InstitutionSituational Analysis of the Ontario Craft Brewing Industry
Demands in the alcoholic beverages in Canada vary widely depending on the type of beverage and the target market. The alcoholic beverages sectors consist of beer, wine and spirits. The demand for each beverage is hugely dependent on various demographics. For instance, the beer market has traditionally been made up of the male gender. With the declining demand for beer as people shit to other alcoholic drinks such as wine and spirits, many players in the beer sector have looked to diversify their offerings to reach other consumers such has women, a market segment that has not been fully exploited. The beer marketers have been keen to diversify their products by developing beer that is lighter and flavored to better suit the female gender (Jayachandran, 2010).
Molson Canada and Labatt brewing are two most dominant players in the beer market in Canada. The two firms are well-known, and they have established strong distribution channels throughout Canada. With the two companies controlling over 78% of the total beer market, competition is stiff among other smaller companies in the sector. Independent brewers who participate in craft brewing have a niche market and are they are small in terms of their market reach and their distribution chain. Using the SWOT model critically to analyze the industry, this is a major weakness since they are not able to operate optimally and compete effectively with other players in the industry. However, they do provide some level of competition to some of the bigger brewing companies in the sector, by providing high quality beers with unique ingredients. The craft brewing industry’s strengths, therefore, lie in their ability to provide high quality beer which is brewed using unique ingredients (Pahl & Richter, 2007).
Companies such as Brick Brewery's operate under a very competitive landscape. The biggest competitor to brick breweries is SABMiller Plc rank slightly above bricks brewery’s in the GBO company shares of beer volume. Moreover, a reduction in the importations of beer into Canada as further provided competition to bricks brewery’s as more beers that are global are introduced into the market. The introduction of other brands of beer from other global markets is a major threat to the growth and development of the homegrown craft brewing industry. For instance, Boston brewing company that accounts for less than 1% of the American beer market has a presence in Canada and is also one of the principal competitors of brick breweries (Fine, 2009).
The liquor control board of Ontario stores provides retail beer at a significantly much cheaper price as compared with Vienna lager breweries that are also based in Ontario Canada. Other retail stores such as Heineken retail the beer at a much steeper price than the other two stores. Small beer crafters, therefore, prefer to collaborate with the liquor control board stores as their preferred distribution channel as a result.
The craft brewing industry in Ontario is primarily made up of small players who control a very small portion of the beer market in Canada. However, nowadays these small brewers are making headway by employing innovative approaches in marketing and operating the craft breweries. Rather than competing directly with the big companies, craft brewers are using avenues such as social media to reach out to local communities and make a connection with them. Through the use of social media, these small brewers have tremendous opportunities to significantly expand market share and become major players in the sector. For instance, some craft brewers have both twitter and Facebook pages that they use to promote their beers and also connect with their loyal customers. Ontario craft community events also assist the small beer brewer by providing and avenue for them to showcase their products (Richter, 2012).
Key performance indicators that can be useful to Ontario craft breweries include metrics from the sale of beer categorized in terms of the total volume, the total value, GBO company shares of beer and LBN Brand share of beer. For example, total volume data indicates that the amount of beer sold increased to 2348.8 million liters in the year 2012, up from 2272.7 million liters in the year 2007. In the same period, the total value of beer sold rose from 14402.6 million C$ to 15996.2 million C$. To ascertain the market potential and the growth potential, forecast data on the sales of beer by category in terms of total volume growth and total value growth between the years 2012-2017 can be used. For instance, the data shows that the beer will have an average total volume growth of 2.3 % between the years 2012-2017. Moreover, the metrics indicate a 0.4 % total growth in beer volumes in the same period.
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Richter, T. (2012). International marketing mix management: Theoretical framework, contingency factors and empirical findings from world-markets. Berlin: Logos.