Introduction

The following essay is analyses the beer industry in the United States. It looks into the
beer industry and what can be done to ensure that the beer it develops an appropriate
growth mechanism in the light of globalization, integrated technology and strict industry
regulations. The analysis looks into the political environmental, social, technological,
economical and legal factors that affect the beer industry in the United States.
The political/legal factors
The political environment in the United States was not supportive to beer drinking in the
country due to huge wave of temperance advocates who in the year 1921 led to the
prohibition and eventual banning of alcohol brewing in the country. This led to the
closure of many beer production companies. However, in the year 1940’s the prohibition
era was over but alcohol did not have wide acceptance among the potential consumers
(Lundström 2005). Even after it was made legal by the federal government, the state
government perpetuate prohibition by limiting the hours of drinking and distribution
systems of beers to make the Americans accept beer as good drink. The political
environment includes taxation procedures that are in the country. Currently, the tax is
40% of the retail prices, which is a higher rate of taxation compared with taxation in
other countries such as Germany (Lundström 2005). Globalisation as a political factor
has influence on the beer markets in the United States. The liberalisation of markets
allowing importation of beer from other countries has led to the entry of variety of beer
and alcoholic brands in the country. The imported beer sales volume is at par with the
locally produced beer in United States (Appendix 1). Regulation of the beer industry has
also affected its profit margins due to regulation on advertising, as it is perceived to be deceptive to public on the advantages of drinking beer (Strokes 2010). This has
hindered creativity in beer industry marketing and advertising due to such regulations.
Other regulations pertain to the entry into the industry where the licensing procedures
are complicated and designed to lock out new players who want to enter the industry
(Lundström 2005).
The economic factors
United States of America is the world’s largest economy. It boasts of having the world’s
highest gross domestic product as well as highest per capita income of $48,000. The
country has a population of approximately 300,000 million people. It is the largest
exporter of electronics and technological goods such as computers as well as organic
waste (The World Bank 2010). With such a huge economy and high-income levels, it
shows that the country has a ready market for the beer. The per capital consumption of
beer in the United States is 121liters. This shows that beer consumption in the country
is not ingrained compared with other European countries like Germany, which has per
capita consumption of 140 litres. The beer industry in the United States contributes
approximately $228 billion and $71 billion goes to wages and salaries of those involved
in production of beer in the country (The World Bank 2010).
The economic factors have huge impact on the beer industry in the United States. The
first economic aspect that has affected the beer industry is the global recession, which
has reduced the volume of beer consumption in the country. The year 2008 was the
most affected as the overall sales volume declined by 4%. It led to loss of jobs as beer
companies’ strategized ways of surviving the recession. The total beer consumption has
reduced by 7% since the year 2007. The other economic factor relates to the increased competition across the globe due to the merger and acquisition of the beer companies
resulting to concentration of beer industries. For instance, the United Distillers, one of
the major importers of beer in the United States has acquired more than forty
establishments of beer distribution in the United States (Espey 1989). The takeovers of
the local beer companies by multinationals have intensified competition and made beer
production and selling very competitive. Other than the takeovers and mergers that are
ongoing among various beer companies in the United States, there are factors that
affect the beer industry and they are part of economical factors such as the distribution
systems adopted by different players in the industry. Currently, most of the companies
in the industry prefer to use the traditional distribution systems such as retail stores or
establishments such as bars and restaurants (Espey 1989).
The future of beer industry in the United States is brighter because of the increased
number of beer brands and young consumers. The economic forecasts show that the
economy will be out of recession in the year 2014 and this will lead to expansion of the
beer industry. The overall sales volume of beer in the country grew by 4% in the year
2012. Similar growth is expected in the year 2013 and even more growth is expected in
the country (Barnes Reports 2012).
Social cultural factors
The social economic factors are imperative in influencing the beer industry. This is
because beer consumption is a social factor that integrates with the American culture.
The American culture advocates for moderation in beer drinking and beer markets had
difficult time during the prohibition period when beer was illegal in the country. The industry had to promote beer using the American pop culture where the pop stars were
used to promote and brand the drinks (Beverage World 2000).
Americans have a high sense of style and self-importance and everything that helps
them to perpetuate this image has a wide acceptance. This explains how Heinemann
has managed to sell its classic drinks in the United States successfully. In a survey
conducted by the institute of beer manufacturers, it showed that sixty percent of those
who drink beer are between eighteen and forty five years of age. It also indicated that
beer drinking exists in all social economic classes although it was low among people
with $50,000 per capital income (Espey 1989).
The American culture takes beer drinking as leisure with forty-two percent of those
interviewed indicating that they drink for leisure. Twenty-two indicated that they drink
when it is necessary like in social gatherings and another eighteen per cent took beer
when they were depressed. About the household drinking, twenty-eight percent of the
households surveyed indicated that they serve an alcoholic drink as part of their daily
meal. The alcohol can be wine, beer and the spirits. To understand the culture better,
the existing literature especially fictional works indicate instances where the characters
were in a binge and the types of beer that they drunk (Swedberg 2009). The social
cultural environment in the United States of America shows prevalence of drinking beer
in the country. It also provides information on how beer marketers can capitalise on this
market (Andriani et al. 2004).
The industry has been involved in a number of activities to popularise its products by
engaging in corporate social responsibility activities like sponsoring NBA series in United States of America, as it is one of the most popular sporting event in the country
(Strokes 2010).
Technological factors
Technology has affected the beer industry in the United States in a number of ways.
The first way involves the methods of beer production. With increased technology
especially the development of enterprise resources planning systems beer industries
have increased. The companies have reduced their costs of operations and managed to
reduce the selling price. The use of Enterprise Resource Planning has enabled the
companies to reduce administrative costs such as payroll processing to pay the
workers, supplier management and inventory management (Schultz 2000).
Technology is also useful in fermenting, processing and eventual production of beer and
this has significantly reduced costs of production. The technology has increased
efficiency in the production process. The technological processes are not however
available to every beer company as it is a capital-intensive activity. Technology has also
been useful in marketing the beer products all over the globe through the traditional
media such as the television as well as the social networks. The ability to integrate
technology in marketing and production activities gives the companies advantage over
their competitors (Pratesi 1994).
The other factor relates to the environmental and ecological factors.
Beer is made from fermented food materials such as rice, corn and barley. With the
increased global climatic changes, the demand for food has increased and led to
increase in the prices of these commodities. This has made the production costs of beer
to be high. The other environmental factor that has affected the beer industry is the need for the beer production companies to conserve energy. The environment
advocacy groups advocate for companies to be energy and environment conscious.
This consciousness is meant to ensure that companies have green energy or purchase
carbon credits. Most of the companies have also engaged or used their resources in
environment conservation efforts (Beverage World 2000).
The other environmental factor relates to the increase in the lifestyle diseases in
the United States of America where many people suffer from obesity, diabetes,
blood pressure and kidney ailments. These ailments have made people more
conscious and reserved from enjoying alcoholic beverages due to their
contribution on the diseases. This has affected the companies negatively as it
has reduced the overall number of beer consumers in the country (Lundström
2005).
Buyer power
The economic recession which intensified in the year 2008 has affected buyer
power significantly. The unemployment, job losses affected many people
negatively. However, the beer industry has not been fully affected mainly because
of beer being an addictive substance that people who have a habit of drinking
cannot stop doing. However, this has affected the sale of classic drinks which
have reduced since 2008 (Barnes Reports 2012).
Suppliers
There are two types of suppliers in the United States beer industry. The first type
of suppliers deal with raw material such as barley, rice sugar and corn which are
the ingredients of beer. Although their supplies are critical they have diminished influence on the industry as they are many and competition among suppliers
lowers the prices of this ingredients. The second class of suppliers who have
influence on the beer market are suppliers who supply technology and
equipments. They are powerful and they have more influence as technology
reduces the cost of production and operations. Therefore established beer
companies establish good relationship with these suppliers to ensure that they
are abreast with technological changes that will improve their operations (Barnes
Reports 2012).
New entrants
There are new entrants who have entered in the beer market since the year 1990,
such as Seagram, Allied, Heinemann which entered in the market courtesy of
globalisation. However, there are stringent licensing regulations in the United
States which makes it hard for the new entrants. However with globalisation, new
entrants come in through take over by multinationals or mergers with foreign
beer companies (Beverage World 2000).
Substitutes
The main substitutes for beer in regard to alcoholic industry are wines and sprits;
however, this can be termed as differentiation rather than substitution.
Substitutes such as non alcoholic drinks have increased their sales especially
processed fresh juices. This is especially due to health based marketing which
portrays alcohol as harmful. Pepsi and Coca-Cola have dominated this market of
non alcoholic drinks (Beverage World 2000).

Rivalry

Rivalry in the industry is fierce due to the need to compete for the market. The
competition between the industry players is well displayed through commercials
and marketing campaign with each beer company trying to appeal to the
consumers differently. The rivalry comes through price wars, distributorship and
legal actions.
Conclusion
The beer industry is one of the greatest industries in America with significant
contribution to the economy of the country. Increasing production as well as ensuring
that there are factors relating to the development and creation of resources that pertain
to the prosperity of country will ensure the development of resources and the issues
relating to the expansion of the industry.

References

Andriani, L, Gold, F, Rotella, M, & Scharf, M. 2004, ‘Travels with barley: a journey
through beer culture in America’, Emily Publishers Weekly, vol. 8, pp.42.
Barnes Reports 2012, U.S. Beer and ale wholesale industry, viewed 15 May 2012.
< http://www.pinpointdemographics.com/americasneighborhoods.html >.

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Beverage World 2000, ‘Brew u? Labatt USA opens beer academy’, Beverage World
News, 15 May, pp.16.
Espey, J 1989, ‘The big four: an examination of the international drinks industry’,
International Journal of Wine Marketing, vol. 1, no. 2, pp.47-64.
Lundström, A 2005, Beer production policy: theory and practice, Springer, New York.
Pratesi, C 1994, ’Miller beer,’ Management Decision, vol. 32, pp.25-28
Schultz, M 2000, The expressive organisation: linking identity, reputation and the
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