Hudepohl Case Study Final
Elisa Soulier - Jillana Ahloe - Michael Daily - Patrick Cannon - Whitney Dewey
1
Hudepohl Brewing Company
Industry Analysis: Economic Trends
At the time Bob Pohl was appointed general manager of the Hudepohl Brewing Company in 1980, there were six big firms within the brewing industry selling 82% of the beer. These leaders shared common characteristics of being vertically integrated, operating large scale plants, advertising heavily, mostly distributing through independent wholesalers, and possessing sufficient funds for more aggressive future growth plans. However, there were varying degrees of firm capabilities found within five cost components: raw materials purchasing, production, labor, packaging, general and administrative expenses. As a result, firms had different abilities to add value by significantly decreasing supplier opportunity cost.
Firms had to account for wide fluctuations in prices for brewing ingredients, but there were significant volume discounts for major packaging material purchases. The majority used batch size and similar technology for production. A conservative culture and primacy of quality control precluded use of automation, but large breweries were able to make changes with installation of expensive computers. Cost of labor was impacted by a norm of consistently higher wages compared to other manufacturing employees, powerful unions, and production efficiencies created by technological improvements. Finally, economies of scale allowed for a decrease in unit costs, and thereby, more funds to buy expensive equipment and attract better management.
Industry Competitive Trends
New marketing strategies were being implemented by large breweries due to changing consumer profiles, growth of convenience stores changing where beer was purchased, and a less rigid regulatory environment. By 1978, total beer sales in percentage terms by market segments reported greatest decline in popular beers and greatest increase in super premium beers.
1
Hudepohl Brewing Company
Industry Analysis: Economic Trends
At the time Bob Pohl was appointed general manager of the Hudepohl Brewing Company in 1980, there were six big firms within the brewing industry selling 82% of the beer. These leaders shared common characteristics of being vertically integrated, operating large scale plants, advertising heavily, mostly distributing through independent wholesalers, and possessing sufficient funds for more aggressive future growth plans. However, there were varying degrees of firm capabilities found within five cost components: raw materials purchasing, production, labor, packaging, general and administrative expenses. As a result, firms had different abilities to add value by significantly decreasing supplier opportunity cost.
Firms had to account for wide fluctuations in prices for brewing ingredients, but there were significant volume discounts for major packaging material purchases. The majority used batch size and similar technology for production. A conservative culture and primacy of quality control precluded use of automation, but large breweries were able to make changes with installation of expensive computers. Cost of labor was impacted by a norm of consistently higher wages compared to other manufacturing employees, powerful unions, and production efficiencies created by technological improvements. Finally, economies of scale allowed for a decrease in unit costs, and thereby, more funds to buy expensive equipment and attract better management.
Industry Competitive Trends
New marketing strategies were being implemented by large breweries due to changing consumer profiles, growth of convenience stores changing where beer was purchased, and a less rigid regulatory environment. By 1978, total beer sales in percentage terms by market segments reported greatest decline in popular beers and greatest increase in super premium beers.