Competitive Analysis of InBev

Introduction

It has been a widespread analogy that when we hear about wine, our minds refer to France as the well-known wine producers. That makes sense since France becomes a leader of wine producers beside Italy, in the world due to historical and cultural factors. In 1996 alone, the country produced more than 1,506 million gallons of wine and two years later, they produced 1,390 millions gallons of wine.

 Meanwhile for another alcohol-based beverage, Beer is often associated with the US although historically United Kingdom (UK) and the US become the homelands that make the drink popular within societies in which in the US alone, the beer industry started approximately in 1840’s with the introduction of larger beer (Goldammer, 2000).

 Nowadays, beer has become a significant part of American culture and thus it makes sense if people associate beer with American drinks.  In addition, according to one report, the U.S. beer industry has provided positive contribution to the country’s economy since it generated more than $144 billion annually; provide direct and indirect jobs for 1.6 million people all over the United States, and involve at least $48 million in annual wages. The industry also contributes $27 billion of tax to state and federal tax revenue in 2003 (‘Beer Economy’, 2003).

Although beer becomes significant part of US economy, the country also faces dilemma since the number of drinking-associated violence also increases significantly. One of supporting factors to the increase in the number of drinker and the associated violence is vast beer promotion that attracts the youth to start drinking at earlier age due to prototype of courageous people that drink beer.

Concerning the marketing beer and its impacts on customers, this paper will elaborate the competitive analysis for InBev, the world’s leading brewer with turnover reached 14.4 billion euro in 2007. The company also holds the number one or number two position in more than 20 key markets in the world. The analysis includes the competitors of InBev, market shares, and the overall competitive analysis of AB in China, North America, and Europe.

U.S. Beer Industry and Competitors of InBev

In the US market today, the beer industry has become a critical economic sector that has tremendous effects for the macro level. It contributes more than $144 billion annually, providing direct and indirect jobs for 1.6 million people all over the United States, involving $48 million in annual wages. The industry also contributes $27 billion of tax to state and federal tax revenue in 2003 (‘Beer Economy’, 2003).

Furthermore, in the US, the beer industry evolves into three basic levels of brewing according to annual production. These levels are the large breweries, regional breweries and microbreweries. The large breweries are those with annual shipments of over 15 million barrels, the regional breweries are those with annual shipments ranging from 15,000 barrels to 15 million barrels and the micro breweries are those with annual shipments of less than 15,000 barrels. The large breweries accounted of approximately 80% of the industry’s shipments, the regional breweries account for approximately 15% of total US shipments and the small or microbreweries account for the rest (Goldammer, 2000).

The attractiveness of beer industry in the U.S. has dragged many producers from all over the world to present in the U.S. market, thus increasing the level of competition. In the U.S. alone, there are over 2,000 independent wholesalers. However, large brewer companies control almost 80% of the total sales holds most of the market shares. This created a highly concentrated business environment where only a small number of players controls price and product standards. The number of dominant players increases when the scope of analysis is changed to be an international analysis of the beer industry. However, U.S. top brewers are also top players in the global beer industry.

Competitive Analysis of Anheuser Busch

Anheuser Busch is currently the world’s largest brewer. The company produces 30 beers and 2 non-alcoholic brands from 12 US breweries. The company grew 3 times the industrial average. In terms of strategic positioning, the company has a unique presence in the business world.

In the United States, Anheuser Busch delivers several brands in order to maintain their position in the U.S. beer market; it includes Beck’s and Stella Artois in addition to multi-country brands and recent innovations that include Labatt Blue Insulated Cans and Labatt Blue Light Insulated Cans. The strong awareness of Anheuser Busch is obvious since the company sold more than 4.0 million hectoliters that further position the company as number 3 based on segment import with market share about 11.5%. You may also be interested in PESTEL Analysis beer industry

Similarly in Canada, with the same brands, Anheuser Busch also maintain their position by delivering multi brands and produce recent innovations that include Labatt Blue ‘Cold One’, which particularly engineered to keep beer crisp, cold and refreshing for longer periods of time. This brand is named to be the best selling Canadian beer that sold in four continents. The market in Canada is far more attractive for Anheuser Busch that is enable to sell about 9.8 million hectoliters, which position the company as number 1 in the Canadian market (post-Lakeport acquisition) with market share about 42.7%.

Meanwhile in China, Anheuser Busch also presents several brands in order to maintain their position in the China beer market; it includes Beck’s in addition to multi-country brands and recent innovations that include the popular Brahma. In the China market, the company sold about 33.4 million hectoliters of beer in 2007, which position the company as number 3 in the market with 11.4% of marker share.

Concerning the strategic management, generally, a company is required to discover a single business activity where it can pursue to provide ultimate customers value within it. For Anheuser Busch, the business activity was manufacturing and selling beer. However, the company is also recognized for being the largest recycler of aluminum can, and actively gaining profit from other business endeavors, like transportation and communication. These ‘side-segments’ has contributed considerably in the growth of the company. The five segments are as follows:

1. Domestic Beer. This is the main business of the company. As mentioned previously, Anheuser Busch has a powerful strategic position within this segment. It controlled 48.8% share of the US beer market. This segment produces approximately $1.5 billion in net income for the company.
2. International Beer. However, as the domestic market became more mature and lack prospects of future growth, Anheuser Busch explores and develops the beer market outside the US by means of partnership with several foreign breweries, like Group Modelo, Labbat Brewing Co, Ltd and Kirin Brewing Co. International beer is the segment that deals with export sales, overseas beer production and marketing operations. This include company-owned operations, administration of contract and license brewing arrangements and equity investments. Anheuser Busch has two international breweries, one in China and one in the United Kingdom. Today, the Brand Budweiser is produced in 10 foreign countries under the direct supervision of the Anheuser Busch brewmasters (‘Company Information’, 2006).
3. Packaging. This segment consists of the lid manufacturing, label printing, beer crown and closure liner making, glass manufacturing operations and aluminum beverage can manufacturing. It is generally positioned to support the main operations of selling beers, but the packaging segment alone has collected $54.4 million of net income in the year 2000 (‘Company Information’, 2006).
4. Entertainment. The entertainment business of Anheuser Busch consists of SeaWorld, Busch Gardens and other adventure park operations. Busch Entertainment Corporation has nine theme parks throughout the United States. It is recorded as one of the largest US theme park operators with $71 million net income from Busch Gardens (theme park operators), SeaWorld (marine life parks) and other rides and animal attractions (‘Company Information’, 2006).
5. Other segments. The company is also active in other business segments like real estate development, transportation, and communication. These segments contribute approximately 20% of Anheuser Buschs annual gross revenues.

Works Cited

1. Anheuser Busch. (2006). Anheuser Busch AR 2005. Retrieved October 27, 2008 from http://www.anheuser-busch.com/search (2006). Company Information. Retrieved October 27, 2008 from http://www.anheuser-busch.com/search
2. Goldammer, Ted. (2000). The Brewers Handbook. Apex Pub InBev. (2008). InBev is the world’s leading brewer. Retrieved October 27, 2008 from http://www.inbev.com/go/about_inbev.cfm(2008).
3. Market Factsheet. Retrieved October 27, 2008 from http://www.inbev.com/go/about_inbev/market_information_by_country/Market_factsheet.cfm#boxes Reel Beer Media Inc. (2003). Beer economy. Retrieved October 27, 2008 from http://www.realbeer.com/news/articles/news-001894.php