Any topic (writer’s choice)
Locally produced or regional craft beers caused a seismic shift in the U.S. beer industry during the early 2010s with the gains of the small, regional newcomers coming at the expense of such well-known brands as Budweiser, Miller, Coors, and Bud Light. Craft breweries, which by definition sold fewer than 6 million barrels (bbls) per year, expanded rapidly with the deregulation of intrastate alcohol distribution and retail laws and a change in consumer preferences toward unique and high-quality beers. The growing popularity of craft beers led to an approximate four percent annualized rate of growth in industry revenue between 2015 and 2020.
Despite the continued growth in craft beer popularity, the overall beer industry remained flat in 2019 with total beer sales dropping by almost two percent in the United States. The craft beer industry, too, had begun to show signs of a slowdown going into 2020. Annual growth for the next five years was projected to be a little over two percent; approximately half of what it had been for the past five years. Part of the slowdown was due to shifting consumer trends away from beer and towards lower calorie alternatives, such as hard seltzers, or even abstaining from alcohol completely. Still, there did not seem to be a slowdown in the number of new craft brewers entering the market. In addition, consolidation continued. Led most notably by AB InBevs acquisition of several craft breweries, Grupo Modelo, and its acquisition of SABMillermacrobrewers were continuing to battle for the craft beer market share. Established craft brewers responded in kind, as Boston Beer Company Inc. acquired Dogfish Head Brewery.
Yet, the most pressing threat to craft brewers may not have been competition, but the coronavirus (COVID-19). Beginning in early 2020, COVID-19 spread across the world, leading governments to restrict travel and to order citizens to remain at home to try to contain the spread of the virus. Within the United States, shutdowns had led to over 40 states experiencing record-setting unemployment rates.4 For the small, local craft brewers who relied on local bars, tasting events, and other intimate settings to drive awareness and revenue, COVID-19 and social distancing could be the biggest threat in 2020.
After reading the case, students will provide a written case analysis answering the following case questions:
What are the strategically relevant components of the U.S. and global craft beer industry macro-environment?
What is competition like in the craft beer industry? Which of the five competitive forces is strongest? Which is weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants?
What does your strategic group map of the craft beer industry look like? Which strategic groups do you think are in the best positions? The worst positions?
What key factors may determine the success of a start-up or smaller, craft brewery?
What recommendations would you make to a smaller, craft brewery to improve its competitiveness in the market while mitigating any current and future risks?
Identify the strategic issues facing craft brewers in 2020. What effects may these issues have on the industry?
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