Introduction This case shows how global forces have impact on European brewing industry and how these companies are trying to overcome the obstacles. In spite of restrictions and awareness campaigning runned by the government, these companies are trying to grow through acquisitions, alliances and closures within the industry. Companies are concentrating on expanding their existence into other markets. Some other companies are concentrating on innovation, branding.
Moreover they are fighting on cost cutting such costs include packaging costs which will reduce the cost of overall manufacturing. PESTEL ANALYSIS OF EUROPEAN BREWING INDUSTRYPolitical * Government organising public events in order to make public aware about the effects of alcohol consumption on the health. * Government is imposing restrictions on consumption of beer and alcohol products. * If anyone is influenced by alcohol in doing crime they are fined with high penalty. There is an overall decline of consumption of Beer in Europe as many traditional key markets have been made increasingly aware of the social problems associated with alcohol consumption. Factors could be the active campaign of European governments against drunken driving, binge-drinking and consequently the long term health and fitness problems.
This initiative taken by the government was one of the reasons that transformed the buying behaviour of European market. Though would be classified under the head of social analysis the government intervention has caused the change in buying behaviour. Economical * The government restrictions have lead to increase in sales of alcohol in supermarket. * Government campaigning and restriction on drinking resulted in decrease in the sale of alcohol product consumption in clubs and pubs.
* Companies are trying to achieve economic of scale through cost reduction. Brewing companies are engaged in various marketing strategy to grow their market through acquisition, mergers and introducing premium products. * Super markets are offering cut price offers. * Rise in packaging cost In the case study there is the talk of the overall decline of European beer consumption, while there was an increase in emerging markets (e. g.
China, Brazil) around the world. This could be because of the government campaigns which caused a shift in sales from the ‘on-trade’ (beer consumed in pubs or restaurants) to the off-trade (retail/supermarkets). Social Growing number of people aware of health conscious and fitness * Because of beer side effect such as bloating, weight gain and gas people could have been swayed to consume other alcohol beverages * The trend in drinking at home is rising because of the government intervention Technological Technology had brought in efficiency and improved production. Technology had definitely helped in receiving information and had helped in various departments. However as a result of incessant research and development the manufacturing units not only were able to obtaining the economies of scale but also over produced.This actually encouraged players to search for the market.
Environment Pollution (A large number of glass and can consuming increases the environmental pollution) Energy consuming Legal After having a basic understanding of the beer brewing industry, we can now analyze each of Michael Porter’s Five Forces. Porter’s Five Forces are the factors that can influence sustainable profitability within the industry. The five forces are: Intensity of Rivalry, Availibility of Substitutes, Bargaining Power of Buyers, Bargaining Power of Suppliers and Threat ofEntry. Force 1: Intensity of Rivalry Rivalry is the extent to which companies compete with one another for customers. Rivalry can be price-based or non price-based. Rivalry is measured by the concentration level of the industry; the more concentrated the industry, the less rivalry.
Other factors that increase rivalry are large capital asset requirements and high switching costs. Price-based rivalry. The beer industry does not have evidence of price wars. Beer prices have increased, but that is mostly due to inflation. The increased pr
