This paper discusses the potential profitability of the beer industry. II. INTRODUCTION
The Beer makes up most of the alcoholic beverage industry, with a 74% volume in 2002 (Alcoholic Beverages, 2005). The production of beer around the world has increased from 36.85 billions gallons in 2000 to 38.78 billion gallons in 2003 (Alcoholic Beverages, 2005). Beer production has been a part of society close to the beginning of civilization. A Mesopotamian tablet dating back to 7000 B.C. contains a beer recipe named ¡§wine of the grain¡¨ (Alcoholic Beverages, 2005). In 1292, a Czech Republic town produced its first pilsner beer. A prominent beer brand, Pilsner Urquell, brewing dates back to the early thirteenth century. Beer is produced with a mixture of mashed barley, malt, and rice or corn. U.S. brewers use filtration systems as well as add additives to stabilize the foam and allow long lasting freshness. Bottled or canned beer is almost always pasteurized in the container in prevent the yeast from further fermentation.
After 1996, the U.S. beer industry had consistent growth with about 3,500 brands on the market in 2002 (Alcoholic Beverages, 2005). The U.S. exported beer to almost one hundred countries worldwide. The beer industry peaked production with 6.2 billion gallons in 2003 (Alcoholic Beverages, 2005). The U.S. beer industry haws over 300 breweries. However, this industry is dominated by three companies: Anheuser Bush (45% of the industry), Miller Brewing (23% of the industry), and Adolph Coors (10% of the industry) (Overview of the U.S. Beer Industry, 2005). MARKETS BASIC PRODUCT/SERVICE OFFERINGS
There are several different types of commercial beer, consisting of pilsner, lager, ale, stout, light, low-carb, malt liquor, dry, ice-brewed, bottled, draft, and non-alcoholic. Further, the U.S. market has been divided in to three categories: super premium, premium, and popular-priced (Alcoholic Beverages, 2005). In 2002, the U.S. Market Share Reporter stated that light beer consumed 40.1% of the beer market, premium held 25.9% of the market, and popular-priced beer held the remainder. Here is a brief description of the most popular types of commercial beers: «
Lager: a high carbonated beer, containing a low alcohol content, with a pale, medium-hop flavor «
Stout: a thick, dark beer, almost like syrup
Porter: a sweet, malty flavored brew with a farley high alcohol content «
Malt Liquor: a mostly malt based containing high amounts of fermentable sugars «
Light: a reduced calorie brew made by decreasing the grain amount used when brewing or by adding enzymes to break down the starch content in the beer (Alcoholic Beverages, 2005).
One small segment of the beer industry is the micro brews. This segment as well as brewpubs had a double-digit increase in the U.S. throughout the early 1990¡¦s (Alcoholic Beverages, 2005). However, this increase started to decline toward the end of the 1990¡¦s. This was mostly due to overexpansion. This did not stop all the microbreweries from continuing to open in the U.S. which allowed this market to show considerable growth. In 2002, the U.S. reportedly had 396 microbreweries, 46 regional specialty breweries, and 994 brewpubs (Alcoholic Beverages, 2005). III.
MARKET STRUCTURE AND ATTRACTIVENESS
The three major players in the brewing industry, Anheuser-Bush, Miller, and Coors Co., have started increasing their market shares at the expense of smaller national brewers. The alcoholic beverage industry has gone through a consolidation period since the consumption rate has declined over the past few years (Overview of the U.S. Beer Industry, 2005). One of the markets that have flattened in this industry is the domestic beer market. This industry has hit a mature stage where consumption rates have flattened. This caused price increases to help suffering companies increase its profit margins (Overview of the...
Please join StudyMode to read the full document