Global Forces and the European Brewing Industry

FORCE | NOTES | LEVEL | THREAT OF NEW ENTRANTS | -Inexistence of legal entry barriers;-High initial investments in the industry;-Existence of economies of scale;-Inexistence of switching costs for costumers. | MEDIUM | THREAT OF SUBSTITUTES | -There are no switching costs for costumers;-High interest in exotic products; | HIGH | BARGAINING POWER OF SUPPLIERS | -European packaging industry is highly concentrated;-There are no substitutes for the packaging input. | HIGH | BARGAINING POWER OF COSTUMERS | -The buyers are individuals, so there is no concentration of buyers;-Low switching costs for costumers;-The product is not so differentiated and can be replaced by substitutes. | LOW | COMPETITIVE RIVALRY | -There are many players in the industry;-There is not much differentiation between player’s products; -The companies compete a lot in prices. | HIGH | ATTRACTIVENESS | | LOW |
In order to analyze the brewing industry attractiveness, we performed a Porter Five Forces Model analysis and a PEST analysis. CONTEXT | TREND | IMPACT | | | POSITIVE | NEGATIVE | Political-Legal | -Governmental campaigns against drunken driving;-Governmental campaigns towards health problems because of alcohol;-Free-circulation of goods and capitals in the EU;-Alcohol consumption limits policies in some countries. | -There are no barriers for trades and that is positive in a market that is so global. | -Growing consumer’s awareness for health problems and drunken driving. | Economical | - Slowdown of economic grow rate in Europe countries;-Exponential economic growth in markets like China, India and South America. | -In the non-European market there are a lot of opportunities of growth. | -There are some challenges in the European market, because of the slowdown of beer consumption. | Socio-Cultural | -Growing awareness for health problems and fitness;-Increasing hostility towards “binge drinking”;-Growing