Boston

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Strategic Management Model – Boston Beer Company

The aim of this report is to identify some of the possible strategies that Boston Beer Company could adopt. In order to do so, it is not only necessary to have an understanding of the company itself, but also of the industry in which it operates.

Analysis of Brewing Industry
With nearly 80 million American beer drinkers, beer has become one of the most popular beverages, second only to water and tea. Each year, the U.S. beverage industry produces and sells more than 2.6 billion cases of beer, or about 193.3 million barrels. Although light beer continued to dominate the market with a 37 percent share, the consumption rate of micro brews or specialty beer also continued to grow in popularity.
Standard & Poor’s believes that the U.S. brewing industry in particular will benefit from a favorable pricing environment for beer, improving demographic trends, and rising consumption of premium products. In addition, continued productivity improvements and high industry wide capacity utilization rates should aid profits. Given these factors, we project that operating profits for the domestic brewing industry will advance between 6% and 8% in 2003. This follows a strong performance in 2002, when operating profits for the domestic brewing industry rose more than 10%, by our estimate.

Market Segment
The craft-brewed beer industry is often divided into four industry segments - microbreweries, regional specialty breweries, contract brewing companies, and brewpubs - which are differentiated by volume of production and distribution channels. The undisputed leader of the microbrew segment has been the Boston Beer Company (BBC) and its product Samuel Adams, the tenth largest beer producer in the country. A long-lost American tradition, the craft-brewed beer industry has enjoyed a comeback in recent years and now is among the fastest growing domestic beverage segments despite national trends ...