The Beer Market in Spain

Topics: Beer, Marketing, Pale lager Pages: 7 (1887 words) Published: November 23, 2011
Group 6- Jennifer, Priya, Ricky and Barbara

Beer market in Spain

1.Environmental Analysis:

Porter’s 5 Forces:

Buyer Power: Buyer power is relatively strong in the beer industry. The recent financial crisis showed us that buyers are price sensitive. Also, the presence of many different brands and products give buyers a lot of choice. Therefore, sellers must differentiate their products or offer very competitive prices to remain profitable.

Supplier Power: Beer is made from malt, hops, water and yeast. These ingredients are relatively commoditised and are readily available .There are many suppliers offering generic products. Suppliers have relatively little bargaining power.

Threat from new entrants/ Barriers to entry: The initial investment in beer production is large as plants and production technology are complex and take time to establish. Furthermore, establishing a brand identity and establishing relationships with retail outlets is time consuming and can be difficult. Because of the presence of a few market dominating firms, threat from new start-ups is small, except in niche markets. Therefore we can conclude that barriers to entry are moderate.

Substitutes: The alcoholic beverage found to be the closest substitute to beer available on the market is cider. The cider industry is growing rapidly and it is becoming an increasingly popular choice among beer drinkers.

Rivalry: The market leader in beer sales is Heineken, which holds 32% total volume share in 2010 (Euromonitor International, April 2011, page 3). This closely followed by Mahou with 30% total volume share. In this respect, the beer industry is not particularly competitive. However, amongst smaller brands competing for niche market share, there is fierce competition.

2. Who, What, How analysis:

Functions or needs: Thirst, social needs, relaxation (WHAT)

Customer Groups: (WHO)

Teens & adults

Students, friends, families & retirees

Product varieties / Technologies: Premium Lager Beer, Standard Lager Beer, Non-alcoholic Beer, Light Beer (HOW)

3. Identification of key trends:

Beer sales were affected by the 2008/09 financial crisis. Consumers decreased spending on going out and other leisure activities. Therefore on trade (drinking when out) fell by 7% in 2010 and off trade (staying in and drinking) rose by 1%. This follows the growing trend to stay in and socialise rather than going out to bars etc. The increase in price sensitivity of consumers has also contributed to an increase in supermarket and hypermarket market share for beer sales. Many Supermarkets and Hypermarkets have created their own beer labels that they offer at a discounted price to take advantage of this increased price sensitivity.

However, the majority of sales are still ‘on trade’, due to the Mediterranean climate and the Spanish culture of going out for a drink, especially during the warmer months.

Furthermore, 30% of beer sales in Spain are made by tourists. Beer sales levels are extremely sensitive to fluctuations in tourism. The economic crisis caused a decrease in the tourism industry, and thus in beer sales.

In the south of Spain, lighter beers are more popular while in the North heavier beers with more body are more popular. Beer consumption in general is also strongly linked to the season, with more beer being consumed in warmer months.

In 2010, the only beer product to achieve a total increase in sales growth was non-alcoholic beer. This could be the effect of an increase in health awareness and/or a reaction to stricter driving restrictions.

Finally, the economic downturn has caused an increased demand for 330ml and 500ml canned beer relative to the traditional 330ml bottled variety.

4. Competition Analysis:

Heineken is the market leader in beer sales, with 32% total volume sales in 2010. Second is Mahou, with 30%. However, in 2010, Heineken’s strategy to focus on premium lagers caused it to lose share, while...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Indian Beer Market Essay
  • Global Beer Market Trends Essay
  • Market Cultural Report on Spain Essay
  • Regulation of the Stock Market in Spain Essay
  • Beer Market in the U.S.A: An Analysis Research Paper
  • Beer Market Essay
  • Spain Essay
  • Spain Essay

Become a StudyMode Member

Sign Up - It's Free