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

2. 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."

3. 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?)

4. 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

5. 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

7. Technology
Coors Cold Activated
Miller Vortex

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. Works Cited
Schultz, E.J. "Draft Dodging: Why Big Beer Is Going Flat." Advertising Age (2013): 16. Business Source Complete. Web. 21 Oct "Is Beer a Reflection of the World Economy?." Wealth Wire - Investing News. N.p., n.d. Web. 22 Oct < "The Wall Street Flaneur." The Wall Street Flaneur. N.p., n.d. Web. 22 Oct Kurtzleben, Danielle. "Poll: More Americans Ditching Beer for Wine." US News. U.S.News & World Report, 02 Aug Web. 22 Oct "Factors That Affect the Beer Industry." Factors That Affect the Beer Industry. N.p., n.d. Web. 22 Oct "About Us." Molson-Coors. Molson-Coors Brewing Company, n.d. Web. 22 Oct "Anheuser-Busch InBev - About AB InBev -." Anheuser-Busch InBev - Home. N.p., n.d. Web. 22 Oct