Brewing Industry Pestle Analysis Essay
Brewing Industry Pestle Analysis
1.Government campaigning against drinking and drivingHard-hitting campaigns and stiffer penalties have helped to reduce the number of roads accidents, deaths, injuries and damage. Campaigns have aimed to raise awareness of the legal situation and the dangers of driving while intoxicated. In most international jurisdictions, anyone who is convicted of injuring or killing someone while under the influence of alcohol or drugs can be heavily fined, as in France, in addition to being given a lengthy prison sentence.
Sometimes those campaigns make the brewery industry looking very bad since usually the blame is laid exclusively on them for making alcohol so easily available.
Threat, with the government heavily expending money in such campaigns the consumption of alcohol tends to decrease with people scare of the consequences.
Threat, any further reduction in the limit would stop people visiting rural pubs altogether if having one drink meant their licence2. World Health Organization policies on drinking. Alcohol policyThis Alcohol Policy is designed for use by Companies to highlight the dangers of alcohol abuse and to make it clear that it will not be tolerated at work, or allowed to affect performance.
WHO focuses on a combination of targeted measures aimed at limiting the availability of alcohol especially to young people and at reducing their exposure to commercial communications, drink-driving countermeasures as well as improving education and information.
The goal is to reduce alcohol consumption and alcohol-related harm and give advice on implementing an alcohol and drug policy in Member States.
Threat, another policy with the main goal to reduce alcohol consumption.
3. EU rules on excise taxesTaxation is levied irrespective of distribution and excise duties have not increased very quickly recently. This is due partly to the need to move towards in Europe, the UK’s taxes on alcohol are much higher than most countries. The European Commission proposed that the minimum excise duty rates for alcoholic beverages should be increased in line with the rise in the EU-wide consumer price index. The minimum duty rate on wine would remain at zero, as would that for other fermented beverages except for beer.
The main reason for this kind of proposal was to approximate the excise duties in different countries to tackle problems like cross border shopping and smuggling.
Threat, because it will produce an increase in the price of the beer in many EU countries and a study by the Oxford Economics highlighted that this measure will undermine legitimate business and encouraging criminal activity in the high tax countries.
4. EU policies for responsible use of alcoholThe EU alcohol strategy is set to address, among others, drink-driving, aiming to a substantial reduction of alcohol-related road fatalities and injuries by the end of the year 2010, and under-age drinking, aiming to reduce high risk drinking among children and adolescents and postponing the age they start to drinkThese are policies mainly focuses on the saving lives of young Europeans, improving health in the EU, shrinking the social costs of alcohol and limit alcohol consumptionThreat, main objective of these policies is the reduction of alcohol consumption meaning fewer sales for the brewery industry.
5. Government linking crime and drinkGordon Brown’s advisers have suggested that alcohol should be made more expensive to cut down on violent crime, they have also advised that increasing taxes on drinks would curb domestic violence and reduce traffic accidents and injuries in the workplace.
A report by the Home Office in drinking and violence says that 60% of binge drinkers admitted involvement in criminal and/or disorderly behaviour during or after drinking. The link between drinking and offending was particularly strong for violent crimes.
Threat, once again the brewery industry is blamed for problems caused by the excessive consumption of alcohol. Government is looking for a reduction in the consumption of alcohol.
6. China Changes Foreign Investment (FDI) RulesChinese officials have in recent months called foreign investment malicious and promised severe measures to curb and punish hostile takeovers aiming to monopolize the Chinese market. These new rules were taken to restrict investment on the real estate, retailing, and shipbuilding, banking and insurance market.
Even though these rules have not affected directly the brewery industry in future that could be the case after many small breweries in China have been bought by the large international brewers.
Threat, a change of rules restricting foreign investment is never good news for business.
1. Globalization (acquisition/merges/alliances)The integration of economic, political, and cultural systems across the globe.
The global pressure for consolidation due to the overcapacity within the brewery industry.
The needs to contain costs and benefits of leveraging strong brands through acquisitions, merges, alliances, licensing by the big player while attempting to gain a bigger share or to control the market.
Opportunity for fast growing and to exploit new markets.
2. Increase in wages and disposable income from the new members of the EU (Eastern Europe)Jobs and money have flowed into Easter Europe countries since they became part of the EU.
With the inclusion of theses countries in the EU the average wage went up and the living conditions have improved. They now are able to afford all the commodities that the rest of Europe has been enjoying for years.
It is opportunity for trading in the new market with a very prosperous future.
3. Retails prices cheaper (supermarkets’ power)To attract customer to theirs shops the big retailers like Tesco or Carrefour often buy (due to their power) and sell alcohol at very low prices.
According to the Institute of Alcohol Studies booze prices have become much more affordable in the past 25 years. Prices have risen by 24% but household income is up by 91% in that period, making alcohol a much smaller part of most people’s bills.
Opportunity-this has a direct effect on the amount people drink. It shows there is a correlation between the affordability of alcohol and the amount drunk by those over 15.
4. Increase on household billsThe share of household income spent on food, bills and other unavoidable costs has risen to 31% from 25% over the past six years, research shows.
Brewery industry could suffer because people will have to do some cuts to be able to afford all the bills and the first thing that they cut on time of crisis time is going out and supermarket extras (like alcohol, sweets, and premium products)Threat – people have less money available to spend on alcohol.
5. Cross border shoppingThe continued strength of Starling against most European countries, plus they attract overseas travel, means that many consumers are choosing to travelling to France or other countries for their drink supplies.
The brewery industry has been fighting for years for the reduction of the taxes in many EU countries with high alcohol taxes but the EU Commission sees the increment of the taxes in these countries with low taxes as the solution for this problem.
Threat, it is illegal, it does not bring any benefit to the country with high tax rate (evasion) and also encourages criminal activity in the high tax countries.
6. Global Credit CrunchThe credit crisis began last summer when Bear Stearns, the fifth largest US investment bank, almost collapsed. Since then property market crash, food prices increasing and rising in unemployment have dominated the news everywhere.
The brewery industry is not immune to a global crisis and sooner or later the effect will be felt directly and indirectly.
Threat, the industry will have to make adjustments to cope with the credit crunch.
1. ReligionReligious affiliation has been demonstrated to play a significant role determining whether or not an individual consumer alcohol.
Alcohol consumption can decrease even more since more people are becoming more religious nowadays. Threat – alcohol is not tolerated in many religious.
2. World Beer CupEvery two years a highly qualified professional panel of beer judges honours the top three beers in 91 beer style categories with gold, silver and bronze awards. The World Beer Cup is often referred to as “the Olympics of Beer Competitions” because it is one of the very few international beer competitions awarding only one gold, silver and bronze in each category.
This is more than a social event or a beer exposition; this is the place where all the hard work of the breweries around the world is going to be judged. This competition can make an unknown beer very popular and vice-versa. This is a certification of quality issued for people that really understand about beer.
Opportunity – to expose all the best beers in the world.
3. Effects of alcohol in pregnant womenThere is a high level of acceptance that alcohol use during pregnancy could be harmful to the child.
This is a very difficult case for the brewery industry. Some of the studies shown that the very reduce consumption of alcohol by a pregnant woman will not damage the child but on the other hand other studies believed that alcohol should be completely cut from a pregnant woman diet.
Threat – fewer sales.
4. Beer ClubsThese are clubs where people that enjoy drinking beer meet to exchange ideas in social events where the beer is the central focus. These clubs also act as beer seller, encouraging the moderate enjoyment and appreciation of a great variety of quality beer from around the world.
The rise on the number of beer clubs will bring great benefits to the brewery industry.
Opportunity – to get inside information from people who understand and enjoy drinking beer, to get some new ideas and a perfect platform to test and launch new products. This clubs can increase the sales of beer like the wine club have done to wine.
5. Healthy lifestyleWith today’s pace of life, people are trying to have a healthier and fitter lifestyle. Nutrition and exercise both play important roles in alleviating stress and keep your health.
Consumption of beer/alcohol and a healthy lifestyle are two words that cannot be used together. Every time someone starts a healthy regime the first thing that they cut is the consumption of alcohol. The brewery industry has failed to show the health benefits of drinking alcohol in moderation.
Opportunity – to show to this people that consuming alcohol in moderation is not a health risk and that there may be a net benefit.
6. Unhealthy issues in teenagers drinkingTeen drinkers are more likely to get fat or have health problems, too. One study by the University of Washington found that people who regularly had five or more drinks in a row starting at age 13 were much more likely to be overweight or have high blood pressure by age 24 than their non-drinking colleagues. People who continue drinking heavily well into adulthood risk damaging their organs, such as the liver, heart, and brain.
Threat – The brewery industry will loose customer if their product is linked to an unhealthy lifestyleOpportunity – to gain new customer showing that alcohol consumption in moderation can be beneficial to your health
1. Genetic Modified Studies (GM)Obtain scientific knowledge about the various techniques and to obtain a better insight into the genetic properties of raw material.
The brewery industry have been carrying out research about GM for many years to have the best possible information at their disposal when, if they do, decide to use genetically modified yeast and barley.
Threat – because people are very sceptical and worried about the future impact for the human race and the environment if GM becomes largely produced/consumed.
Opportunity-to improve their products and reduce costs.
2. Power of the InternetDecades ago, brewers determined that television commercials were just about the best way to sell beer but the advance of technology has changed this idea.
Now, the Internet makes possible not only for the big beer sellers but also for those companies whose sales volume or marketing budgets are not ready for TV to use the power of video/sound to reach potential customers.
Opportunity – to reach a wide range of customer and also to cut costs and to make their message get across since other products are populating the Internet with clips as the cost of TV commercials continues to rise and ratings continue to fall.
3. Exchange of information, data and researchTechnology has made possible to research and analyse information that could be crucial for the development and implementation of action to reduce the harm done bye alcohol.
The brewery industry should anticipate future needs and challenges to identify the effects of alcohol consumption in relation with social, economic and health indicators.
Opportunity – holding this information the brewery industry will be able to help to formulate policies aimed to preventing and decreasing the harmful use of alcohol.
4. A draught beerRussian people like the idea of buying draught beer for take away because such beer is cheaper and better quality than pre-packaged beer.
The technology developed for a Russian company has opened/started a new market/trend and at the same time their product solves one of the main problems of draught beer, the excess of foam. The brewery industry should definitely use this product since it will cut the time to serve customers, save same staff’s energy and also avoid the wasting of up one third of beer when dispensed from a tap.
Opportunity-this new concept of beer retail trading, which is all about selling of fresh draught beer for take away in retail outlets, will stimulate the growth of draught beer sales and contribute to the development of new technologies for the brewery industry.
5. Cold beer technologyThe Tower Booster is a highly efficient heat exchange mechanism that is housed in a beer towerThis product will provide the coldest beer in the bar and will provide customer with beer that is poured at sub zero temperatures, the ultimate cold beer experience.
Opportunity – a Tower Booster can be housed in a branded beer tower and, as such, provides a point of meaningful competitive advantage for a brewery6. Ultrasound Speeds Up Beer BrewingUltrasonic vibrations are becoming a precision tool to speed up the manufacturing process for a variety of products including beer.
This technology has had a huge interest from the brewers who need to control the level of carbon dioxide in their drinks. At the moment they are using ultrasonic vibration but this is a very timing consuming process.
Opportunity – use technology to improve products and speed up the fermentation process.
7. TurboTapTurboTap is draft beers’ only Rapid Dispense Retrofit.
Installed on your draft system in minutes, the TurboTap quenches beer-thirsty crowds up to 4 times faster than a conventional tap. Each pint or pitcher is delivered with a perfect, profit-boosting, flavor-enhancing collar of foam. And it only takes about one minute of training to be able use it. Using advanced fluid flow technology, TurboTap improves your keg yield up to 30%, increases peak-time sales and reduces staffing. It is ideal for concessionaires, wholesalers and bars and nightclubs.
Opportunity-to increase the volume of sales of beer to their customers.
ENVIRONMENT1. RecyclingAbout 88% of the solid waste, which was generated in the production of beer, is recycled.
The brewery industry should aim to recycling and reusing as much possible.
Opportunity – cutting costs and being greener2. Reduce water usageThe total end of pipe wastewater effluent reaches a daily average of 2,000 m3/d and a maximum of 3,000 m3/d.
The brewer will achieve a significant reduction on water usage with 4 very easy changes: to control water consumption through installation of water flow meters, reduce wastewater volume by installation of spring valves on water hoses, recycling and reusing of pasteurization and wash water and recycling of backwash water from seven sand filters.
Opportunity – cutting costs and being greener3. Programs to help to cut carbon emissionThere are many different types of air pollutant. Pollutants can react together to produce harmful chemicals, upset the natural balance of acidity and nitrogen in the environment, which can affect the diversity of species in sensitive areas and changing global conditions, and potentially give rise to dramatic changes in climate and sea level.
The emission to the air by a brewer company is mainly from power plant operation, which mostly emit CO2, and to a lesser extent NO2 and SO2.
Opportunity – with a decrease of energy consumption you can cut at the same time the air emission.
4. Decreasing energy consumptionCut the excessive amount of energy consumed during the production of beer in eastern European and Russian breweries.
Energy-efficiency projects in the brewery sector where energy consumption by industrial companies is significantly higher than in western plants. This should allow breweries to reduce utility bills by up to 20 per cent and permit the strong environmental benefit of lower greenhouse gas emissions. The cost of the improvements will be repaid out of energy savings, making them entirely self-financing.
Opportunity – to cut costs and take care of the environmental.
5. Pollution PreventionIndustrial pollution control measures used to concentrate on what is commonly referred to as “end of pipe” treatment, which focuses on what to do with the waste once it has been generated.
The brewery will be able to minimize waste and save on materials, water, steam and energy.
Opportunity – cut cost, being more efficient and greener.
6. Green energyGreen energy is used to describe sources of energy, which are considered environmentally friendly and non-polluting.
Brewery in Nepal has been using a brewing vessel where the energy comes from burning rice husks rather than diesel oil. Besides serving as a source of green energy the for the brewery, the use of these husks has a positive effect on the local economy, as rice producers can now sell a product that previously went to waste. Also, collection and delivery of the husks creates local jobs.
Opportunity – to find new ways of using energy efficiently and non-polluting.
7. Green RefrigeratorsGreenfreeze uses hydrocarbons as the blowing agent for the insulation foam and for the refrigerant. Hydrocarbons are completely ozone friendly, and used in refrigeration have minimal global warming impact.
The brewery industry should go for HFC-free refrigerators as part of theirs Environmental Policy.
Opportunity – because operating costs are lower, and the maintenance is easier than with HCFC or HFC technology and one more step for a greener industry.
LEGAL1. EU legislationAlcohol is a key public health and social concern across the European Community. Europe has the highest proportion of drinkers in the world, the highest levels of alcohol consumption per population and a high level of alcohol-related harm.
The brewery industry will be targeted with measures aimed to limit the availability of alcohol beverages especially to young people and at reducing their exposure to commercial communications. Also, drink and driving campaigns we the objective of improve education and give more information about the dangers of alcohol.
Threat – because this laws have the main objective of reducing alcohol consumption.
2. Ruling eases Germany’s beer lawThe 1516 beer purity law limits beer ingredients to malted grain, hops, yeast and water. Mr. Fritsche’s brewery adds sugar syrup after fermentation.
The dark beer, called “Schwarzer Abt”, can be marketed as “special beer”, using similar provisions as some breweries add herbs at the end of the fermentation process.
Opportunity – for the creation of the new products to attract more consumers3. Sport EventsThe Traffic Commissioners have powers to attach conditions to public service vehicle licences restricting the carriage of drink on football excursions. British Rail introduced a bye-law to prohibit the carriage and consumption of drink on specified trains.
Once again the brewery industry has been affected by laws trying to reduce the number of violence cases in sport events due to the excessive consumption of alcohol.
Threat – decrease in sales4. Licensing lawDrinking establishments can apply for licenses to stay open and serve alcohol for 24 hours.
The brewery industry was looking for this change for years. Now they have it and they hope that sales will go up and that some of the problems related with alcohol consumption like binge drinking and violence will ease a little bit because people will have more time to enjoy their drinks and sober up before go home.
Opportunity – longer hours open means more sales.
5. Drinking and drivingAlcohol is a legal substance but there are a number of laws governing the sale, purchase and consumption of alcohol in the UK. The effect of these laws is to criminalize certain types of behavior e.g. drinking and drivingThe brewery industry has collaborate for years with all the information that they hold about the consumption of alcohol to help to develop laws to decrease the number of car accidents involving people with high level of alcohol on their blood.
Opportunity – to show how the brewery industry is aware of the problem6. German’s food and drink lawsGerman brewers claim that it is the longest-established food quality standard in the world.
These qualities laws applies only to beers made within Germany, after a European Union court ruled that using it to keep out imported brews would be contrary to free trade rules.
Opportunity – to export/import all kind the beer from/to the German market.
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