US Beer Industry: Porter’s Five Forces Analysis

The US beer industry is one of the largest in the world. Porter’s Five Forces analysis is a way to assess its business climate effectively with all of its nuances. According to Bruijl, the five elements of this evaluation model are “rivalry existing competitors, threat of new entrants, power of suppliers and buyers, substitute products and services” (1). There are many major players and small local companies in the US beer business, which makes this industry extremely competitive (North America Beer Market). Entering a brewery market is difficult for new players, as it requires many financial resources for production equipment, marketing, and governmental certificates and licenses.

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Suppliers’ power is significant there since the quality of the final product and, therefore, profit directly depends on the quality of the supplied raw materials. Buyers also have a strong influence on beer prices due to a large number of small and large domestic players and foreign companies in the market. There has been a high demand from consumers for craft beer with a unique taste in recent years (North America Beer Market). It means that the threat of substitution is gradually diminishing in the industry.

There are two strategic groups in the US beer industry. Some market players acquire local breweries to increase production and expand their influence (North America Beer Market). Others innovate in the production process to improve product quality or develop new ones (North America Beer Market). The Boston Beer Company is not only one of the leaders in brewing in the United States but throughout the North American region. It is partly because the company has a broad and well-developed network of partners (Company FAQ). Another resource is their popularity as a traditional brewery brand as well as a craft one.

Works Cited

Bruijl, Gerard H. Th. “The Relevance of Porter’s Five Forces in Today’s Innovative and Changing Business Environment.” Pp. 1-22. SSRN. Web.

“North America Beer Market – Growth, Trends, Covid-19 Impact, and Forecasts (2021 – 2026).” Mordor Intelligence, 2020, Web.

“Company FAQ.” The Boston Beer Company, n.d., 2021. Web.

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