EUROPEAN BREWING INDUSTRY
This triggered several changes in the brewing industry in the European region that forced brewers to rethink their marketing, distribution, branding, and sales strategies in reaction to the conditions that had changed. Introduction The European brewing industry has matured over time and one will definitely think that the brewers in this industry make great profits. Various local and global factors continue to negatively impact the industry. Zufan (2018) says that this has led to the big players in this industry to come up with new strategies so that they remain afloat. This paper gives a PESTEL analysis of the European brewing industry and the five-point analysis of the factors that are affecting the industry. Owen and Nordland (2009) say that Some European markets that have traditionally had low beer consumption have shown good growth.
For instance, from table 1 in the case study countries like Austria and Finland have witnessed a progressively increase in the consumption beer. Social The change of lifestyle in emerging market due to more disposable income will lead to an increase in the consumption of beer. Emerging trends such as non-alcoholic beers, fruit-flavored beer, extra cold lagers, and wines will greatly influence the consumption of beer. Due to education on health, there is increased awareness of the negative effects of alcohol on fitness and health. This will make reduce the consumption of alcohol. According to Owen and Nordland (2009) strategic alliance, licensing, and acquisition has all happened as the leading brewer battle to have the market controlled. Urges for consolidation because of overcapacity in the European brewing industry and the need to contain benefits and costs of leveraging strong brands lead to mergers.
For instance, in the year 2004, Am Bev, a Brazilian brewer group merged with Interbrew, a Belgian brewery to create the world’s largest brewer. Section II Threat of substitute This threat is because there are products such as extra cold lagers, fruit flavored, and wine that can substitute beer. In the European market the bargaining power high because of the government campaign that is strongly against binge drinking and drunken driving. This has increased off trade and reduced on-trade. The off-trade of beer has been dominated by well established supermarket chains like Carrefour and Tesco and this provides them a greater power of bargaining. Power of bargaining of the suppliers Suppliers are the organizations or individuals who supply the companies with the raw materials that they need to produce their products.
The major costs of purchasing are raw materials like energy and barley and packaging. There should be evaluation and monitoring for proper implementation. According to Rogers (2015), there is a need to determine the mission of the company by looking at the basic reasons for the existence of the company. Financial analysis method will also be very important in understanding the performance measurement of the companies. On the basis of ratio formula it is easy to see the effectiveness of the company and the financial risk of the company. There is a requirement that the company decides the strategies for attaining every goal and the action plans that will aid in realizing those strategies. This has given inspiration for future growth and expansion.
The pledge by the company to grow electricity and renewable thermal energy in production from 14 percent to 70 percent by the year 2025 in the program of ‘Drop the C’; This will reduce the emission of carbon by 80 percent and will help the company achieve its 2020 emission targets in production. The opportunity to retain Scottish and Newcastle pub-management business; Heineken will take over the UK based business when a 800p-a-share bid by the company goes through. It is a very essential and interesting business model which will give a competitive advantage. External threats facing Heineken The external threats that are facing Heineken include; 1. The company should solve the problem with risks associated to currency since the international market is always unstable in money exchange.
Heineken need to use the strategy on hedging risks that are associated with such transactions and this will delay the impact on Heineken's financial result. After the dollar-denominated costs are deducted, a net cash inflow will remain. This cash inflow should be hedged in advance through forwarding contracts to reduce the volatility of export results due to fluctuations in the market. For Heineken to intensify the international marketing, it should sponsor many sporting activities in the world. Summary This paper has given a PESTEL analysis of the European brewing industry and the five-point analysis of the factors that are affecting the European brewing industry. The too many companies in the European brewing industry are making competition to be very steep leading to consolidation through alliances, acquisitions, and closures within the industry.
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