The general environment of the craft beer market is constantly changing and enhancing. Popular brands are slowly losing their advantages, and craft beer provides lovers of beer something different and unique for them. It is significant to mention that even small companies can increase the amount of beer they produce by 40 percent in a few years (Baiano, 2021). It confirms that the general market environment is supportive of business expansion. At the same time, the craft beer industry grants people more choices of products (Baiano, 2021). That is why the industry has begun to compete for the selection of buyers. Therefore, manufacturers are attempting to apply all the competitive advantages to promote their brand.
The Factors that Influence Beer Producers
It is significant to emphasize that there is a combination of various aspects affecting the firm’s competitiveness in the beer production segment. For a new company to enter the market has specific challenges related to materials and capacities for production. Thus, for example, the brewery owner faces a complex problem with receiving raw materials because large enterprises have more purchasing power and affect the pricing accordingly (Garavaglia & Swinnen, 2017). Hence, it is complicated for a starting firm to obtain quality raw materials and employees who can perform quality work at affordable prices. Consequently, the power of suppliers is high for this sector of the industry market.
At the same time, some businesses may produce beer for millions of consumers through automated processes at various global facilities. Therefore, it is possible that a customer may change one firm’s beer choice to another. Accordingly, if there are close substitutes, clients will be capable of refusing to buy a specific manufacturer’s product, weakening the brand of a particular company (Garavaglia & Swinnen, 2017). Hence, the power of customers is also extremely high, which forces firms to evolve and encourage loyalty to their trademark.
It is also intense rivalry between competitors in the craft beer market because of the similar assortment of production. In this way, firms that have had a mass output of beer can change the direction of their business, which creates a high level of competition in the industry. Another contributor to increased competition is that local and regional craft breweries rival well-known companies that were first to enter the market (Garavaglia & Swinnen, 2017). Thus, the smaller firms have to make more effort to attract the attention of buyers to their products. Accordingly, there is a strong competitive rivalry between these various breweries.
Development of the Industry
In my opinion, the craft beer market is not new in the industry. This is because it started in the late 1800s before prohibition was even enacted. Then the businesses developed more as family manufacture, which is why they did not reach the commercial scale. However, today various companies that produce craft beer have the opportunity to sell it to wholesalers, and they already distribute it in stores and bars (Baiano, 2021). Hence, it enables the spread of a brand’s popularity and encourages buyers to choose their products. Consequently, I consider that this option indicates that the craft brewing industry is already strongly entrenched in the beer-making field. Moreover, breweries are now often opened where customers can observe the manufacture of beer and consume it on location or in specially designed areas (Baiano, 2021). This marketing effort indicates that the craft brewing industry constantly evolves and competes with automated beer producers.
Baiano, A. (2021). Craft beer: An overview. Comprehensive Reviews in Food Science and Food Safety, 20(2), 1829-1856. Web.
Garavaglia, C., & Swinnen, J. (2017). The craft beer revolution: An international perspective. Choices, 32(3), 1-8. Web.