Strategic Management at Brewery Industries

Only available on StudyMode
  • Download(s) : 162
  • Published : January 21, 2011
Open Document
Text Preview
Global forces and the European brewing industry
This case is centred on the European brewing industry and examines how the increasingly competitive pressure of operating within global markets is causing consolidation through acquisitions, alliances and closures within the industry. This has resulted in the growth of the brewers’ reliance upon super brands. In the first decade of the twenty-first century, European brewers faced a surprising paradox. The traditional centre of the beer industry worldwide, and still the largest regional market, Europe, was turning off beer. Beer consumption was falling in the largest markets of Germany and the United Kingdom, while burgeoning in emerging markets around the world. China, with 7 per cent annual growth, had become the largest single market by volume, while Brazilian volumes had overtaken Germany in 2005 (Euromonitor, 2006).

Table 1 details the overall decline of European beer consumption. Decline in traditional key markets is due to several factors. Governments are campaigning strongly against drunken driving, affecting the bars. There is increasing awareness of the effects of Kingdom, there is growing hostility towards socalled pubs and clubs. Wines have also become increasingly popular in Northern European markets. However, beer consumption per capita varies widely between countries, being four times higher in Germany than consumption European markets have been showing good growth. The drive against drunken driving and binge drinking has helped shift sales from the “on-trade” (beer consumed on the premises, as in pubs or restaurants) to the off-trade (retail). Worldwide, the off-trade increased from 63 per cent of volume in 2000 to 66 per cent in 2005. The off-trade is increasingly dominated by large supermarket chains.

Acquisition, licensing and strategic alliances have all occurred as the leading brewers battle to control the market. There are global pressures for consolidation due to overcapacity within the industry, the need to contain costs and benefits of leveraging strong brands. For example, Belgian brewer Interbrew purchased parts of the old Bass Empire, Becks and Whitbread in 2001 and in 2004 announced a merger with Am Bev, the Brazilian brewery group, to create the largest brewer in the world, InBev. The second largest brewer, the American Anheuser-Busch, has been investing China, Mexico and Europe. In 2002, South African Brewers acquired the Miller Group (USA) and Pilsner Urquell in the Czech Republic, becoming SABMiller. Smaller players in fast-growing Chinese and South American markets are being snapped up by the large international brewers too. Medium-sized Australian brewer Fosters is withdrawing from direct participation in many international markets, for examples selling its European brand-rights to Scottish & Newcastle. Table 3 lists the world’s top 10 brewing companies, which accounted for around half of the world beer volumes. There remain many small specialist and regional brewers, such as the Dutch company Grolsch (see below) or the British Cobra Beer, originating in the Indian restaurant market.Table 1

Country 1980 2000 2001 2002 2003 2004 2005
Austria
Belgium
Denmark
7651
12945
6698
8762
10064
5452
8627
9986
5282
8734
9901
5202
8979
9935
5181
8881
9703
4862
8970
N/A
N/A
Finland
France
Germany
2738
23745
89820
4024
21420
103105
4085
21331
100904
4136
20629
100385
4179
21168
97107
4370
20200
95639
N/A
N/A
94994
Greece
Ireland
Italy
N/A
4174
9539
4288
5594
16289
4181
5625
16694
4247
5536
16340
3905
5315
17452
N/A
5206
17194
N/A
N/A
17340
Luxembourg
Netherlands
Norway
417
12213
7651
472
13129
2327
445
12922
2290
440
11985
2420
373
12771
2270
N/A
12687
2490
N/A
12747
N/A
Portugal
Spain
Sweden
3534
20065
3935
6453
29151
5011
6276
31126
4932
5948
30715
4998
6008
33451
4969
6266
N/A
4635
6224
N/A...
tracking img