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by Kelly Bishop1 view·Updated Apr 25, 2021
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  1. Hello, my name is kelly Bishop.
  2. And today I'm going to go over the strategy of
  3. my favorite alcoholic beverage company, the boston beer company.
  4. So the boston beer companies in the alcoholic beverage industry,
  5. which is a very competitive industry that's been dominated by
  6. two players for awhile.
  7. Anheuser Busch and Millercoors but has expanded to grow um
  8. including many local and regional craft breweries, boston beer has
  9. done a great job of linking different s curves together
  10. to um survive this increase of competition and increasing their
  11. brands to include Sam Adams.
  12. Dogfish had angry orchard, truly twisted tea and um local
  13. brands in new york Miami and Los Angeles.
  14. So the strategy really comes from the top down in
  15. this company and that would be from Jim Cook, the
  16. founder, Dave Berwick the Ceo and president and SAm Calagione,
  17. who is the founder of Dogfish Head.
  18. Their business level strategy is very unique not only in
  19. their industry but in many large but many ways in
  20. a large company as a whole.
  21. Um It would be described as differentiation.
  22. Um So the uniqueness of the brand is something that
  23. is is strived for with their mission statement, even reading
  24. to create an offer a world class variety of traditional
  25. and innovative brands.
  26. And they've done this by now having the number one
  27. craft beer, the number one craft I.
  28. P. A.
  29. The number one hard cider, the number one flavored malt
  30. beverage and the number two hard seltzer.
  31. Right now, they've got into this um First by exploiting
  32. the customer, the customer relationships with marketing, customization and reputation.
  33. They've built their brand on being a high quality, high
  34. flavor product.
  35. Um And they've used their sales team that is nationwide
  36. to localize that for every um community.
  37. Uh The firm linkages.
  38. So beer is a three tier system, so they sell
  39. it to the wholesaler.
  40. The wholesaler is their number one customer.
  41. and what they rely on heavily in the tamarin survey,
  42. which surveys many different wholesalers on a variety of beer
  43. related um things.
  44. They usually come in number one and if not they
  45. are number two.
  46. So that wholesaler relationship is valued from both the wholesaler
  47. side and boston beer side and then the product and
  48. service attributes, we know this is something that's not going
  49. to be um long term success.
  50. But even though boston beer is still very innovative and
  51. there still are fast followers, you can see with the
  52. whole craft industry that wasn't around in 1984 when Jim
  53. Cook first started boston beer, but now there are so
  54. many different craft breweries and um the cider business is
  55. not really in America when they started angry orchard and
  56. now that's grown to even included like local surgeries and
  57. then you have the hard seltzer where it's just fast
  58. followers left and right.
  59. Um, you have truly friday packed lemonade coming out last
  60. year and you have brands like mike's white claw and
  61. bud light all coming out with their own lemonade variety
  62. pack this year.
  63. So even though there are fast followers and not a
  64. long term advantage, loss of your company is still very
  65. innovative with their products according to the Harvard business article.
  66. What is strategy?
  67. They would be in the variety based positioning so they
  68. provide a subset of industry needs.
  69. They do not make every single type of alcoholic beverage
  70. but instead play to their loyal fan base and within
  71. each brand they do provide differentiation um, but still will
  72. never fulfill the whole need of the industry.
  73. Yeah. Their cost drivers in their value train of what
  74. really allowed them to be so successful for decades.
  75. You have their inbound logistics where jim goes to Germany
  76. each year to personally pick the crop of hops that
  77. they're going to use and they have it politicized so
  78. that it's fresh all throughout the year.
  79. You have their research and development.
  80. The brewery in boston is now not big enough really
  81. to even supply the city of boston.
  82. They even have a open paprika in there.
  83. Uh huh.
  84. The place is black put each other day, I wanted
  85. to be Consultants in the beer industry.
  86. So even in 2020 with COVID restrictions, they still had
  87. um 317 trainings and they have divisional trainers for sales
  88. teams and as well as just general beer insider trainers
  89. as well.
  90. And then the three tier system, like I touched on
  91. earlier, this is something that Jim has gone to Washington
  92. and lobbied for.
  93. Um it helps and it's so important to have wholesalers
  94. because it prevents two key players from really coming in
  95. and dominating the industry and let smaller craft brands survives.
  96. The key factors in the external environment would be um
  97. the domination of two large players, Anheuser Busch and Millercoors
  98. and then the increase of local and regional craft breweries.
  99. Um They usually, Anheuser Busch and Millercoors usually are in
  100. competing wholesaler networks and are the top brand in each
  101. one. So it's hard to get Sheriff mind and then
  102. you have lots of mergers of large domestic brands with
  103. international competition, the risks.
  104. Um There are a lot of fast followers in the
  105. industry, um their customers who won't want to trade up
  106. for a better beer and pay a little more and
  107. they were like heavily on their perceived value.
  108. Um So these might not be um might not always
  109. stay around, so they really rely on that customer value.
  110. And then for the corporate strategy they are have a
  111. high level of diversification with their revenue coming from seven
  112. different different brands and including hospitality as well as tap
  113. rooms and merchandise.
  114. Um It's a related constrained diversification, consumers would not know
  115. um if they look at a a beer set that
  116. angry orchard sam Adams truly twisted T.
  117. Dogfish head, they're all the same company.
  118. Um But it has value because they all utilize the
  119. same value chain.
  120. The strategic fit.
  121. The value chain creates the economies of scale and adds
  122. value. Um increased reputation and brand power.
  123. The product development.
  124. They are able to develop and bring new products to
  125. market quickly due to their smaller size and that R.
  126. And D.
  127. Um Really that I spoke about um they already have
  128. a whole sales team that are ready to go and
  129. saddle uh so they can develop products quickly and get
  130. them to market quickly their market power, Their sales force
  131. is able to have one meeting with the customer and
  132. sell five different brands.
  133. So they are bringing a lot to the market.
  134. Um Their joint resources allow for larger marketing and bigger
  135. power in the market as a whole.
  136. Vertical integration is impossible for this.
  137. Um This brand due to the three tier system, but
  138. they did have horizontal integration emerged with Dogfish Head.
  139. They had a great relationship and collaborated in the past.
  140. Um Dogfish had acquired or boston be required Dogfish Head.
  141. And um Dogfish had got shares of boston beer's.
  142. They didn't have to pay huge capital gains taxes, boston
  143. beer did it because most of their revenue growth was
  144. coming from non beer items and they were lacking in
  145. the I.
  146. P. A.
  147. Category which Dogfish had had a great I.
  148. P. A.
  149. Um jim was in his seventies and he needed a
  150. new face of the brand.
  151. So um Dogfish had liked it because now they could
  152. expand into all 50 states with the existing sales team
  153. and existing wholesaler which would have cost them um a
  154. lot of money previously this works um due to their
  155. corporate values, um aligning their sales team, aligning their goals
  156. in their training.
  157. Um Doctor said is now in all In all 50
  158. states and wholesaler alignment is at 85%.
  159. So they've really been successful in getting that and and
  160. beating the odds and being one of the 16 of
  161. mergers that are fully um integrated.
  162. They've never had a restructuring or never had to do
  163. organ or layoffs.
  164. They did have an organizational pause and restructure when they
  165. had acquired dogfish head.
  166. And in 2015, wind sales of same atoms were declining.
  167. They did put on a hiring pause due to a
  168. lack of sales.
  169. So boston here is a very unique strategy, um, that
  170. has allowed them to dominate different areas of the alcoholic
  171. beverage industry.
  172. I would highly recommend reading jim cooks book.