U.S. Beer Industry
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Anheuser-Busch (45%), Miller Brewing (23%) and Adolph Coors (10%) are the three biggest producers in the U.S. beer industry, garnering approximately 80% of market share combined (Overview, 2003). Three leading factors in the consolidation occurring in the U.S. beer industry are: flat consumption, regulatory requirements, and high taxation levels. Barriers to entry are significant and include high startup and legal costs and manufacturing and distribution economies of scale that are prohibitive to new entrants. All three of the largest brewers in the U.S. own their own subsidiaries responsible for nonbrewing functions such as canning plants, labeling, etc. Such advantages from economies of scale enable the three dominating brewers to increase operating profits. According to Standard & Poors Industry Surveys, Anheuser-Busch has ôbeen able to leverage its 45 percent U.S. market share into 75 percent of the industryÆs operating profits through significant economies of scale in the areas of raw material procurement, manufacturing efficiency and marketingö (Overview, 2003, 1).The U.S. beer industry saw shipments decline by 3% in the first half of the 1990s, with sales at the largest three brewers gaining only slightly in the same period. Flat consumption trends, regulatory burdens, and high taxation levels have led to such declines and flat sales. However, it is flat consumption levels, particular in the U.S., that
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son to beer product lines. High tax rates and restrictions on distribution typically hamper sales in the U.S. beer industry. However, malternative products help eliminate these barriers to growth. According to Daykin (2002), major brewers switched to malternative products over sluggish selling wine coolers in order to ôtake advantage of the lower tax rates and wider distribution systems for malt drinksö (2). In the five dynamic model that involves conditions, structure, conduct, performance and government policy, malternative beverages are a strategy that enables the big three brewers to achieve success.
Malternative growth significantly increased over the past two years with brewers enjoying more consumer dollar when compared to domestic beer. On top of premium pricing growth has been phenomenal with the malternative category experience an 87 percent increase in growth from 200 to 2001, in comparison to beer growth of 9 percent for premium light beer, and 6 percent growth for premium beer (State, 2002, 35). While no one can accurately predict if malternatives are a here-to-stay fad like light beers (once considered a fad) or a fad like wine coolers that did go bust, in the short term no major brewer can afford to ignore thi
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Some common words found in the essay are:
Information Resources, Surveys Anheuser-Busch, According Daykin, Adolph Coors, Miller Brewing, Market Success, Morgan Stanley, Malternative Market, Industry Resources, Ice Australia, beer industry, flavored malt, malt beverages, malternative beverages, flavored malt beverages, niche brands, daykin 2002, major brewers, flat consumption, profit margins, malt beverage, beer malt beverage, malt beverage market, hein 2002 35, lower tax rates,
Approximate Word count = 2666
Approximate Pages = 11 (250 words per page)
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