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Copy of beer industry: five force analysis

beer industry: five force analysis

Sarah Barron

on 6 April 2013

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Transcript of Copy of beer industry: five force analysis

Beer Industry Porter's Five Forces Beer Industry : Overview Indian beer market is valued at INR 35 bn with volume sales of 172 mn cases for FY 2008-09 and at the current trend the market is expected to grow at an annual rate of 17.2% till 2011. International beer companies have a good enough reason to tap markets like India. In India, beer sales grew at nearly 90 per cent, compared to a less than 60 per cent growth for other alcoholic drinks. Challenges Govt. tax and regulation. Advertisemsnt barrier. Price restrictions. Inadequate Market Infrastructure Restriction of Movement of Beer Consumers open to Experimentation Top Players Five Forces Industry Rivalry Price based Rivalry Non-Price based Rivalry Product Differentiation Top 5 beer brands in India Kingfisher Heywards 5000 Royal Challange Kalyani Black Label Kings Concentration of industry Capital asset requirement Demand influences Switching cost Conclusion: The industry is experiencing significant concentration effect,
which decreases rivalry. Also there are significant barriers to exit.
which increases the rivalry. Therefore the overall effect of rivalry on this industry is NEUTRAL Substitutes Market segment share Beer : 52% Alcohol : 38% Wine : 10% Available Substitutes Whiskey Wine Vodka Rum and many more.... Profitability of industries Switching cost Conclusion Liquor sales are rising. Consumers are not inflicted with switching cost. Therefore the effect of substitutes is NEGATIVE Suppliers Suppliers do have bargaining power in the industry. Suppliers concentration is low. As far as supplier substitutes, the ingredients that go into the brewing of beer cannot be replaced. The beer brewing industry relies heavily on supplier input. Especially the ingredients that are in beer. Suppliers are in constant need to keep this industry afloat. The suppliers provide the brewing equipments as well as the ingredients. Conclusion the effect of bargaining power of suppliers is POSITIVE Buyers The main buyers of beer in the brewing industry are distributors. Dedicated distributors. Miscellaneous distributors. Types of distributors: The distributors are limiting new compitition. The distributors are the ones with all the connections to the consumers & retailers. Thus the distributor control the prices based on what profit margins they require. The final consumers do not have any bargaining power. Conclusion The effect of Buyer Power for the Beer Brewing Industry is NEGATIVE Threat of new entrants Economies of scale Brand loyalty Capital requirements Government polocies Access to distribution Conclusion The effect of threat of entry is POSITIVE Summary Industry rivalry Neutral effect Substitutes Negative effect Bargaining power of suppliers Bargaining power of buyers Threat of new entrants Positive effect Negative effect Positive effect Thank You...
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