The United States Beer Industry

Threat of new entrants. It was hard to enter this market since this industry needs much money to spend in production technology and high advertising cost. Some pubs and bars who sell beers with subscription contract became parts of distribution channels. If there was a newcomer, it would be hard to find new connection. Moreover, when a newcomer could sign contract with a bar, customers who like old brand might be not satisfy with a new one causing switching cost to he shop. Rivalry among existing firms.

The competition in this mass market was aggressive in terms of pricing, brand royalty, distribution channels and national advertising cost. For niche market, they emphasized on the quality and taste. Bargaining power of buyers. For Individuals, they could buy only In a small number. For retailers, they would have higher bargaining power of buyers due to higher purchase volume. Bargaining power of suppliers. Due to the fact that beer was made from malted barley, the ingredient was grown In many states throughout US causing low bargaining power of supplier. Threat of substitute products or services.

There were two majors substitute product: wine and spirits. This affected on a declining of beer consumption. 3. What are the implications of the evolving competition structure in the brewing industry for the profitability and strategy of a smaller messmate firm in the industry? For a smaller messmate firm, they sold premium beer with their special taste and charged higher price to customers so they could cover 4. Are there different strategic groups in the industry? What are they? Do you think the nature of competition varies between groups? Yes, there were two different strategic groups.