Boston Beer Company Essay

This report examines the US Beer industry as well as the industry structure, capacity and marketing trends as they relate to the current and future positioning of the Boston Beer Company, or as most people know it around here, Samuel Adams. The US beer industry has had several years of slowing gains and downfalls. Three brewers dominate the industry that I emphasized in my industry analysis, which are: Anheuser-Busch, Miller Brewing and Adolph Coors. These market leaders have expanded their respective beer industry market at the expense of other brewers, including Boston Beer Company. Boston Beer Company is just a mere 1 percent of the beer brewing industry. The US beer industry is highly competitive with brewers leaving the industry and a few new large brewers enter. China is the undisputed leader in global beer industry, accounting for 17. 1 percent of the world’s beer production in 2005. Purchasing power in Chinese economy is on the rise, which will drive beer sales and improve overall profitability for them. Domestic brewers have been buying small breweries in individual Chinese provinces to service particular communities. First to better understand A little more about Boston Beer Company I’ll look deep into their background of Boston Beer Company. Just like in our Strategic Leadership class to find out what somebody’s values are, you have to know what their back-story is. Samuel Adams has an amazing story line behind it. According to their website it says that â€Å"Boston Beer Company was started with Jim Koch’s great-great grandfathers recipe. With a determination to handcraft a quality, flavorful beer, Jim brewed his first batch of Samuel Adams Boston Lager in his kitchen in 1984†, before I was even born. The beer is said to be created with the world’s finest, all natural ingredients. Jim chose the name Samuel Adams after the Boston patriots, the father of the American Revolution, and a man who fought for our American Independence. Samuel Adams made its debut in Boston on Patriots Day in April of 1985. Boston bartenders were quoted saying that Samuel Adams was unlike any beer they had ever tasted. By the end of the first year, sales reached up to 500 barrels and it just took off from there. Just six weeks after its introduction Samuel Adams was selected as â€Å"The Best Beer in America† at the Great American Beer Festival’s. Since 2000, Samuel Adams has won more awards in international beer tasting competitions than any other brewery in the world. Boston Beer Company has become an inspiration to other small industries out there. By 1995, hundreds of small, local and regional breweries sprouted up all over the country, following in Boston Beer Companies footsteps. From reading this firm analysis so far you would think they dominate the Brewing Industry, brewing close to two million barrels of Samuel Adams beer, but is still less than 1% of the total US beer market. That is just astonishing to me. The companies’ culture and philosophy is simple. To set superior standards for quality. Jim and the brewers at Samuel Adams ensure the highest standards for the best ingredients needed to make the highest quality of beer. I found this so interesting that on Jim’s annual hops selection trip to Bavaria the hops farmers always comment on how Jim just doesn’t just sniff the hops, he â€Å"dives into them! (BostonBeer). There philosophy is not to be the biggest brewing industry but to be the best tasting beer brewing company. Samuel Adams is the only brewer that actually buys back its beer when its past its peak freshness date. These are there strengths. There strengths have always been to take pride in their beer, differentiate yourself in a market that is already dominated by three huge organizations. To this day Jim tastes every batch of beer brewed to make sure it meets his high standards. Another strength they pursue is they have a wide range of beers. These brews include: year-round beers, seasonal styles, signature holiday brews. This differentiates them so much from large brewers. Say for example someone like Anheiser Bush sells the same beer over and over and over. Samuel Adams has Boston Larger, Summer Ale, October Fest, Winter Larger.. etc. This brings in so many more customers like my dad who are excited when the newest season beer comes out. From personal experience my dad marks his calender for when the different brews for Samuel Adams comes out. This is so vital and different from any other brewery. Jim Koch the founder and CEO of The Boston Beer Company Early on, Boston Beer Company acted like a virtual company, primarily contracting with third party packers to produce its products. The brewery did have a small facility, but it was never be enough to produce all the beer the company was capable of selling. In 2006, it expanded its breweries into Cincinnati, which was expected to produce roughly two-thirds of Boson Beer’s total volume. Boston beer companies target customers have always been those around New England and people who like a high-end, thick, good, delicious beer. Boston Beer Company was actually the first brewer to market their product nationally, however they did not have the expense of shipping it across the country however. In 2006, regarding Boston Beer’s productions, chief executive Martin Roper said â€Å"We have revised upward our capacity needs in New England based on healthy craft category growth, our own growth trends and higher freight costs and are no exploring production capacity in excess of 1. 0 million barrels. Our current estimates are that construction of such a facility could cost between 120 million and 160 million. We believe this is an appropriate strategic investment based on the growth of the category as well as known and unknown risk in supplier alternatives. † It is increasingly important for the Boston Beer Company to focus on defining where they stand in a global businesses strategy and perspective, developing Samuel Adams into a leading international brand by making investments in brewers that have leading brands in high-growth beer markets. It is my recommendation that they focus specifically on growth in the Chinese beer industry. It has taken more then three hundred years to develop technology and process required to transform malt into the product displayed in grocery and convenience store coolers across the globe.