EUROPEAN BREWING INDUSTRY

European Brewing Industry

European Brewing Industry

Step One: Identify between 5 to 8 key trends - From PESTEL/FIVE Forces etc

1. Policy on Drinking Hours - UK relaxes drinking hours (in line with Europe)

2. Current Recession - impact on consumption - impact of trends in disposable income?

3. Industry Consolidation at the micro level

4. More demand for “off trade” much cheaper beers - less drinking out?

5. Binge Drinking UK and other areas of Europe - impacts on health, medical/policing costs and resultant lost productive output to industry? - (relate to changes for example in the UK drinking hours)

6. Preference for more global brands

7. Advances in brewing/Automation technology - reduce costs of production/improve quality and potential to reduce carbon/energy foot print

8. No Smoking Bans - impact on “on-trade”

Step Two: Identify and list forces likely to have an high impact on the industries future development. (list as many as you can think of)

- The brewing industry is an important customer of European grain producers- if beer sales fall, sales of grain also fall- it is in the best interests of the producers to promote reasonable pricing. Switching costs for the brewers are also low- it would be easy for the brewers to source grain elsewhere.

- The retailer's market share is now 60% across Europe. 13% of the beer sold is own-label beer . Retailers can source these beers from any brewer, placing downward pressure on the price paid to brewers.

- The opportunity to integrate backwards by retailers is low, so retailers cannot use that threat to push down price.

- Consumers also have power over the brewers- there is no cost to the consumer for switching from one brew to another.

- Substitutes to beer include soft drinks, wine, cider, and spirits.

- Industry growth is slow- consumption dropped 0.5% between 1992 & 1998 -falling volumes have intensified ...