European Brewing Industry

European Brewing Industry

PESTEL Analysis

Political factors

- A part will not be adept to gain achievement, moral status and believe if it will not address the political part as part of the strategy.

- For Western European brewing industry, political part encompass the desires of the part to pursue the granted principles and guidelines of the government in alignment to be advised as lawful and authorized brewing industry or sector (Cadotte & Bruce, 2003, 21-43).

- In this kind, for instance, Western European brewing industry should be adept to address political facets so as to display that they worth the principles and guidelines of the government in any of the brewing industry.

Economic factors

- Low growth in consumption levels of beer. Market consumption volumes decreased with a CARC of -0.3% between 2005 and 2009, (Datamonior, 360) this could be due to political laws.

- Recession has been an issue in UK in 2009, an estimated of 50 pubs closed due to this.

- Competition for economy of scale between supermarkets

- Merges in the industry due to global pressure of consolidation

Social factors

- Government campaigns have grown concerns on drunk-driving and health issues

- Underage drinking is in increasing by 6.5% in the UK (Key Note LTD 2011)

- Buying behavior and changes in consumer attitudes.

Technological factors

- New products, fruit flavoured beers allowing more demand for the consumers this has a positive impact on sales of demand his has emailed further inventory of Enhancing machinery for efficiency through “beer recovery process”. Beer from overseas imported resulting to a 7% rise in the UK between 2002- 2008.

Environmental factors:

- Bans on cans in favour of environmentally friendly recyclable bottles.

- Interventions for bottled beer. According to TGI a survey was undertook showing the bottled larger penetration increase from 22% in 1994 to 29% in 2010.

Legal factors

- Stronger enforcement of underage buying of alcohol (-18s).

- “Think 21” policy introduced 2008.

- European competition commission having legal power to control

Five Forces Analysis

Threat of New entry

High barriers increasing Economy of scale, the Level of competition within the industry is high; therefore, the profitability is very low. The Government campaigns and regulation imported which help with the ease of new entry. There is high global competition- china compensating for 23% of world consumption.

Threat of Substitutes

The main substitutes of alcohol would be wine and spirits, also non-alcoholic beverages such as functional drinks, which can substitute, as low/no alcoholic drinks. There is a threat on consumptions decisions, which is down, to personal taste.

The bargaining power of suppliers

The main inputs for beer producers in the European market are malted grain, hops and Barley which highly concentrated as the supplier has more power of the buyers. Raw materials are important in this firm as the end product influenced by the nature of the ingredients used.

The bargaining power of Buyers

- The major buyers in the European beer market are supermarkets and hypermarkets, accounting for 40% of the overall distribution. (Data monitor, 2010) Supermarkets are often able to compete with prices increasing buyer's ...