Beer Industry

Report
AEM 4160
THE BEER INDUSTRY
AGENDA.






Industry Overview
Major Players
Primary Pricing
Strategies
Secondary Pricing
Strategies
Case Study
Recommendations
THE BEER INDUSTRY
INDUSTRY OVERVIEW.
WHY THE BEER INDUSTRY?

Undergoing major changes
 Consolidation

Uses pricing strategies that we have focused on in
this class
 Advertising
 Bulk

pricing
Beer is an interesting topic, specifically for college
students
INDUSTRY SNAPSHOT.
INDUSTRY STRUCTURE.
Life Cycle Stage
Regulation Level
Revenue Volatility
Technology Change
Capital Intensity
Barriers to Entry
Industry Assistance
Industry Globalization
Concentration Level
Competition Level
Mature
Heavy
Medium
Low
High
High
Low
Medium
High
Medium
INDUSTRY REVENUE.
Growth Year Revenue ($ million) Growth %
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
33,162.2
31,991.0
29,991.4
29,355.7
29,773.0
31,275.5
29,460.4
30,742.9
31,163.0
31,060.1
28,308.9
27,393.1
28,115.9
28,783.5
-----3.5
-6.3
-2.1
1.4
5.0
-5.8
4.4
1.4
-0.3
-8.9
-3.2
2.6
2.4
Competition with other Industries
Beer Brewers Industry Analysis
11 of 17
Figure 1: Alcohol Sales by
Industry
33%
Beer
52%
Wine
Liquor
15%
Increasing wine consumption. Currently, beer holds a majority of the market,
DEMAND.

Continuously increases in industry
 As
time goes on and more people are of legal age,
demand increases
 Stable demand Beer prices are constant
Price and Non-Price Rivalry

Price Rivalry
 No
real price rivalry
 Beer price increase due to inflation
 Industry wide, not company specific

Also non-price based rivalry
 Product
 Low
innovations
calories, low carbs, etc.
PRODUCT DIFFERENTIATION.

Beer Style
 Term
used to differentiate and categorize beers
 Companies use different styles to meet consumer
preferences
 Can vary depending on the color, flavor, strength,
ingredients, production method, recipe, history, or origin
of the beer
 Companies offer different variations of core product
PRODUCTS OF THE BEER INDUSTRY.
INNOVATION AND TECHNOLOGY.

Technology advancements = increase in productivity
 Reduction
of inefficiencies
 Increase operational effectiveness

The level of technology change is low
wers Industry Analysis
INCREASE IN PRODUCTION =
INCREASE IN EMPLOYMENT.
y size. The brewing industry is measured by the number of barrels
ed per decade. As shown in Table 1 and Figure 1, the beer brewing
has been increasing since 1860.1
Table 1: Decennial Production
1860 – 2000
Barrels
Year
(In Millions)
% Difference
1860
3,812
72.5
1870
6,574
100
1880
13,347
106.5
1890
27,561
42.7
1900
39,330
51.2
1910
59,485
-84.4
1920
9,263
-60.3
1930
3,681
1391.2
1940
54,891
61.8
1950
88,807
6.5
1960
94,547
42.4
1970
134,653
39.9
1980
188,373
8.1
1190
203,658
2000*
199,173
*Reflects 2000-2007
2 of 17
barley, hops, corn and yeast) and packaging materials (such as kegs and
bottles), as well as equipment (such as grain mills, tanks, yeast propagators, and
packaging systems).
PRODUCTION AND
DISTRIBUTION IN BEER INDUSTRY.
Law prohibits restaurants, stores and individuals from buying directly from
breweries. There is a required three-tier process in place to prevent alcohol
abuse, and to ensure minors are not purchasing or consuming alcohol.
Therefore, individuals and retail outlets must purchase from a licensed
wholesaler or distributor. Figure 1 shows a picture of the supply chain.
Figure 2: Supply Chain
Materials:
Breweries:
Water
Corn
Yeast
Barley
Cans
Bottles
Kegs/barrels
Stores
Distributors
and
wholesalers
Restaurants
“Breweries” encompasses the actual brewing part of the process, as well as the
bottling process and the equipment that is used during both of these processes.
According to Yahoo finance the beer brewing industry in the United States is
estimated to be worth 46 billion dollars. 5
2
3
http://stocks.us.reuters.com/stocks/fullDescription.asp?rpc=66&symbol=BUD
http://www.molsoncoors.com/investor-relations/business-profiles/
INDUSTRY COSTS.
CAPITAL INTENSITY.

The level of investment required is high
BARRIERS TO ENTRY.
GOVERNMENT REGULATION.



Bureau of Alcohol, Tobacco Firearms and
Explosives (ATF)
US Alcohol and Tobacco Tax and Trade Bureau
(TTB)
State regulations
IMPORTS AND EXPORTS.
IMPORTS AND EXPORTS.




Anheuser-Busch InBev and MillerCoors now control
74.3% of total market share.
Exports = increased almost eightfold, from 1.3% of
revenue in 2006 to an expected 11.3% in 2011.
Imports= 13.0% share of domestic demand in
2011, worth more than $3.8 billion, is above the
2006 import level of 11.3%.
Imports and exports continue increasing
INDUSTRY TRENDS.

Mergers have increased foreign ownership
 International
giant South African Breweries (SAB)
acquired Miller Brewing Company to form SABMiller
 Molson Canada merged with Coors Brewing Company
in 2005 to form Molson Coors
 Three years later, these companies launched
MillerCoors, a joint venture of their operations within
the United States
 Combined
market share= 29.0%
classified as either a lager or ale; which is determined by the production method
and which type of yeast is used.
INDUSTRY STRUCTURE.
Concentration of industry. The concentration ratio is a measurement of the
revenues of the largest firms, in comparison with the rest of the industry. The
CR4 refers to the top four largest firms. If a CR4 is greater than 40%, it implies
significant concentration effects. As Table 6 shows, the CR4 of beer brewing is
77%.
Table 6: Concentration Ratio of Top Four Competitors
Company
Revenues (in millions)
SABMiller
$ 18,620
Anheuser Busch
16,685
Molson
Coors
Brewing
6,190
Beer
Brewers
Industry
Analysis
Boston Brewing Co.
341
CR4*
77%
9 of 17
*$41,836 / $55,000
Table 7: Herfindahl Index
Company
Revenues (in millions)
The
Herfindahl
Index
is
another
measurement
of c oncentration within an
SABMiller
.10
industry.
It Busch
is measured by taking the sum of.35
the market share of all firms within
Anheuser
the
industry
andBrewing
squaring it. A HI greater than
Molson
Coors
.141800 implies significant
concentration
effects.
HI for beer brewing is 2362.
Boston Brewing
Co. As Table 7 shows, the.20
Others
.21
8 HI:
2362
http://www.usatoday.com/money/industries
9
http://en.wikipedia.org/wiki/Beer_style
After review of the CR4 and Herfindahl Index, it is apparent that the beer brewing
industry is a concentrated industry.
THE BEER INDUSTRY
MAJOR PLAYERS.
MAJOR PLAYERS.
ANHEUSER-BUSCH INBEV.


Market Share: 42.6%
Brand Names: Budweiser, Bud Light, Beck's, Stella
Artois, Michelob, Natural Light, Leffe, Hoegaarden,
O'Doul's
MILLERCOORS LLC.


Market Share: 31.7%
Brand Names: Miller, Coors, Blue Moon, Mickey's,
Pilsner Urquell, Foster's, Keystone, Milwaukee's Best ,
Steel Reserve, Killian's
THE BEER INDUSTRY
PRICING STRATEGIES.
PRIMARY PRICING STRATEGIES.
PRIMARY PRICING STRATEGIES.

Collusion

Discounting

Sub-premium Emergence
COLLUSION OF NATIONAL FIRMS.

Collusion is an agreement made between firms to:
 Divide
Market Power
 Set Prices
 Limit Production
 Lower Competition

Firms choose to collude in order to increase the
overall profit margin of their respective firm.
WHY COLLUSION IS POSSIBLE.

Industry must be controlled by A FEW MAJOR FIRMS.
 A-B

and MillerCoors control 80% of market share (Oligopoly).
SIMILAR COSTS among top firms, with respect to
production, advertising, etc.

Close to EQUAL DEMAND for product.

SIMILAR PRODUCTS.
COLLUSION ENABLES FIRMS TO:

Set prices relatively high.
 Leads

to increased Profit Margin.
Change price freely with minimal resistance.
 Price
will then, usually, only changes in a vertical
direction.

Internally expand.
 Leads
to Economies of Scale.
AFFECT ON CONSUMERS.

Consumers must pay HIGHER OVERALL PRICE for
products in this market.
 This
is the reason why a 12 pack of Miller Lite and Bud
Lite are more expensive than most other brands in the
same category.

Consumers choose beer depending on perceived
benefits and qualities other than price.
REVENUE GROWTH.
YEAR
REVENUE
$ MILLION
GROWTH
%
1998
33,162.2
1999
31,991.0
-3.5
2000
29,991.4
-6.3
2001
29,355.7
-2.1
2002
29,773.0
1.4
2003
31,275.5
5.0
2004
29,460.4
-5.8
2005
30,742.9
4.4
2006
31,163.0
1.4
2007
31,060.1
-0.3
2008
28,308.9
-8.9
2009
27,393.1
-3.2
2010
28,115.9
2.6
2011
28,783.5
2.4


Revenues, along with the Price
Volatility of key brewing
ingredients dropped due to
expansion of the CRAFT
BREWERY SEGMENT.
Profit increased as a
percentage of revenue to
11.1% in 2011, compared to
10.8% of revenue in 2006.
DISCOUNT PRICING OR BULK PRICING.

Sell large quantities of beer at an attractive price.

Pay less per unit.


Requires consumer to trade down to sub-premium
brands.
Second-Degree Price Discrimination.
SUB-PREMIUM SALES TRENDS.


30 PACKS GREW 18.2% IN US DOLLAR SALES
(2009).
18 PACKS GREW 35.5% IN US DOLLAR SALES
(2009).
Source: Category Focus: 2010 Beer Report: Sub-premium, crafts lead the way
PREMIUM SALES TRENDS.


30 PACKS GREW 6.4% IN US DOLLAR SALES
(2009).
36 PACKS GREW 15.8% IN US DOLLAR SALES
(2009).
Source: Category Focus: 2010 Beer Report: Sub-premium, crafts lead the way
WHY BUY IN BULK?

Consumers now realize that buying a large number
of beers for a discounted price is efficient for our
wallets.
AND…

Buying in bulk is convenient, saving us both time and
effort.
SHARES OF PREDICTED ANNUAL SALES
BY VOLUME PACKAGE SIZE.
PERCENTAGE OF TOTAL SALES
100%
50%
0%
72 OZ
144 OZ
PACKAGE SIZE
Source :RTI International, Research Triangle Park, NC, USA
288 OZ
BUYING IN BULK.


You can expect to pay about $11.99 for a 12-pack
of 12-ounce cans at a typical grocery store
BUT, at Costco, a 30-pack of 12-ounce cans sells for
$19.99!
 About
67 cents per can versus about $1 per can at a
supermarket.
Source: MSN.com 10 bulk-buying bargains
EMERGENCE OF SUB-PREMIUM BRANDS.

Several factors caused shift from premium brands
towards sub-premium brands:
 Current
economy
 Price of national premium brands held constant
 Sub-premium dominate bulk market
 Improved image of sub-premium brands

Perceived “coolness
ALL LEAD CONSUMER TO TRADE DOWN!
BEER SALES & THE CURRENT ECONOMY.


As the unemployment rate has gone up, beer sales
have plummeted at the exact same time.
Consumers more cost efficient.
Source: IBIS World: Beer Production in the US
PREMIUM PRICES HELD CONSTANT.


A-B and MillerCoors have held prices constant and
cut costs of production and marketing instead.
Consumers enticed to trade down to sub-premium
level in order to save money
TOP BRANDS STILL DOMINATE BUT CONSUMERS
DETERMINE WHICH SEGMENT IS MOST POPULAR.
Source: Anheuser-Busch Companies, Inc.
IMPROVED IMAGE.


Keystone Light beer, the top share grower in the
convenience store channel
Keystone recently embarked on National
advertising campaign
 Keith


Stone Commercials
One of the most preferred drinks for college kids
nationwide.
Keystone Light is a hot brand for beer drinkers
looking for value in today's economy
OVERVEIW.


National brands able to manipulate price due to high
market share
A-B and MillerCoors hold prices constant during recession.



Consumers shifting towards buying in bulk to save money
Leads to a shift in preferred segment


Drops in sales and revenue
Premium light
Sub-premium light
Customers haven't stopped drinking. They just want to pay
less for a buzz.
SECONDARY PRICING STRATEGIES.
A WORD ON COMPETITION.
HOW IS COMPETITION IS EVOLVING PRICES IN THE
DOMESTIC BEER INDUSTRY?
INCREASINGLY COMPETITIVE!




Four largest corporations generate 81.8% of the
revenue.
Same four corporations also produce 74.3% of all
the beer in the United States.
However, domestic beer companies are facing
increased competition.
High market concentration.
WHY IS THIS IMPORTANT?



Affects the way beer companies strategically price
their beer.
Second-Degree Price Discrimination.
Consumers self select into different beer
consumption categories.
WHY IS COMPETITION INCREASING?




Target Market
Social Trends
Consumer Loyalty
Evolution of Drinking Habits
TARGET MARKET.




Major beer companies now try to advertise
primarily to the age group of 21-35.
Underage drinking?
How do beer companies keep their aging consumers
loyal to their product?
Younger demographic wants to pay a lower price
for substantial volume!
CONSUMER LOYALTY.
Loyal Consumers




Older Demographic
Ages 35+
Have a beer they
grew up with and
prefer.
Less Likely to be
influenced by price
fluctuations.
Not Loyal Consumers





Younger Demographic
College Students
Those interested in
buying in bulk.
Those influenced by
current social trends.
Price Influenced Easily
SOCIAL/DRINKING TRENDS.





Especially for primary target market, drinking
habits have evolved.
Binge Drinking
Pre-Gaming
Underage drinking has become commonplace on
college campuses.
Emergence of other options that promote quick
inebriation. (Ex: Four Loko)
INDUSTRY COSTS AFFECT PRICES.
So what are some pricing strategies
that domestic beer companies have
used to evolve along with
consumers?
How Do We Get
More?
SECONDARY PRICING STRATEGIES.

Two Primary Strategies
 1.
Advertising less on the basis of price.
 2. Incorporate common craft beer practices into major
company practices.
ADVERTISING TRENDS.




Major beer companies
rarely advertise on the
basis of price.
Consumer Benefits are
now the focus.
Taste, Quality,
Intangibles.
THINK- Can you even
remember the last time
you saw a beer
commercial that
mentioned prices?
I DO/DO NOT BUY THIS PRODUCT
BECAUSE…
Pros




I feel nostalgic when
drinking it. (Intangible)
I like the taste. (Taste)
The beer is not too
filling. (Intangible)
My friends also enjoy
the beer. (Intangible)
Cons





The product triggers no
social feelings inside an
individual. (Intangible)
Bad taste. (Taste)
Unhealthy. (Quality)
Lots of calories. (Quality)
I’m the only one who likes
this beer among my group
of friends. (Intangible)
EXAMPLES/TRENDY SLOGANS.





“Great taste, less filling” – Miller Lite
“Drinkability” – Bud Light
“The King of Beers” – Budweiser
“The Banquet Beer” – Coors
“Cold as the Rockies” – Coors Light
WHY IS THIS CONDUCIVE?



Allows major beer companies to keep prices are a
relatively high, stable level. (Collusion)
Also, less attention is paid to potential price
fluctuations.
They want you to focus on perceived consumer and
social benefits!
ARE WE INFLUENCED BY SOCIAL
NORMS?
CRAFT STYLE IMPLEMENTATION.

Major beer brands
are starting to
implement more
consumer friendly
practices that craft
beers have always
provided.
CRAFT BEERS GROWING.



From 2003-2011,
production of craft beer
as risen from 5,137 million
barrels per year to
10,097 million barrels per
year.
Almost Doubled!
Demand Increase
MAJOR BEER COMPANY ACTIONS.
Actions



Beer Tasting Opportunities.
Brewery Tours.
Consumer Appreciation
Events.
Results



They do not want to lose their
consumers to smaller craft beer
companies!

Potential to attract new
consumers.
Increase overall consumer
base.
Potential demand increase for
their product as a result.
Can manipulate prices in their
favor when demand and their
market share is high.
THE BEER INDUSTRY
CASE STUDY.
CASE STUDY.
BEER ADVERTISING AND
MARKETING UPDATE:
Structure, Conduct, and Social Costs.
By: Jon P. Nelson
BEER AVERTISING: AN OVERVEIW.

The U.S. brewing industry is dominated by three
firms, who together account for about 80% of beer
shipments.
 Anheuser-
Busch
 SAB-Miller
 Coors
SOURCE: Nelson, Jon. (2005). Beer advertising and marketing update: structure, conduct, and social costs.
http://www.springerlink.com/content/g6774l01385x5p37/
SAB-MILLER.


1970: Philip Morris acquires the Miller Brewing Company.
First to launch a “Lite” beer in 1975.



Miller Lite advertising expenditures had grown from $15
million in 1975, to $67 million ($0.33 per case) in 1986.
1988: Rival Bud Light hits peak advertising at $70 million
($0.51 per case).


Obtains the First-Mover advantage in the Lite Beer market.
Not until 1994, do sales of Bud Light surpass those of Miller Lite.
First-mover advantage and the success of the light beer
category, means “light beer war” affects all subsequent
advertising and marketing decisions by leading brewers.
SOURCE: Nelson, Jon. (2005). Beer advertising and marketing update: structure, conduct, and social costs.
http://www.springerlink.com/content/g6774l01385x5p37/
NEW COMPETITION PROSPERS.

New Competition: Specialty Brewers, Microbrewers, and
Brewpubs.



Sell at super-premium prices.
With the exception of a few, many abstain from heavy national
advertising.
Rivalry among industry leaders has spilled into the market
for Flavored Malt Beverage
Evokes new forms of competition, and new strategies for
marketing and advertising.



This recent product innovation presents the consumer with a variety of
choices may spark a renewed advertising rivalry amongst industry
leaders.
Marketing reflects consumer tastes for lighter beverages.
Might be the next runaway product category.
SOURCE: Nelson, Jon. (2005). Beer advertising and marketing update: structure, conduct, and social costs.
http://www.springerlink.com/content/g6774l01385x5p37/
AVERTISING AND STRUCTURAL CHANGE.

1950–1986: Intense advertising rivalry among the top three brewers:
Anheuser-Busch, Pabst, and Schlitz. Followed by by an intense advertising
rivalry between Anheuser-Busch and Miller during the “light beer war.”





1987-1995: The total number of firms rises, and there is an expansion of
microbreweries


Successfully exploited the new medium of television and the economies of scale
associated with national advertising and distribution.
Structural change marked by increased size of individual and multi-plant
operations by the industry leaders.
Schlitz and Stroh merged and Pabst dropped out of the top group.
Independent mass-market brewers declines to 33 in 1986.
Market share of the top three firms rises from 75% in 1990 to 80% in 1995.
1996–2003: Stroh goes out of business and sells brand names to Miller and
Pabst.

2002, Miller Brewing sold by Philip Morris to South African Breweries Ltd. (SAB).
SOURCE: Nelson, Jon. (2005). Beer advertising and marketing update: structure, conduct, and social costs.
http://www.springerlink.com/content/g6774l01385x5p37/
AVERTISING AND STRUCTURAL CHANGE:
MARKET SHARES AND ADVERTISING BY THE THREE LEADING BREWERS FOR THE
PERIOD 1975–2003.
SOURCE: Nelson, Jon. (2005). Beer advertising and marketing update: structure, conduct, and social costs.
http://www.springerlink.com/content/g6774l01385x5p37/
AVERTISING AND STRUCTURAL CHANGE.


Anheuser-Busch and Miller demonstrate remarkable output
growth between 1975 and 1990.
Anheuser’s average spending per case is below that of its
smaller rivals.




Reflects advantages of size, a broader product line, and superior
marketing skills.
Advertising intensities rose during1976-1985, and then
stabilized for Anheuser and Miller.
Coors’ advertising continued to increase as outsiders entered
the ranks of its management.
1990–2003, the leaders increase nominal spending by an
additional $0.05 to $0.09 per case.
SOURCE: Nelson, Jon. (2005). Beer advertising and marketing update: structure, conduct, and social costs.
http://www.springerlink.com/content/g6774l01385x5p37/
CONSUMER PREFERENCES AND
ADVERTISING.
SOURCE: Nelson, Jon. (2005). Beer advertising and marketing update: structure, conduct, and social costs.
http://www.springerlink.com/content/g6774l01385x5p37/
CONSUMER PREFERENCES AND
ADVERTISING.


Consumer preferences and advertising interact to
determine success at the brand level.
1993–2003: Among the top 10 brands, three were
able to successfully enter the market:


Today: Top four brands=almost half (48.5%) of U.S.
beer sales


Corona Extra, Busch Light, and Heineken.
Top10 brands= two-thirds of the sales.
2003: The top four brands also accounted for 46% of
beer advertising.
Anheuser-Busch
Anheuser-Busch Corporate
Becks
Bud Light
Bud Light Lime
Budweiser
Budweiser American Ale
Budweiser Corporate
Budweiser Select
Busch
Busch Light
Coors
Coors Light
Corona
Corona Extra
Corona Extra Sponsorship
Corona Light
Dos Equis
Fosters
Guinness
Guinness Draught
Heineken
Heineken Draughtkeg
Heineken Premium Light
Keystone Light
Michelob
Michelob Amberbock
Michelob Ultra Fruit Infused
Michelob Ultra Light
Mikes Hard Lemonade
Miller Chill
Miller Genuine Draft 64
Miller High Life
Miller High Life Light
Miller Lite
Natural Light
Peroni Nastro Azzurro
Samuel Adams
Samuel Adams Boston
Samuel Adams Light
Samuel Adams Octoberfest
Samuel Adams White
Samuel Adams Winter
Smirnoff Ice
Stella Artois
DOL SUM
RAW DATA ANALYSIS.
300000000
250000000
200000000
150000000
100000000
50000000
0
BRAND
RAW DATA ANALYSIS.
BRAND NAME
Anheuser-Busch
Bud Light
SUM OF DOLS

6962500
277952000

Budweiser
Coors
Coors Light
Miller Genuine Draft
64
Miller Lite
156336000
13836500
133489300
9264500
121165300
Television Advertising
Data: Beer Industry- Top
Four Firms.
Of the top four industry
leaders, Bud has the
largest Market Power, as
it incurs the most DOLS.
RAW DATA ANALYSIS.
ANALYSIS:
DOW RELATIONSHIP
TO DOL SUM FOR
TOP FOUR FIRMS.
RAW DATA ANALYSIS.
ANALYSIS:
DOW AND DAY
PART
RELATIONSHIP
TO DOL SUM
FOR TOP FOUR
FIRMS.
RAW DATA ANALYSIS.
ANALYSIS:
DOW AND DAY
PART
RELATIONSHIP
TO DOL SUM
FOR TOP FOUR
FIRMS.
RAW DATA ANALYSIS.
ANALYSIS:
DOW AND DAY
PART
RELATIONSHIP
TO DOL SUM
FOR TOP FOUR
FIRMS.
THE BEER INDUSTRY
RECCOMENDATIONS.
THE INDUSTRY NOW.

2008 Merger activity between Anheuser-Busch
InBev and MillerCoors led to industry shift.
 Anheuser-Busch
InBev and MillerCoors control 74.3% of
total market share.
 Allowed the international companies InBev and
SABMiller higher levels of control over breweries that
originated domestically.

Trade has heavily influenced industry revenue.

Imports and exports fell drastically when
unemployment worries stalled booming global
consumption and trade.
THE INDUSTRY NOW.

Supply and demand shifts in recent years, induced
by unpredictable ingredient prices and changing
consumer preferences, are created turmoil in the
Beer Production industry.
 Faces
increasing competition from other beverages,
namely wines and spirits
 Increase wine and spirit demand (consumer taste
expansion/shift), leads to a decrease in the demand for
beer.
RECOMMENDATIONS.

ADVERTISING.
 Maintain
consistent and strategic marketing messages, and
building and preserving a high level of trust with customers.
 Consumers
know what to expect from both the company and their
products.
 Promote
 The




the brand that is beer.
four fundamental strengths of beer:
1) Beer is genuine.
2) Beer is real.
3) Beer lacks the pretenses often associated with wine or liquor.
4) Beer brings people together; beer is about refreshment, enjoyment
and fun.
 Reaffirm
these four strengths in both developing and loyal consumers.
RECOMMENDATIONS.

PRODUCT DEVELOPMENT.

The use of technology and continued innovation to make
product personalization easier and product upgrades more
accessible to the consumer.
A shift in consumer expectations, attitudes and preferences to
things such as satellite TV, smart phone, and Internet connections.
 Constant access to information has led a dramatic shift in
consumer culture, ideas and lifestyles.


Must must meet the new consumer demand for People more
variety, more novelty, more sophistication in the products
offered in the market.

Example: New Trend Low Calorie Beers


Budweiser Select 55 (55 calories)
Miller Genuine Draft 64, MGD 64 (64 calories)
RECOMMENDATIONS.

PRODUCT DEVELOPMENT (continued).
 Brand
Expansion.
 Capitalize
on the success of a solid brand by breaking into
different product categories under the same brand name.
 Allows firm to increase and leverage the brand equity,
increase product portfolio, and grants a company a larger
hold over the market; thus generating greater revenue.
THE BEER INDUSTRY
QUESTIONS?

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