Boston Beer Company Swot Anaylsis
Samuel Adams has long been one of America’s most popular beer companies. The Boston Beer company prides itself on great tasting beer for the consumer, and profitable growth for the company. Although Samuel Adams beer is a popular beer in New England, it only holds just over 1% of the market share of the beer industry. Overwhelmed by popular brews such as Bud, Coors and Corona, Samuel Adams struggles to gain market share. Even with their low market share, they are still a profitable business.
Their mission statement reads: “To seek long-term profitable growth by offering the highest quality products to the U. S. beer drinker. ” Boston Beer Company’s main objective or purpose is to provide the American beer drinker with the highest quality product to ensure both a great beer-drinking experience and also to help ensure customers return for the many different lines of beer that Boston Beer Company has to offer; that will thus translate into long-term profitability.
In basic terms, they are trying to provide the best possible beer in the U. S. so that people will continue to buy their beer after the original purchase, which will turn their profits into long-term growth of the company worldwide. History The Boston Beer Company was founded in 1984 by a man named Jim Koch. Jim grew up in a family that had a long line of brewers in their history, including his grandfather Louis Koch, who was the original inventor of what became the Boston Lager recipe.
Instead of pursuing the old family dream, or what was considered the family profession, he decided to go to college in hopes of becoming a management consultant but always keeping the beer industry in mind. Then finally, when it seemed like the perfect time to enter the beer market because of a lack of specialized or “better beers,” and after going door-to-door for several months with his partner Rhonda Kallman (who was the only other employee in the company at that time besides Jim himself), in April 1985, Samuel Adams Boston Lager debuted in about 25 bars and restaurants in Boston, MA and the surrounding areas.
From there the legend was born, and as popularity vastly increased, so did the output of beer and increase in profits. By the end of 1985 Samuel Adams sales had reached 500 barrels, and it was being distributed throughout Massachusetts, Connecticut, and more importantly, West Germany(where beer reigns king). From there, the company expanded slightly while keeping their ideals, morals, and most importantly, their best-tasting beer and its image, in mind.
They built a small brewery in Boston and hired a staff of individuals who were just as dedicated to and obsessed with beer as they were. And thus the modern-day Samuel Adams legend is born with over 18 award winning beers available nationwide and is now the largest American-owned brewery in the United States (as a result of the Anheuser-Busch merger with InBev three years ago). Types of products offered The Boston Beer Company offers many different types of Specialty or “Better Beers” that are now distributed both nationwide and worldwide.
Some of the beers that they offer include: Boston Lager, Boston Lager Light, Double Bock, White Ale, Summer Ale, Octoberfest, Winter Lager, Old Fezziwig Ale, Cranberry Lambic, Holiday Porter, Boston Ale, Cherry Wheat, Cream Stout, Scotch Ale, Black Lager, Brown Ale, Hefeweizen, Pale Ale, Honey Porter, and Irish Red. Recent Successes/Achievements: It is hard for one to list all of the awards that the Boston Beer Company has won with their many Samuel Adams beers, but it is safe to say that they have won several medals (mostly gold) in almost every major and many minor beer competitions in the U. S. and the world.
The Boston Beer Company stakes its reputation and its business on the product that it puts out to not only the United States, but throughout the world as well. Not only is each batch of beer rigorously tested and approved, but even when it reaches the customer, the company sends specialists to the customers at random to test the beer for temperature, quality, freshness, taste, and the use of the tap/beer glass. Another reason that Samuel Adams stands out from any other beer in the industry is the history and the taste.
The recipe for the beer was developed in the 1800s by Jim Koch’s grandfather, and was only slightly changed from the original to give it a more modern appeal, taste, and balance (but again it was only changed slightly). The taste however is the main reason that Samuel Adams has become such an award-winning beer worldwide and also why the company has thus become so successful throughout the globe. The Industry Brewing over 35 distinctive styles of beer, Samuel Adams offers drinkers a variety of styles for a wide range of tastes. Using the finest ingredients from around world, their goal is to create a vigorous and flavorful beer.
Some of those brews include year-round beers, seasonal styles, signature holiday brews and the Brew master’s Collection. The Boston Beer team brewers along with Jim himself introduce a new beer every year so there’s always something different for beer lovers to try. Still not satisfied with his own versions of existing beer styles, Jim forged the extreme brewing movement in the early 1990’s. First he brewed the Samuel Adams Triple Bock in 1993, followed by Samuel Adams Millennium Ale in 2000 and Samuel Adams Utopias, in 2002, 2003, and 2005.
These “extreme” beers, which stretch the very definition of beer, rival some of the world’s finest cognacs and ports. Samuel Adams is America’s largest microbrewer. Annually, it sells more than 1. 3 million barrels of lager, ales, cider, and malt beverages. In 2006 Samuel Adams had roughly around $285. 4 million in sales. Their market share is just over 1% of the U. S. beer market. Target Market Samuel Adams has a variety of different beers, from Boston Lager, to Irish Red; the company is looking to satisfy all customers in the target market. The key consumer segment for Sam Adams is young adults, mostly males.
We are looking mainly at the 21-27 year old population, which represents about 13% of the adult population, but accounts for more than 27% of total beer consumption. From the Reinghold Case, “Householders ages 24 and younger spend 41% more on at-home beer consumption than the national average. Despite the growth of high priced brewpubs, beer remains an everyman’s drink. Blue-collar workers spend 58% more (in units consumed) on beer at home than the average wage earner; however, higher income groups and single consumers largely drive consumption of premium-imported beer.
We also look to target the growing population of women beer drinkers, and of course the middle aged consumer market. SWOT Analysis Strengths Product Innovation Throughout Samuel Adam’s history as a profitable company, they have always been looking for ways to improve their beers, or create new brews. Coming out with a new beer every few years has kept their customer base motivated to buy. Marketing Strategy Samuel Adams has always had a tactical marketing segmentation. Through mainly New England, they have managed to hold a very high standpoint among beer enthusiasts.
Their marketing strategy allows the consumer to not only realize the quality of the beer, but the quality of the individuals running the company. They also market very well in the field with advertisements posted on almost all bars in the area. Quality Control The standards set for the ingredients are unlike any company around. The company not only hand selects their ingredients from across the globe, but they also track the process of the supplements, ensuring only the best quality goes into their beer. Awards for Product Quality
When a brewery wins countless awards such as Sam Adam’s has, it becomes difficult to contradict the fact that this is quality beer. These awards strengthen Sam Adams’ reputation and overall brand knowledge. Weaknesses Small among Competition Sam Adam’s is still considered a Micro-brewery, which is a small, centralized company located in a state or region. Although the company has expanded, being it still small entities, larger companies with more money to allocate to advertising will still prevail over them. Reliance on External Distribution
Boston Beer Company does not own its own distribution line. They outsource to companies near their breweries. This could not only cost much more money, but also cause unreliability. If the company that is carrying Sam’s does not hold the same precedents that Boston Beer Company does, the beer may not be handled correctly. Suppliers stretched across the globe Although Sam Adam’s pride and joy is the essence that they conjure ingredients from around the world to make their specialized beer; this could be portrayed as a weakness for the company.
Not only are they paying money in the research and travel of finding these grains, but their also paying another company in order to purchase the blends. Large amount of “contracted” breweries Though they are working on it, Sam Adams does not own all of their breweries. Many of them are locally run factories that have now signed on with the Boston Beer Company. This not only makes it easy for companies to leave their Boston Beer Company contractors, but also buts less emphasis on the quality aspect of the beer.
If any of the smaller breweries sign under Sam Adams name decide to opt out of their contract, it could be a large hit on the companies supply chain and product output. Opportunities Specialized Beer Industry growing Since 2002, the beer industry has transformed into a market where beer enthusiasts have taken over. In just 3 years, the market share for specialized beer has gone up 10%, which is a steady rise, making what used to be 18% of beer consumed was specialized to 28%. Sam Adams has the opportunity to truly get their name out there in the global market with the increase of interest in specialized beer.
Globalization Of course, with any company, globalization is an opportunity that has to be considered. In Same Adam’s case, it is crucial for the success of the company. If the company expanded to its full potential, they could be going business across all seven continents and increase their profits tremendously. Purchase suppliers By purchasing suppliers, Sam Adams would be able to cut out a full exterior supply chain. This would not only make product quicker, more efficient and more affordable, the company’s supplier power would increase substantially, making the option of supplying to other company available.
Purchase Distributors Another way to cut out external expenses and hassles, if Sam Adams were to set up their own distribution line, they would be able to handle all of their products to their specifications. Whether it be the temperature in the cooled trucks, or the overall delivery time, with their own distribution center, Sam Adams would utilize another key method to success. Threats Competition One of the hardest parts of running a company like Samuel Adams is keeping up with all of the competitors.
In Sam Adams’ case, there are tons of other beer companies exploring how this company is being run and what they can learn from it. Sam Adams needs to establish a strong competitive advantage to overcome their opposition. Threat of New Entrants With the economy down the tube currently, a buy-in in pretty much any industry is fairly cheap. If new companies start to come into the picture, companies like Sam Adams, they could have issues adapting to the new entrants and their cultural backgrounds (depending on the type of beer industry). Agricultural Turmoil
Anytime a company uses any agricultural products, there is always the concern about droughts, floods, fires, insects, etc. Being a company based around the best ingredients you could buy, if there was a natural disaster or an environmental shit near some of their crops, the company would be damaged severally and would either have to produce less product for an amount of time, or have to settle for sub-par products. Mergers of other local breweries With so many microbreweries located across the nation, a company must always keep an eye out for key mergers or buyouts.
Just like when Anheuser-Busch was bought out by InBev, many local breweries could be looking on the same path. Even Sam Adams as a company not only has to be aware of this as a threat, but also be aware of it as a potential uprising, if they were to buyout a few microbreweries, this threat would turn into an opportunity. There are many ways which Samuel Adams can increase their profits and cut down on wasted time, money, and profits thus maximizing their efficiency.
Instead of having individual suppliers and distributors, Sam Adams could purchase them, therefore cutting out their operating cost, which would eventually make way for a much higher profit margin, as well as total control of what goes on instead of having to wait on their suppliers and distributors. If Samuel Adams opened up to the global market, many more people could potentially be regular customers to their beer. Samuel Adams could even create a division within their company to deal with international affairs. Sam Adams is obviously one of the more expensive beers on the market, being an average of $2 more on each pricing unit/ level.
If they offered a more competitive pricing strategy, they would have more regular buyers because of the affordability. Return buying is one of main and more important goals of the company. With aqquisition of distributors and suppliers, they would be able to cut their costs and have a more competitive pricing range. If Sam Adams opened more breweries across the country, primarily further west, it would help promote and distribute their products because it would be making it more readily available for their existing and new customers.
Sam Adams incurs very high expenses importing many of their ingredients from other countries, but if they could cut down on that and possibly get high quality local ingredients they would only be paying for the ingredients, not the travel cost and taxes. They could possibly even buy farms, etc. to produce their own ingredients, which would even further cut down on their expenses. Given the SWOT analysis and company infrastructure.
The Boston Beer Company conducts themselves in a matter fitting for them. Whether or not they are interested in the expansions are up to the company. Given that, if they did decide to restructure their company into a global entity, then Samuel Adams beer could end up being one of the top beers in the world.