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Significance of Growth Strategy for Firms in the Global Brewery Industry

This is a guest blog post. For more information on growth strategy and industry analysis, you may be interested in these documents: Blue Ocean Strategy Primer, Common Strategy Consulting Frameworks, Business Model Innovation.

An Overview of the Global Brewery Industry

The scope of the industry can be evaluated from the fact that it generates revenue of more than $325 billion each year. The four biggest companies in the industry are ABInBev, SABMiller, Heineken, and Carlsberg. These firms hold numerous brands in several territories all around the globe; Heineken, for example, holds over 250 brands that are marketed in different areas of the world and has 4% market share in the biggest market of the industry, North America, despite not having a production base in US.

The major driving force that causes the firms in the industry to develop active strategies for international growth is the market saturation in developed territories. The major firms in the industry are diverting their resources towards developing markets in order to optimize their revenues. Another tactic, used by the leaders of the industry, to disrupt the market proportion, is large scale mergers and acquisitions. One of such acquisitions was that of InBev, a Belgian brewer that acquired one of the biggest U.S. brewers Anheuser Busch. This merger caused the firm to become the market leader in the global brewery industry. Those are just examples of how important for all the entities, operating in the industry, is to develop an effective strategy for global expansion, if they want to create a notable market share.

The global brewery industry is highly competitive due to the presence of a large number of firms. There is high diversification in the industry with regard to products, and that can be evidenced from the wide array of brands held by each of the big firms. The competition among the major firms in the industry has been rising, and every other entity, operating in the market, is striving to extend their market share, as well.

Success Factors in the Industry

The success in the global brewery industry depends upon price of the products, design of distribution, the effectiveness of marketing, the cost structure, and the effectiveness of the strategy for global expansion. In order to succeed, firms need to develop an effective pricing strategy. The market leaders have the advantage of high scale sales; they can earn high profits even at low product prices. However, in case of smaller firms, significant thought must be put in cost structure and pricing. The effectiveness of advertising also plays a vital role as it helps a firm stay prominent amidst the crowd.

Effective Growth Strategy

The most important success factor in the global brewery industry is the strategy of the firms towards global expansion; if a company is to strengthen its position in the global market, it will have to design an effective growth strategy to tap into the potential represented by the emerging markets. Best opportunities for global expansion are emerging markets all around the globe, such as Ethiopia and Asia Pacific, and utilizing this potential can help the firms generate higher revenues and profits. Another factor that makes global expansion more feasible for the major players in the global brewery industry is the homogeneity of the taste of consumers all around the globe. Due to advancement in communications, consumers tend to be aware of global brands. Firms with an established market in one region can capitalize on consumer awareness in other emerging markets. International growth results in increased cash flows for a business; it is highly important to setup a method of money transfers for business in order to address these transactions, during business expansion. While global brewery industry is one of the most competitive sectors in the world, it still has the potential for further growth due to the developing markets. Firms can tap into this potential and generate higher revenues.

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