuss the changing nature and effect of these forces. (30 Marks)
Against the background of a declining industry, the brewer and pub operator Adnams seem to be bucking the trends. Assess the strategic directions chosen by Adnams that have aided their progress. (40 Marks) Submission Deadline: 9.00 am Monday 28 March 2011
(Business School Assignment Box and StudySpace Electronic Drop Box)
In times where the ‘industry needs a supportive policy agenda, it is disappointing that the Government’s general policy direction seems destined to achieve the opposite.’ (A wake up for Westminster). It is evident that the Government is not favouring the beer industry. Furthermore, Governments tax and regulatory policy for tackling alcohol misuse is likely to increase further significant costs on the industry. This suggests that the government is failing to address the problem and rather leaving the industry more weakened. According to ‘A recent Ernst & Young report calculated that Government revenue from the production and sales of beer equates to over £9 billion.’ (A wake up for Westminster). It is somewhat surprising considering the revenue the beer sales generates that the government has opted to be less favorable. Also considering the fact that the country is recovering from a recession it would make sense to generate as much revenue as possible. However, maybe the government strongly beliefs that the beer industry will still make progress and would rather still impose higher tax.
Due to the economic downturn families now have less disposable income, which means less socialising outside and meeting up for a drink at the local pub. From the chart it is evident that going to pubs has dropped by 18.2%, which is a significant decrease and two closures per week since 2000-2005 and have now reached 5 per day. (A wake up for Westminster). This shows that pubs are struggling to operate, as the drop in consumers is significantly low. Furthermore, costs of running the pubs and materials have also increased. The ‘utilities cost have nearly doubled compared to three years ago.’ (A wake up for Westminster). Also considering the Government not helping on the cost side as the ‘beer tax escalator will further drive up the inflation. (9% beer duty increase)’(A wake up for Westminster). Looking at these statistics it can be proclaimed that pubs are forced to close down as rise in costs are exceeding sales margin. Due to the lack of profit there is no place for the pubs or any business in this weakened industry. Although ‘the British beer and pub association reports that the overall market has declined by 5% by volume over 2009’(Drinks market watch). However, there is some cause for optimism as some brewers have reported growth in ale sales. ‘Marston’s beer-making division reported a 13% rise is sales for the year, while Green King’s own-brewed volumes have surged by 9.8% over six months. (Drinks market watch). These results indicate that opportunities still exist for the Uk beer market. Social
Changing consumer taste has also effected the beer industry. Consumers now have various options such as sport events, cinemas or outdoor activities. This has impacted the pubs. Also all the need to be healthy and all the ads about less alcohol consumption has also played a part in the loss in profit for pubs. Unemployment and loss of jobs will have an effect on local communities from whom goods and...
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