Industry Analysis

Global market forces are identified as responsible aspects in driving major changes within the food and beverage industry. However, the food and beverage industry have also been affected by the constant changes in consumer preferences as well as increasing government regulations on businesses.

The beverage industry comprises of both alcoholic and non-alcoholic drinks. The nature of competition within this industry calls for players to offer variety of products capable of meeting consumer demand; this goes hand in hand with the quality. Beverage industry experiences frequent entrance of new products and this explains the reason as to why there are hundreds of different drinks in the markets from different companies.

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The beverage industry comprises manufacturers and distributors of various drinks such as soft drinks, energy drinks, coffee and tea as well as sports drinks, alcohol, nutritional drinks amongst others (Deichert et al 2-9).

Trends influence and logics within the alcohol beverage Industry touches such areas as marketing practices, success within trade agreements as well as financial progress. Globalization marketing tendencies have since affected areas of society which were previously not considered as potential economic hubs.

The beverage alcohol industry has been mostly affected by globalization which has also affected alcohol policies within different market segments across the globe. The industry is considered superior in terms of economical advantages, its marketing principles focuses on defining, forming and creating goods with target group in mind. Obtaining of raw materials and the overall process of production presents separate entity which has little to do with final product sold to consumers (Tremblay and Carol).

Major brewers within the US market are considered to be Anheuser-Busch, Inc., SAB-Miller, and Molson Coors Company. Anheuser-Busch recognized as the major supplier of beer within the market followed by SAB-Miller (Elzinga). One of the most important aspects is that companies should produce beer that is mostly liked by the customers.

One of the most sold beer brand in the US are Bud Light, Budweiser, Coors Light, Miller Lite, Natural light, Busch Light, Miller Genuine Draft, Miller High Life, and Michelob Light. USA has one of the largest beer import market with a total value of about $2.7 billion. The overall high demand for beer in USA is because of the growing demand for larger that has low amount of calorie (American Beverage Association).

There is intense pressure from competitive forces within the alcohol industry. There are high levels of competition from major brewing countries like the US, China and European countries (Elzinga). The companies within this industry have resorted to differentiating their final products to suit the current consumer desires. This as a result of the stiff competition between domestic and exotic alcoholic products, creating an environment of mergers for the purposes of gaining cost benefits and market share.

The current beer industry appears very attractive for big companies such as Heineken. This is because of the low pressure from suppliers, as well as low threat of new entrants and moderate pressure from buyers. According to analysis the industry is highly competitive since there is presence of many substitutes.

These calls for every company dealing with alcoholic products to develop competitive strategies which could help them counter pressures from the global forces. The Porters five forces have great influence within the industry when it comes to designing of strategies within the market environment. However, the level of competition within the industry determines the development of products and services that would grant the required competitive advantage (Tremblay and Carol).

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There is decline in traditional key markets for European beer consumption. Some of the factors contributing to these could be government’s aggressive campaign against drunken driving. This affects greatly the propensity of drinking beer within restaurants, pubs and bars.

The overall beer consumption per capita varies greatly between countries with Germany recording four times higher consumption compared to Italy. Brewers’ main purchasing costs include such things as packaging and acquisition of raw materials such as barley. Research shows that the majority of the companies within packaging industry in Europe are international. These include companies such as Crown which produces cans and Owens-IIIinois specialized in glass bottles (Tremblay and Carol).

Majority of Americans consume lots of beer since they consider it preferred beverage. Recent surveys shows various percentages of beer consumption with the percentage of beer consumers being around 65% showing an increase in the rate of consumption from previous years. There is an average of 4.5 beer drinks per week based on individual health matters. In the year 2010 statistics revealed that almost 41% of Americans prefer taking beer, 33% wine and 23% liquor (Tremblay and Carol).

Table1: Percentage of Global Alcohol Consumption (Source: GfK “Alcohol consumption” survey 2008, GfK Custom Research/).

WSJE

Figures in %BeerWineLiqueurs and fortified winesSpiritsCocktails/alcopops
USA372831022
Europe3640597
All countries36334169