Introduction
The beer industry in the United States is a multi-billion venture estimated to generate about $137 billion dollars annually. Besides, it is estimated that the United States consumes about 7.3billion gallons of alcoholic products annually. Nonetheless, the potential of growth in the industry can be harnessed through taking advantages of the opportunities that abound in the market but also being mindful of the imminent threats that threaten stability and growth of the industry.
Opportunities
Potential for the industry to expand globally and exploit consumption in the emerging markets
The U.S beer market is tough for new entrants; however, international evolution analysis shows that the beer industry is in the initial phases of setting a foothold in international and emerging markets particularly in China, Asia, and Africa. Ideally, emerging markets can potentially increase alcohol consumption for products manufactured in the United States and become a significant source of revenues and growth. For this reason, small firms that find it difficult to survive in the local market can pay more attention in producing low-priced beer products that appeal to the emerging markets with a view of expanding activities and growth of the industry. More importantly, the industry evolution analysis indicates that the U.S market is in its maturity phases owing to the stability of the industry; however, critical evaluation of the industry analysis shows that there are tremendous opportunities that abound outside the U.S that can potentially be harnessed to become a source of growth and sustainability of the industry (Sass 204).
Opportunities for merger and acquisition to increase industry competitiveness
Opportunities to diversify into production of biofuels
Currently, the U.S beer industry is focused on the production and sale of alcoholic beverages; however, there abound many opportunities for diversification. The reason why it important to diversify is due to the dynamic nature of customer preferences and tastes and the saturation of the market with cheap beer products from China and some other parts of Europe, which threatens the sales numbers in the industry. Therefore, it is essential for the industry to devise strategies for exploiting related or unrelated diversification for the future sustainability of the industry. Notably, the United States consumers are becoming aware of the effects of consumption of fossil fuels and the country is turning towards the use biofuels and hybrid cars. From this development, there lies an opportunity for the industry, because some of the by-products of barley and sugarcane can be used to make natural gas and biofuels. In this regard, the industry should begin focusing on ways of investing in the production of biofuels as a strategy for unrelated diversification (McBride 592).
Threats
Excessive government regulation
The U.S beer industry is one of the most regulated in the world. With the increasing government interventions through regulation, the move poses a perennial threat to the growth of the industry because the government is actively involved in determining the prices of the products and the nature of the products. Ideally, as government meddling and interventions continue to deepen, the industry further continues to lose on demand and sales (Sass 204).
In particular, increasing government regulations limits the sales capacity of the industry and reduces the overall consumption levels. In this regard, it is critical to point the role that excise duties play in the level of alcohol consumption because the tax regime affects the retail prices, triggers modified drinking habits and through the multiplier effect dampens the consumption of alcoholic products given that the consumers are price-sensitive.
Hegemonic dominance of large firms poses a threat to new entrants and small firms
The competitive force analysis of the industry depicts a picture of an industry that is highly dominated by large firms that compete amongst themselves, thereby pushing smaller firms to the periphery. In essence, large firms especially those that began in the early 1900’s enjoy dominance in the industry and have become more diverse with their products. The situation is made difficult by small firms, due to the fact that alliances are continuing to emerge with the aim of monopolizing the market as the dominant firms continue to expand in size and capacity. Notably, the industry has continued to become concentrated, where only a few firms control the market power and competing to influence the prices and product promotion at the behest of small firms. Alternatively, as dominance continues, smaller firms are forced to exit, consider merger or acquisition or downsize. In such circumstances, the industry benefits smaller firms but continues to threaten the survivability and sustainability of small businesses and startups in the industry (McBride 592).
Anti-beer campaigns in support of healthy living
The U.S being one of the countries in the world with high obesity levels and growing numbers of chronic diseases; has a growing anti-beer campaign. These campaigns are aimed at sensitizing beer users against the possibility of contracting chronic diseases such as heart attacks, diabetes, blood pressure and cancer if they continue consuming alcoholic products. These diseases are commonly associated with unhealthy lifestyles and consumption of products containing high levels of sugar such as beer and other alcoholic beverages. In this regard, as more people becomes aware of the effects of consuming beer products, it is expected that most consumers will relinquish the consumption of beer products and opt for healthy living, which the threatens growth of the industry (Clemons, Guodong and Lorin 152).
Works cited
Sass, Tim R. "The competitive effects of exclusive dealing: Evidence from the US beer industry." International Journal of industrial Organization 23.3 (2005): 203-225.
Clemons, Eric K., Guodong Gordon Gao, and Lorin M. Hitt. "When online reviews meet hyperdifferentiation: A study of the craft beer industry." Journal of management information systems 23.2 (2006): 149-171.
McBride, Robert. "Industry structure, marketing, and public health: a case study of the US beer industry." Contemp. Drug Probs. 12 (1985): 593.
