Boston Beer Company Case Study

Boston Beer Company

1. How attractive is beer industry in US in the mid-1990s?

In mid-90s the beer industry experienced no growth. For the period from 1989 to 1994 annual overall industry growth rate was 0.1%. Beer consumption in US was affected by social and legal constraints and norms. In contrast, specialty beer sales grew significantly and reached 40% compound annual rate over the period from 1989 to 1994. It reflected the change in beer drinking tastes towards bitter, full-bodied, flavorful beer produced by European brewing methods. In the meantime during 1990s the number of macro brewers was going down as number of craft brewers were increasing. Foremost reason for that was the overall declining consumption of beer in US market in 1990s

Porter in [2] states that “in the brewing industry, product differentiation is coupled with economies of scale in production, marketing and distribution to create high barriers”. Despite all the facts, craft brewing industry in US was having new dawn. According to the Institute of Brewing Studies (1997, 1999), 1,273 breweries was operating in the United States as of June 1997, while in Germany there was about 1,234 fully operating breweries. Compared to 43 US breweries in US, it was remarkable period for micro beer industry in the US

In our recommendations we will use best practice from this case.

Recommendations will be given for Small/Family Business companies and Corporations separately, because of differences in resource base, market knowledge and channels.

For Small/Family Business companies number one goal is to find competitive advantage. It could be old family recipe, hand-craft quality, natural ingredients, freshness, or variety of tastes and flavors. In such high competitive market it is crucial to stand out and to provide some extra-value to customers.

The second recommendation is to be wise with financing. It means not to spend all money on own brewery and facilities. It would be better to start from small home brewery, then as and when necessary rent another breweries, and afterwards start buying own breweries. At the beginning most of investments should be made in quality improvement and best ingredients.

The third recommendation is about promotions. We need to ensure that our customers know our product and values. In the meantime the advertising and marketing should be relatively cheap: Beer Festivals, international beer tasting competitions, word of mouth. Passion and inspiration of family business should be emphasized in customer relationship