External and Internal Factors in Opening a Brewery

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Bob’s Bohemian Brewery
A look into the General and Task Environments
By: Kimberly Hutchins, Michael Huber, Jason Hoy,
Emily Gauden, Erica Hoppe, and Dana Hunt

Introduction
In a world where large, corporate breweries rule the market, craft beer is created to please an audience that applauds the styles, techniques and flavors. Though craft beer can be purchased through several different outlets, the best place to thoroughly enjoy the entire experience of the specially made beer is in the brewery where it was made. The article titled, “In Lean Times, a Stout Dream” in The Wall Street Journal1 states that, despite the hard economic times and consequent consumer cutbacks, sales of craft beer, the industry's fastest-growing segment, rose 6 percent by volume, and dollar sales jumped 10.5 percent to $6.3 billion, according to the Brewers Association. The article also states that craft beer has shown continual growth year after year in the last 10 years and data shows that U.S. craft beer sales totaled $7.6 billion in 2010. This is good news for a brewery that is considering opening soon. Using Griffin’s Model to analyze the general and task environment of this ever expanding market will help to determine if it is a good idea for a potential craft brewery, in this case Bob’s Bohemian Brewery, to be a viable business venture. Economy

One of the first and most important aspects a potential new business needs to consider before deciding to open a location is the economy. Everyone is well aware that the current economic health of our county and state is dismal at best. According to The Bureau of Labor Statistics2, as of January 2012, the current California unemployment rate is at 10.9 percent, but the regions of San Diego, Carlsbad, and San Marcos carry a slightly lower unemployment rate of 9.3 percent. That is encouraging news if you plan on doing business in the San Diego region. Also, according to the U.S. Census Report3, the median household income between 2006 and 2010 in San Diego County was $63,069. That is $2,186 over the California median household income average of $60,883, another positive indicator. Unfortunately due to inflation and The Bureau of Labor Statistics4 states that the areas of San Diego, Carlsbad, and San Marcos CPI-U in the second half of 2011 was 253.368, which is a 2.7percent increase over the first half of 2011’s CPI-U for this region. However, this is only a slight concern because inflation is constantly on the rise. Overall the general economic statistics for the region are above average compared to the majority of the country which is a good outlook for businesses looking to open in the area. San Marcos Restaurant Row is a popular destination for people interested in food and beverages. It is surrounded by a healthy assortment of local businesses, two college campuses, and is also located on the busy West San Marcos Boulevard, so traffic flow abundant. Showcase.com5 shows that leasing rates on West San Marcos Boulevard vary, but to be near or on restaurant row, the average price to lease a retail location is approximately $30 per square foot per year. Although $30 per square foot per year is not cheap, San Marcos Restaurant Row is a prime location to have a business involving food or beverages. Also, most leasing rates are listed as “negotiable.” Although it is not cheap to be on Restaurant Row, this is the place to be for a brewery looking for great exposure to potential customers. Although the overall economy is struggling, the craft brewing industry is currently growing. Brewersassociation.org6 reports that although American beer sales decreased by 1.3 percent in total volume in 2011, the craft brewing industry actually increased by 13 percent in volume and 15 percent in total dollars. Brewerassociation.org6 also states that the craft brew retail dollar values surged ahead $1.1 billion compared to 2010, rising from $7.6 billion in 2010 to $8.7 billion in 2011. This implies that consumers are...
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