The Industry of Beer Manufacturing

The aim of this specific study was to examine the beer industry in Australia in detail. This paper will be used as a case study by Carlton & United Braweries (CUB). The company's headquarters is in Melbourne Victoria, Australia, Carlton & United Braweries is a beer company operating as a branch of the Foster Group.
A broad variety of beverage items is produced by the company. In fact, the company is responsible for the production of the country’s best selling beer that is Victoria Bitter. Apart from beer the company produces other non-alcoholic beverages.Industrial analysisIn this section of the study analyzes the degree of competition between the chosen firm and other firms dealing with beer manufacturing as well as the strategies employed by these firms (Brodie, 2015). Some of the strategies employed by the firms in this industry include product differentiation and production of high quality products.Market definitionGlobally, the beer manufacturing industry market has seen an expansion in terms of revenue. There has also been quite a number of emerging markets due to the increase in per capita consumption of alcohol. The industry has been quite dominated by the well established firms which boast of large market share. Emerging markets in the beer manufacturing industry are the ones seemingly controlling the sales and the profits made by the beer manufacturing firms as well as other non-alcoholic beverage firms.Market backgroundThe beer manufacturing industry has seen tremendous growth globally, the recent global production figures indicates that the beer commodity has experienced and upward increase in terms of consumption over the recent years. The origin of beer in Australia can be traced back to the beginning of the British colonial period. According to a recent research the country was ranked fourth in the year 2004 internationally in terms of per capita beer consumption, the research further highlighted lager has been the most popular beer style. Australia’s oldest brewery is the Cascade brewery which was set up in Tasmania in 1824. It is important to note that Rum was the first choice of drink preferred by the early settlers and the convicts in the country, this was during the 18th century. Drunkenness was a menace to the society during the early colonial period and this therefore resulted to beer being promoted as a suitable safer and healthier alternative to Rum. In the turn of the 20th century, Australia experienced deep recession which led to many breweries to be shut down indefinitely (Franklin & Gibson, 2012). In 1901, the federal government passed the beer and excise act which was meant to regulate the production and distribution of beer. The act prohibited making of illicit brews and as a result many breweries were closed down and the small brewery firms were absorbed. In the current 21st century, there are two main firms; Kirin-owned Lion Nathan and SABMiller-owned Foster Group own a majority of breweries in the country. These companies have strived to maintain a large percentage of share market by liaising with the government to make it cumbersome for new entrants into the market to penetrate the market.Market sizeA general estimation of the alcoholic beverage market is approximately worth 16.3 billion US dollars, of this the beer industry enjoys a market share of about 48%, with the wine and spirit industry taking a market share of 29% and 21% respectively. In terms of beer production, about 85% is commonly produced by national brewers and the rest is by microbreweries. A large percentage of the consumption of beer products is attributed to the elderly people of between ages of 35 to 60 years. Figure 1.1 above presents a table of the market size that beer manufacturing claims in the market. Figure 1.2 on the other hand is a graph showing number of breweries from 1887-2013.Market growthThe Carlton & united breweries beer manufacturing company in Australia has exhibited a continuous upward trend in terms of its growth over the recent years. This although is not enough since there is a lot of market in the beer manufacturing industry in Australia that is yet to be exploited. In 2011 , SAB miller a south African owned company took ownership of the Carlton & United breweries which saw the rise of the company’s market figure 1.3The figure above shows the growth in terms of the sales estimated in terms of barrels of beer sold in the company for the past five years. The graph shows and upward growth in terms of the sales made by Carlton & United company.Key competitors There are two major competitors in the beer manufacturing industry in Australia that have been competing with the Carlton & United breweries company namely; J. Boag & sons and Cascade breweries. Cascade remains the major competitor to the company as it is regarded as the oldest brewery firm in Australia thus it commands a huge customer base (Jefferys, 2013).The brewery was established first in 1832. The company is based in South Hobart, Tasmania and is still operational up to date with a larger share in both the Australian and Global market of the beer industry. The company deals with the production of top brands of beer in Australia such as Cascade premium, Cascade pale Ale and Cascade Blonde. The company also deals with the production of other non-alcoholic beverages. The recent research estimates that the brewery produces approximately 360,000 hectoliters annually. The uniqueness of the brewery is in the fact that it operates its own malting as well as its production of dark beers. J. Boag & son brewery also known as Boag’s brewery was established in 1883 by James Boag and his son. The brewery is based in Launceston, Tasmania in Australia. Currently the brewery is owned by Lion which is a Trans-Tasman subsidiary company of Japanese beverage conglomerate, Kirin. Some of the beer products that the company boasts of having in the market include James Boag’s premium lager launched in 1994 and Boag’s strongram bitter launched in 1997(Simpson, 2012). The latest beer product that attracted more customer base in the Australian market and in fact won the “New beer of the year” in the Australian liquor industry awards. the estimated production of the company is 20,000,000 US gal of beer annually which is a significant production in the beer manufacturing industry in Australia. The ownership of the brewery was sold to Lion Nathan ltd. figure 1.4 on competition figure 1.5 competition curveEnvironmental factorOne of the major environmental factors that affect the production of beer and the entire beer manufacturing industry is change in climatic conditions which is a natural factor that affects the production of the main ingredient of beer which is barley. Barley production is the main factor that determines the production of beer hence if the production of barley is low or is influenced by environmental factors then the entire beer manufacturing process is affected. Barley production for example requires a lot of water which suggests that barley requires a lot of rain which is an environmental factor for it to grow and mature well enough to be used to produce beer. With the recent turn of events where the entire world is experiencing global warming and high temperatures, barley production has been affected since one other condition for the production of barley is that it thrives well in cold temperatures and a lot of water. The changing climatic conditions over the years have significantly affected barley production which in turn affects the beer manufacturing process (Barrie, 2014). Figure 1.6 environmental analysis figure 1.7 geographical factor as a natural factor.The recent turn of events of changing rain patterns and unpredictable weather conditions have made beer manufacturing industries device ways to ensure that their production is constant and reliable. Some of the brewing companies have designed their own water sources and grown their own barley in order to solve the problem of inadequate availability of water for the production of barley. The beer manufacturing process itself requires a lot of water with an estimate of four barrels of water used with one barrel of barley to produce beer. This therefore demands of the breweries to access to allot of water. Conclusion Basing on the discussion of the beer manufacturing industry and the environmental factors affecting the beer manufacturing process with regards to various beer manufacturing firms discussed in the study, it is evident that the beer manufacturing industry claims a large share of the beverage market. Beer manufacturing industries ought to produce products that suit the market preferences which according to the report has changed over the years with most of the consumption attributed to the elderly persons of between 35-60 years then this demands for the breweries to consider their target market while engaging in the production of beer. Like the Carlton & United breweries in Australia, breweries across the world should not only engage in the production of beer but other non-alcoholic beverages.ReferencesBarrie, D. R. (2014). The Darwin stubby story: Celebrating 50 years of Carlton & United's production of the largest bottle of beer in the world produced in Darwin, Northern Territory, Australia. Ingham, Qld: S & D. Barrie.Brodie, P. (2015). A framework for sustainable energy reduction in modern breweries. Queensland University of Technology.Franklin, A., & Gibson, M. (2012). Your shout!: The history of Australian beer. Eagle Farm, Qld.: Magna Home Entertainment [distributor.Jefferys, G. (2013). Heroes and villains: The astounding untold story of the founders of Cascade Brewery.Simpson, W. (2012). The Australian beer companion. Prahran, Vic: Explore Australia.