Case Questions for Final Case, Flat Tire

and the New Belgium Brewing Company

November 29, 2017

Due: December 7, 2017, 2:59 pm

  1. Nature of the Craft Beer industry.
  2. What is the definition of a macro-brewery?
  3. What is the definition of a craft brewer?
  4. What is the definition of a microbrewer?
  5. What is the definition of a nanobrewer (doesn’t have to be exact)?
  1. What are the strategically relevant economic characteristics of the Total U.S. and Global Beer and Craft Beer Industries? (Calculate your answers using the data given in the data sheet. Fill in the blanks in the answer sheet provided).
  2. How large was the Total Beer Marketin 2016 in $?
  3. Globally?
  4. In the US?
  5. How large was the Total Beer Market projected to be in $?
  6. Globally in 2020?
  7. In the US in 2021?
  8. How quickly did the Total Beer Market in $ grow on average in the US from 2012 through 2016? (What was its rate of growth?)
  9. How quickly is the Total Beer Market in $ projected to grow?
  10. From 2015 through 2020 Globally?
  11. In 2021 in the US?
  12. How large was the Craft Beer Market in the US in 2016? In $?
  13. How quickly did the Craft Beer Market in the US grow from 2012 to 2016?
  14. How quickly is the Global Craft Beer Market projected to grow from 2015 through 2020?
  15. Looking at this question simply from the point of view of market size and rate of growth, would an investor be better off investing in the Total (primarily Macro-Brewery) Beer Industry or the Craft Beer Industry? Explain why.
  16. Which would be a better investment: in the US Craft Beer Industry? Or in the Global Craft Beer Industry? Explain why.
  1. What trends are driving growth in the craft beer industry? (Name three.)
  1. As the Craft Beer Industry grows, what industry or segment shrinks?
  1. Who are the Top 10 producers of beer:
  2. Globally?
  3. In the US?

Prepare a spreadsheet showing the following data for each producer:

  1. How large are the Top 10 US producers? (Total sales revenues in $. AB InBev is in the case. Look up the rest for 2016 online.)
  2. What are their market positions in the US Total Beer Market?
  3. What market share do they hold of the USTotal Beer Market in 2016? (This is the company’s total revenues divided by the Total Revenues in the Global Market in 2016. The case gives AB InBev’s US market share. Treat all others as though they earn all of their revenues in US sales).
  4. What brands do each of the top 10 own? Estimate how many each owns. List 5-10 each.
  5. How do the Top 10 distribute their products? Promote them? (Assume that all craft breweries promote their beers in the waythe case describes entrepreneurs do).
  6. Circle or highlight those producers that produce only craft beer. (You may need to google some of the Top 10 beer makers to determine this.)
  7. What market share do the three largest craft brewers hold of the US Craft Beer market? (This is the company’s total revenues divided by the total revenues in the Craft Beer market in 2016).
  8. How likely is a large craft brewer to overtake one of the Top 3 macrobreweries in the US in market position? Why or why not? What roles do Distribution and Advertising & Promotion play in your reasoning?
  1. What is competition like in the craft beer industry?
  2. Draw Porter’s Five Forces. Label each of the Five Forces and mark whether they are a) Weak, Moderate, or Strong and whether they are b) Favorable or Unfavorable to the leading players in the industry. Note and explain on the drawing the factors that determine the strength and favorability of these forces.
  3. Explain your determinations and conclusions about the overall impact of the forces.
  4. Which of the five competitive forces is strongest? Which is weakest?
  5. What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants?
  1. Create a strategic group map of the Craft Beer industry. Make the horizontal axis “Scope of Geographic Distribution” (local to regional to national to international) and your vertical axis “Price and Perceived Quality” (low to high). Plot: AB InBev, Boston Beer, New Belgium Brewing Company, Craft Brew Alliance and Orville’s Flying Pig new start-upcraft nanobrewery. What does your map look like? (A freehand drawing is fine).
  2. Which strategic groups do you thinkare in the best strategic positions?
  3. The worst positions? Explain why for each group.
  1. What key success factors will affect the success of Orville’s Flying Pig craft brewery?
  1. What recommendations would you make to:
  2. Orville’s Flying Pig new craft nanobrewery.
  3. New Belgium Brewing Company (Fat Tire).
  4. Boston Beer Company (Sam Adams).
  5. Craft Brewing Alliance.
  6. Pabst Brewing Company (a large macrobrewer).