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Strategic Plan For A Small Uk Brewery

Wolverhampton and Dudley Breweries (W&BD) is an independent brewing and pub retailing business. Currently, it operates three breweries – Park Brewery in Wolverhampton (brewing Hanson’s, Banks’s and Mansfield beers), Marston’s brewery at Burton-on-Trent and Jennings Brewery at Cockermouth in the Lake District. The company brews some of the UK’s leading real ale brands including Marston’s Pedigree, Banks’s Bitter, and Banks’s Original. Supporting its leading range the company also brews a selection of local beers including Hanson’s Mild, and Mansfield Bitter.

In addition to its breweries, W&DB has two traditional floor maltings at Langley and Lichfield. The company also packages products in kegs, cans and bottles and sells a full range of wines, spirits and minerals. According to their company website, key developments in the last decade have enabled The Wolverhampton & Dudley Breweries, Plc to position itself as the UK’s premier regional brewer (W&BD Website). The WB&D company estate extends to around 1,630 pubs – a mixture of both tenancies and managed pubs.

A selection of the venues are modern bars of the Pitcher and Piano brand. Located in town or city centres, they have a target market of ages 22 to 36. Although the company faced a stiff competition in the alcoholic drinks market in the UK, Wolverhampton and Dudley Breweries acquired steady market figures last year. Total volumes brewed, excluding non-owned brands, increased by 5. 2%, including a 14. 8% increase in premium ale. This strong performance was driven by growth in free trade, in sales to other pub companies and in sales to the off trade.

Within premium ale, Marston’s Pedigree and Old Empire contributed to their strong performance, whilst standard ale – Marston’s, Mansfield, Jennings and Banks’s beers – also performed satisfactorily (W&BD Annual Report 2005, p. 14). Although sales of alcoholic drinks are expected to remain virtually static in total volume terms and to grow by just under 3% in total current value terms in 2005, growth in the off trade is expected to be 2% in volume terms and this will make up for the 1% drop in on-trade volume sales in the UK.

Also, the rising living costs and the “big night in” trend saw drinkers shun the pub in favour of drinking at home. This trend was particularly evident in the largest alcoholic drinks, namely beer. The move to off-trade consumption was driven by a combination of consumers finding other ways to spend their leisure time, other than in the pub, and by heavy retailer price discounting championed by supermarkets/hypermarkets such as Asda and Tesco.

The expected ban on smoking in public places is only likely to intensify this trend, with many consumers voting with their feet and staying at home, as they did in Ireland after a similar ban was introduced in 2004 (Euromonitor International, April 2006). In this case, Wolverhampton and Dudley Breweries need to identify a strategic plan/focus in order for them to effectively market their alcoholic products despite the bleak trend in the beer/ale sales. INDUSTRY PROFILE As beer has become popular and categorically drunk all over the world, beer is the great drink of relaxation—and moderation.

It is consumed in bars, clubs, sports grounds—in fact anywhere where adults congregate (Bamforth, 2003, p. 7). Historically, beer production had flourished in the regions of northern Europe, where the vine did not thrive. Malt, best made from the finest barley grains and the making of which is a skill in itself, was mixed with hot water to convert its starches into fermentable sugars. The resulting liquor or ‘wort’ from which the spent malt grains had been removed (and subsequently used for livestock fattening) was then boiled with hops.

The latter were introduced to beer making in Germany around AD 1000 and spread universally in the next five or six centuries. The Germans introduced a delicacy of flavour and aroma; they improved the keeping qualities of beer. After the hops were removed and the boiled wort cooled, yeast was added to achieve fermentation. Not until Pasteur’s findings in the 1860s and Hansen’s work on pure yeast at the Carlsberg brewery in the 1880s was the biochemistry of fermentation largely understood (Crompton, 1998, p. 2).

Through the years, the burgeoning beer industries came to hold important niches in national economies around the world. Previously, although brewing had always been recognised as a major prop of agriculture and of government revenue, the scattered part-domestic nature of the industry and its lack of much of an export profile meant that, in comparison with textiles or coal mining for example, its impact went largely unrecognised. In the late nineteenth century as production grew rapidly, and the scale of enterprises altered, brewers pressed the industry’s claim to recognition.

At present, with the upsurge of globalisation in world trade, beer continuously strives to maintain loyalties of drinkers by re-creating certain beer styles and local brands and the penetration of mass-marketed products and imported beers, such as Guinness, Carlsberg, Beck and Heineken, which have secured an increasing niche market (Crompton, 1998, p. 11). According to Datamonitor (October 2005), the beer market consists of ales, stouts & bitters, low/no alcohol beers, premium lager, specialty beer and standard lager. This market is valued according to retail selling price (RSP) and includes any applicable taxes.

The global market for beer generated total revenues of $331. 8 billion in 2004, representing a compound annual growth rate (CAGR) of 1% for the five-year period spanning 2000-2004. In terms of volume, China’s Tsingtao Brewery Company was the leading player in the Asia-Pacific beer market in 2004, with a 10. 5% share, a slight increase on the previous year. Tsingtao’s brands include Dragon, Phoenix and Premium, several of which are also exported, making the company gripping for more than 80% of China’s beer exports. Tsingtao also has a joint venture with Japan’s Asahi Breweries, called Shenzhen Tsingtao Beer Asahi Co.

Ltd, producing bottled Tsingtao beer for the South Chinese market. On the other hand, the leading player globally and in the US beer market is Anheuser-Busch Companies, Inc, which the company holds a 50. 2% market share. Anheuser-Busch Companies’ leading product is the Budweiser brand. As of 7 March 2006, the Datamonitor International has ranked the top ten beer companies worldwide as follows: 1. Anheuser-Busch Companies, Inc. 2. Asahi Breweries, Ltd. 3. Heineken N. V. 4. Scottish & Newcastle 5. Inbev 6. Carlsberg 7. FEMSA 8. SABMiller 9. Sapporo Holdings Ltd. 10.

Molson Coors Brewing Company For the last five years, the global beer market has realized a marginal expansion. Strong performances were seen in Mexico and Canada, and also in Russia and Poland, while the large Chinese market showed considerable dynamism during the period. On the other hand, large country markets such as the UK, the US, and Germany showed slow growth or even contraction. This limited the overall growth of the global market. Looking forward, the recovery of the US, European and Asia-Pacific markets will lead to an overall increase in the global market’s value by 2009.

In addition, the sales of standard lager form the leading segment in the market, generating total revenues of $ 160. 2 billion in 2004, equivalent to 48. 3% of the market’s value. In comparison, the premium lager sector was worth $106. 9 billion, which represented a 32. 2% share of the market’s value. Viewing Figure 1. 4, the leading region in the global beer market is Europe, which accounts for 41. 3% of the global market’s value. In Europe, the principal distribution channel is on-trade, which in 2004 was responsible for distributing 40. 5% of the market’s volumes, only slightly down from 40.

7% in 2003. Supermarkets and hypermarkets accounted for 20. 9% and specialist retailers for 15. 6% of the market volume sales. Europe’s leading brewery is Scottish & Newcastle Plc (S&N), which is also UK’s leading brewery and has extensive operations across Europe. The company recorded revenues of over $10 billion during the fiscal year ended December, 2003, an increase of 17. 1% over 2002. The company has a presence in 14 countries in Europe and Asia and exports to more than 60 countries across the world. S&N is headquartered in Edinburgh, UK.

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