The Global Beer Industry

The Global Beer Industry

1. Background to the global beer industries dominant business and economic characteristics.

The global beer industry is an attractive industry for large brewing companies that produce different types and tastes of products for the different classes in the world market. During the last two decades there have been a number of free trade agreements like, SAFTA & NAFTA that eliminated the impact of import barriers in countries around the world (MSBC.Com. 2005)

However the beer industry had to face huge challenges from countries that are imposing higher tax and stricter rules regarding the drinking of alcohol beverages.

TRANSPORTAUSTRALIA. 2010. The beer industry is a huge industry that has a great impact on countries economy and on the society. BEER INSTITUTE, 2008

Many brewing companies export beer globally, due to the fact that their local market has reached a saturated point.  These companies forms joint ventures expanding oversees in brewing plants and cooperate with the other brewing companies as strategic growth development and expand to global markets. BEER INSTITUTE, 2008 Heineken have successfully established a joint venture in various countries: Australia, Germany and India (FERRED.COM.2004.).

Expanding means that companies have to take different currencies and the volatility thereof in account and during the recession currencies fluctuated quite a lot, having an enormous impact on the finances. Another influence that affects the beer market is the profit margin. Based on the calculation of on keg sold for $350 profit a 1000 keg sold will be 350,000 profits (BEER INSTITUTE, 2008).

There are new exports markets that are developing rapidly in the beer industry and growth in markets like Asia, Eastern Europe, Latin America and Africa are new targets of the 6 big breweries (RABOBANKMAPSGROWTHINGLOBALBEERINDUSTRY.JSP., 2010) The development of new market demography’s like China surpasses the US to became the biggest beer market in the world, although the US remained the biggest user per capita. In the US the top 3 breweries are controlling 80% of the market at 45% Asheuher-bush, 23% SAB Miller and 10 Adolph Coors (Thompson et al., 2010:256).

Since 2003 the world’s biggest brewers have combined forces and brands to achieve success as global leaders. One of the greater success factors of the global beer industry would be the rate at which they can output their beer and ship to locations. Beer companies have then also located local distribution partners that are familiar with local markets (WADE, R., 2008). In 2004 Interbrew in Belgium and the Brazil based AmBrew announced a merger creating at that time the biggest brewing company. Companies like SAB and Miller followed soon after (Thompson et al., 2010:256).

Marketing management plays a big role in the selling of beer. The Corona beer branding and promoting was a success story in America. The beer company looked at the bottle and the shape of the bottle as well as the taste and flavour. According to DARREN, T. 2010.public relations and sport sponsorships to insure brand identity and selling a life style that is new and intriguing. The price needs to fit the target market and it is wise to establish a flag ship brand (Thompson et al., 2010:256).

It has been found that the dominant business strategy is economics of scale and the growth of existing as well as new markets through acquisitions and joint-ventures. The large beer companies also use big budgets to advertise and insure brand identity and loyalty.

1.2      Research Methodology

Research methodology can be defined as the methods of collecting data (Brynard & Hanekom, 1997:28) or the research process and the kind of tools and procedures to be used (Babbie & Mouton 2004:75). The method of research followed was that of a literature review, a method of research in which secondary data from published sources were gathered and presented. It focused on the secondary objectives as stated above. The following sources of information were consulted, namely: Internet; Scientific databases, e.g. NEXUS, EBSCO, JSTOR, and others; Journal articles; Newspaper articles and press releases; Theses and dissertations in the field; Books; and Other relevant documents, e.g. publications, reports, departmental guidelines, reports of companies, and others – the so-called “grey” literature.