Molson Coors & Anheuser Busch InBev An External Analysis of the Beer Industry Presentation By: Emily Horstmann, Eric Hyde, Claudia Ortiz and Megan Walzel

Broad Environmental Trends Craft Beer Craze Sales from 2008 to 2013 shot up annually Losers: No. 1 Bud Light & No. 4 Miller Lite had a decrease in sales this past year Though light beers began declining about five years ago, their descent has accelerated this year Together the two brewers control nearly 97% of the light-beer market in U.S. (kind of a big deal…) Flavored Beverages (Bud Light Lime-A-Rita, Cran-Brrr-Rita) (Lackluster ads recently) men drinks vs. women (20%) Only one beer campaign has achieved pop-culture acclaim in recent years-Dos Equis' "Most Interesting Man in the World."

Sociocultural Today's 21- to 27-year-olds grew up expecting variety Redd's Apple Ale introduction has seen success Innovation to compete with liquors as well, which have found success with flavorful varieties and dessert-inspired vodkas like Smirnoff Cinna-Sugar Twist (getting out of hand a bit?)

Global Developing markets remain the engine of volume growth for the global beer industry Brazil, Russia, India and China (BRIC) are recording the highest rate of market growth within the global beer industry, generating almost $108 billion in 2010

Broad Environment Continued Political/Legal Highly regulated industry with moderate differentiation among countries Less regulation among emerging markets Faces more sin taxes Economic In the US, adult male unemployment has decreased from 10.4% in Oct. 09 to 7% in June 13 Blue-collar males in their 20s, were battered by an economic downturn that hammered industries such as construction Beer sales volume hit disproportionally, dropped significantly during recession and have recovered slowly since

Technology Coors Cold Activated Miller Vortex

So…is Beer Attractive? Non-price based rivalry There is a lot of product differentiation within the industry Beer style is the term used to differentiate and categorize beers and meet consumer preferences Beer styles can vary depending on the color, flavor, strength, ingredients, production method, recipe, history, or origin of the beer All major companies offer different variations based off their core product Beer is classified as a lager or ale

Five Forces Analysis Competitive Rivalry within Industry Low Threat of New Entrants Medium-Low Bargaining Power of Customers Medium Threat of Substitute Products Medium-High Bargaining Power of Suppliers

Five Forces Model Continued Competitive Rivalry Within Industry—Low Variation of products and advertising is low: if one firm launches a new ad campaign or product, others follow Mergers and Acquisitions are common Top 4 brewers worldwide: AB InBev, Molson Coors, Heineken, and Carlsberg control 50% of global share Threat of New Entrants—Medium-Low Large brewers experience significant economies of scale Very capital intensive industry to enter and highly regulated Boom of craft brewers over the last few years

Five Forces Model Continued Bargaining Power of Suppliers—Low The main players in the beer industry take up a majority of their suppliers’ business Suppliers are dependent on the beer industry Bargaining Power of Customers—Medium The beer consumer is generally economically sensitive Consumers are interested in new, trendy craft beers Threat of Substitute Products—Medium-High Wine and spirits industry is gaining market share Recent poll states: 36% of alcohol drinkers prefer beer, 45% prefer wine as opposed to 47% preference to beer and 27% preference to wine in 1992 Beer is perceived as less healthy and less classy than substitutes

Same Strategic Group Both operate in broad markets offering a wide variety of products catering to specific segments Anheuser-Busch—100+ beer brands Molson Coors—200+ beer brands Both are cost leaders

Is this a good industry to be in? Moderate attractiveness (based on Porter’s 5 forces) Sales dependent on disposable incomes Beer industry tends to have a direct relationship with the state of the economy

Competition in the same nations The majority of operations are conducted in the same nations including: The United States Canada The United Kingdom Other mutual markets include: China India Russia Spain Ukraine

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