The distribution alliance Redhook formed with Anheuser-Bush in 1994 was to run for 20 years, but could be terminated after 10 years under certain conditions. Under the alliance, A.B. invested in Redhook and gained a 25% stake in the company's equity, and made its nationwide networks of 700 wholesale distributors. Redhook retained full control over production and marketing. Distributors who participated in the alliance were to be given exclusive distributing rights in their territories. Redhook believed they could gain acceptance and much greater exposure with this alliance with Anheuser-Bush, but the alliance was viewed controversial be many.
Strengths and Weaknesses
Regarding strengths and weakness, we found that one of Redhook's weaknesses was that management wanted to make it too big in the craft beer industry too fast. For instance, once Redhook started making a profit they replaced the first brewery with a larger capacity with state of the art equipment. Redhook also has a problem regarding the structure of the industry and the quality of the company's management team. Another weakness for Redhook was the age group that was buying their craft beer. One of Redhook's strengths was that they had an agreement with one of the biggest beer distributor Anheuser-Busch to distribute their product. However, one could probably turn that into a weakness for Redhook as Anheuser-Busch may not promote Redhook's product as well as their own. The table below shows the strengths and weaknesses of Redhook.
Major source of revenue and profitCraft Beer
Market share of the company4.7%
Strong company brandsBlonde ale
Marketing and advertising effectiveYes. Articulate plans in place Major focus of the companyProduction to produce high quality beer Skilled workersTrained, educated and prepared
Stock price track recordVaries. Down now
Technology efficientCompany has embraced technology
Company proactive about changeYes. Company proven change can work International tradeCompany goal is to compete in the international market
Major BrandUnknown brand name
High cost structurePrice cutting for craft and specialty beers, wine and imports
Beer industry offensive attack to reach dominant position
Industry SaturationMarket saturation
Merger Opportunity and WeaknessMerged with Busch
Maturity of beer market induced lower prices
Some of the opportunities for Redhook, was their involvement in the community, the major beer distributor promoting the product and the visitor tours. Redhook faced the threat of Anheuser-Busch taken over due to them being such a major distributor. Also, the other Craft beer distributor stayed within their territory, therefore having their community support.
Customer NeedUnfulfilled customer need and awareness
TechnologyArrival of new processing technology
DistributionRegional national distribution
ProfitExporting to Foreign nations
GrowthDevelopment of new markets
Introduction of new products
Changes in external environmentCompetition
Increase trade barriersSales decline
Shift in customer product useShift in customer taste
Substitute productsEmergence of new products
New regulationsHighly regulated by government
Redhook's main core competency is that they obviously brew premium, high quality craft beer. They have a good grasp on what they want to accomplish in the beer industry, we are not sure if they have the ability to do so with so many competitors in such a small market. We also think the Redhook home page is a nice touch. Anyone remotely interested in Redhook can find out anything they want to know about any of their products, brewery tours, or Redhook sponsored concerts on the home page. Customers can even take classes on brewing through Redhook University....