Over the last few years, there has been a transformation occurring inside the bear industry. What is happening is consumer tastes have shifted away from purchasing beer that is manufactured by the large producers (i.e. Anheuser Busch and Molson Coors). Instead, there has been a focus on buying the brands that are produced by the small micro-breweries. These are producers that manufacture less than 2 million barrels per year. Since the beginning of the recession in 2008, these companies are seeing an increase in sales with this segment accounting for $7 billion in sales annually. (Toscono, 2010)
One of the more popular brands is Samuel Adams. Owned by the , Samuel Adams has a unique following of beer drinkers that prefer this lager over others. The biggest reason why is from the unique flavors that are customized for specific times of year. This is helping to give Samuel Adams that one of a kind taste, which beer drinkers are looking for. These elements have helped to make Boston Beer into the largest micro producer in the United States (manufacturing 1. 8 million barrels per year). (“Boston Beer Company,” 2010) to fully understand the comparative advantages of the firm requires looking at the strengths / weaknesses and risks. Together these different elements will provide the greatest insights as to what makes Boston Beer so competitive.
What is Boston Beer (Samuel Adams) comparative advantage? What impact does this have on the strategies? How does your firm manage its strategies?
A comparative advantage is when a firm has specific areas that are giving them the ability to increase their market share with all other factors being equal. Like what was stated previously, to understand the comparative advantage requires examining the strengths / weakness in contrast to the risks. This will helps us to comprehend what factors have made the company so successful. (“Comparative Advantage,” 2012)
Strengths / Weaknesses
In the case of Samuel Adams, the biggest comparative advantage that the company has is their ability offer a unique product. This is based on the firm creating specific brands that are geared towards select segments of the population. For example, Boston Beer markets a number of brands under the Samuel Adams line. In some cases, there are lower amounts of alcohol content and the beer is allowed to ferment over (i.e. The core family of beers). While at other times, there are higher amounts of alcohol and unique ingredients which are used to give the beer a unique taste (i.e. extreme beers). This is different from many of the micro and traditional brewers in the industry with a larger selection that is offered. (“Comparative Advantage,” 2012)
The biggest weaknesses for Boston Beer are the threat of new imports and the lack of advertising / global market penetration. The American market is a major target for beer producers. This is because there is a history of consistent sales over the years. Since the 1980s, a number of foreign producers have been marketing their beer inside the U.S. This has caused the entire industry to face increasing amounts of competition. In the case of Samuel Adams, new producers could quickly enter the market with similar tastes and styles. They could then, quietly promote themselves as the cheaper alternative in comparison with micro brewers. Moreover, the firm does not have the advertising leverage to aggressively promote their products in an ever changing market. This can hurt the company’s ability to reach out to consumers. (Berghoff, 2009)
There are four categories of risks that must be considered when evaluating Boston Beer to include: clear enough, alternative futures, the range of future and true ambiguity. Clear enough is when there is a focus on ensuring that everyone understands the company and the different products. In the case of Samuel Adams, consumers can recognize and enjoy the brand. The challenge will occur when tastes change and how this will affect the way they see the company in the future. This is when the firm must be able to quickly introduce new products to address these needs (creating a clear enough image in the mind of customers). Over the last 15 years, this has been taking place with the introduction of new brands (as this is the most important aspect of their business model). (Bamforth, 2012, pp. 145 — 146) (Berghoff, 2009)
Alternative futures is when executives must evaluate new markets they can go into to deal with these changes. This means altering the approach and the marketing strategy to promote the company. In this situation, Samuel Adams should survey consumers to identify where these transformations are taking place and how they can adjust. This is the second most important area of their business model. (Bamforth, 2012, pp. 145 — 146) (Berghoff, 2009)
The range of futures is when executives are looking at possible choices to determine which one will help them the most. In this situation, the firm needs to have new markets identified where they can expand into. This will improve their competitiveness and dominance around the globe. This falls underneath the importance of alternative futures as a sub-category. (Bamforth, 2012, pp. 145 — 146) (Berghoff, 2009)
True ambiguity takes place, when the staff members realize that the firm has come to a crossroads of declining sales and shifting markets. This is an equally important area (in comparison with the others) that will identify when changes are happening. The survey of different consumer tastes and trends will help the company to address these kinds of issues in the future. (Bamforth, 2012, pp. 145 — 146) (Berghoff, 2009)
Clearly, what makes the Boston Beer Company so competitive is their ability to market Samuel Adams to a unique demographic of consumers. At the same time, they have been able to reach out to new customers by offering them a larger selection and different tastes. In the last few years, this has allowed the firm to dominate the sector while other competitors are . The way that this is impacting their strategies is to focus managers on adjusting with these transformations. This is from the firm monitoring what kinds of tastes customers are looking for and providing it to them. Over the course of time, this has helped Samuel Adams to redefine the beer market.
Boston Beer Company. (2010). CNBC. Retrieved from: http://www.cnbc.com/id/39233398/The_10_Biggest_US_Craft_Breweries?slide=11
Comparative Advantage. (2012). Investopedia. Retrieved from: http://www.investopedia.com/terms/c/comparativeadvantage.asp#axzz1ofyHVShY
Bamforth, C. (2012). The Oxford Companion to Beer. New York, NY: Oxford University Press.
Berghoff, S. (2009). Tapping into the Craft Beer Industry. Stump Town. Retrieved from: http://www.stumptown..html
Toscono, P. (2010). The 10 Biggest U.S. Craft Breweries. CNBC. Retrieved from: http://www.cnbc.com/id/39233398/The_10_Biggest_US_Craft_Breweries?slide=1