Boston Beer Case
The Looming Future of Boston Beer
Craft Beer vs. Domestic Producers The major domestic producer segment only contained three major companies also known as “The Big Three”: Anheuser-Busch, Miller Brewing Company, and Adolf Coors Company. They commonly competed on the foundation of economies of scale which wound up being the main driver of revenue. By selling significant quantities of product at a cheap price, “The Big Three” was able to obtain 77% of the market share in 1994. By holding such a large portion of the market, domestic producers received elevated amounts of revenue which became extremely helpful in the 1980’s when demand dwindled. “The Big Three” was able to avoid financial hardship by having the financial and marketing resources to defend their brands. Due to mass production however, the tastes and standards of quality often varied widely. This created a niche for other brewing segments to tap into the market. Queue the necessity for craft beer. The craft brewing segment manufactured products for more sophisticated drinkers who desired more flavorful and bitter tasting beer. In terms of driving their revenue, craft brewers concentrate on the price aspect of their product. By primarily focusing on the quality of their beer, they could charge a price premium to drive revenue. In fact some brews are so well sought-after, they are sold for double the price major domestic beer. Craft Brewers also capture value through strong brand name recognition. They use extensive marketing campaigns to spark interest and build product awareness. In addition, Craft Brewers have the opportunity to contract out plants of domestic manufacturers who are beneath capacity. Due to the excess amount of producers, custom brewers have considerable control in the relationship allowing them to set strict prices and quality control. Additionally, contracting allows brewers to strategically choose plants locations allowing them to cut down on transportation costs and guarantee
Craft Beer vs. Domestic Producers The major domestic producer segment only contained three major companies also known as “The Big Three”: Anheuser-Busch, Miller Brewing Company, and Adolf Coors Company. They commonly competed on the foundation of economies of scale which wound up being the main driver of revenue. By selling significant quantities of product at a cheap price, “The Big Three” was able to obtain 77% of the market share in 1994. By holding such a large portion of the market, domestic producers received elevated amounts of revenue which became extremely helpful in the 1980’s when demand dwindled. “The Big Three” was able to avoid financial hardship by having the financial and marketing resources to defend their brands. Due to mass production however, the tastes and standards of quality often varied widely. This created a niche for other brewing segments to tap into the market. Queue the necessity for craft beer. The craft brewing segment manufactured products for more sophisticated drinkers who desired more flavorful and bitter tasting beer. In terms of driving their revenue, craft brewers concentrate on the price aspect of their product. By primarily focusing on the quality of their beer, they could charge a price premium to drive revenue. In fact some brews are so well sought-after, they are sold for double the price major domestic beer. Craft Brewers also capture value through strong brand name recognition. They use extensive marketing campaigns to spark interest and build product awareness. In addition, Craft Brewers have the opportunity to contract out plants of domestic manufacturers who are beneath capacity. Due to the excess amount of producers, custom brewers have considerable control in the relationship allowing them to set strict prices and quality control. Additionally, contracting allows brewers to strategically choose plants locations allowing them to cut down on transportation costs and guarantee