HavenHarris(GroupLeader) BradHillwig(Asst.

Leader) PrakruthiNaik AttiBhargava BA631:BusinessEnvironmentAnalysis December8,2008

 TableofContents

Introduction1 GrowthOpportunities.3 Competition...9 GovernmentRegulations..10 Social&CulturalIssues..19 Conclusion/Planningpremise...21 Bibliography..22

Introduction
WeshouldtakeamomenttorecognizethatthemodernBeerIndustrywasbuiltuponasolid foundationofindustryintegrity,corporateresponsibility,astrongworkethic,andgreat foresightofindustryleaders.Someoftheaccomplishmentsofthepastyearsareclear extensionsofpracticesandprinciplesestablishedinthe1930's.Whilethebrewersofthe1930's couldnothaveimaginedtheglobalreachofbrewersinthe21stcentury,theirvaluesand commitmenttothefuturewerecriticaltotheindustry'ssuccess.Thosequalitiesremainalive andstrongtodayintheBeerIndustryandinthousandsofmenandwomenworkinginBeer companiesthroughouttheworld. Thebeverageindustryisextremelycompetitive,withprivatelabelsgreatlyinfluencingthe environment.Afewglobalbeveragegiantsproducemanybrands,butthosebrandsfallinto selfcontainedcategoriesaswell.Thus,thebeveragemarketisnotreallyonemarket;itisa collectionofmarketswithmanydifferenttypesofproducts,processesandrequirements.The beveragemarketincludesseveraldifferentproductsthatcanbegroupedintotwomain categories:alcoholic(beer,wine,spirits)andnonalcoholic(carbonatedsoftdrinks,juice,water, sportsdrinks,etc.).Eachcategory,andofteneachtype,ofbeveragehaveitsuniqueissuesand needs. ThebeerindustryisthebiggestsectoroftheAlcoholicBeverageindustry,withglobalannual salesexceeding$325billionUSD.However,marketsaturationhasbeenreachedinmuchofthe developedworld,whichislimitingtheindustrysgrowthpotentialandforcingmanycompanies tofocusonemergingmarkets.Withsofewoptionsforgrowth,companiesthatoperateinthe industryfaceconsiderablecompetitivepressures.Consequently,theymuststreamlinetheir processesinordertodrivereal,profitablegrowthallwhileensuringthattheyeffectively meetthedemandsofbothcustomersandconsumers. Overthepastyears,thereprevailedasignificantlitigationthatadvancedtheindustrysself regulationofadvertisingandmarketingpractices.Thisenhancedtheeffortstofurtherreduce illegalunderagedrinkinganddrunkdriving,extendalliancesinthebroaderalcoholbeverage industry,advocatecoherentandsensiblepositionsonimportantregulatoryprojects,and strengthenedrelationshipswithregulators,lawmakers,andlawenforcementofficials. Inthispaperwehavehighlightedanumberofthesignificantachievementsonthelegislative, legal,andregulatoryfronts.Thispaperalsoprovidesinsightsonthemarkettrendsofthebeer industryandontheissuesrelevantprimarilytobeerproducersordistributors.Itoutlinesthe specificchallengesfacingthecompaniesoperatinginthisarena,suchaseverchanging consumertastes,agrowingemphasisonproductsafety,andtheincreasingpowerofglobal retailers.Italsoexploresopportunitiesforprocessimprovementandcitesspecificsolutions thatcanempowerbeercompaniestomeetindustrychallenges,bothtodayandtomorrow,and drivetowardsprofitabilityandgrowth.
EnvironmentalScan TheGlobalBeerIndustry

GrowthOpportunities
ThesaturationoftraditionallythrivingbeermarketssuchasNorthAmericaandEuropehas driventheconsolidationoftheindustry.Majorbrewershavesoughtgrowththroughstrategic mergersandacquisitions,whichhasreorganizedtheindustryandstrengthenedthemarket positionsoftheindustryslargestbrewers.Expansionintokeyemergingmarketshasbecomea strategicpriorityforleadingfirms,whoarenowcompetingformarketshareinseveral importantregionsoftheworld(Hutter,pg.1).Whenmakingstrategicgrowthdecisionsfirms mustevaluateanewmarketbaseduponspecificcriteria,suchas: Economics&Demographics:
o Population/Consumerbase:Whatisthesizeofthepopulation?Whatisthedemographic makeupofthepopulation?Whatarethegrowthtrends?Isthereanemergingmiddleclass?How isthepopulationdisbursed? Employment:Arethereavailablejobs?Whatispercapitaincome?Isthejobmarketgrowing? Infrastructure:Doestheregionhaveestablishedinfrastructuresuchasroads,utilities,energy, communications,agriculture,privatesector? Businessclimate:Isthereanestablishedlocalbeerindustry?Isthereafreemarketeconomy? Taxes:Isthereastabletaxstructure?IsitProorantibusiness?

o o o o

ConsumerTastes&MarketTrends
o o o o BeveragePreferences:Docurrentbeveragepreferencesposeanybarriertomarketentry? Health&SocialIssues:Arethereanyhealthorsocialissuesthatmayposearisktoexpansion intothisarea? Competition/Opportunity:Whatfirmsalreadyoperateinthisarea?Whatisthecurrentmakeup ofthebeveragemarketplace?Howmuchmarketsharecanwecapture? LimitingFactors:Whatarethelogisticaloroperationalchallengesfordoingbusinessinthisarea? Howwilloursupply/distributionchainsfunctioninthisregion?

Governmental&CulturalFactors
o o o o Government:Howmuchinfluencedoesthegovernmenthaveontheprivatesector?Isthe governmentstableandethical?Whatisthegovernmentsattitudetowardalcohol? GovernmentRegulations:Hasthegovernmentimposedanyrestraintstotradeorfavored certainindustries? CulturalIssues&Factors:IsthereanyReligiousorsocialoppositiontoalcohol? Societal&EthicalNorms:Isleisuretimeimportanttotheculture?Isdrinkingasocialnorm?Is alcoholviewedasethicallyacceptablebytheculture?

EnvironmentalFactors&GrowthStrategy
o o o AgriculturalOpportunity:Whatistheclimate?Canwelocallygrowouringredients? CostsofImporting/Exporting:Whattypeofoperationwillthelogisticsoftheenvironment permit? DynamicsoftheLocalMarket:Aretherelocalbrewersthatwecanacquireormergewith?Do theyhavefavorablemarketshare?Dotheyhavepositivepartnershipswithkeysuppliersand distributors?

Withtheseguidelinesinmind,wehaveidentifiedseveralemergingmarketsthathave significantgrowthpotentialforlargescalebrewers.Thefollowingpagesprovideabriefanalysis ofthefollowingregions:China,India,SouthAfrica,RussiaandLatinAmerica.

EnvironmentalScan TheGlobalBeerIndustry

China
In2003ChinaeclipsedtheUSastheworldslargestbeermarket.Withtheworldshighest population,anexplodingprivatesectorandburgeoningurbancentersthathavelow unemploymentlevelsChinaisseenastheworldsnextbigconsumermarket.Thelocalbeer industryisfirmlyestablishedandcontainsapproximately300brewers(Slocum,etal.p.35), primarilysupplyingtheurbancoastalareas.Manymultinationalfirmshaveinvestedheavilyin theChinesebeermarketandalthoughthereisathreatofoversaturation,relativelylowper capitaconsumptionlevelsindicatethatthismarkethasroomtogrow.Considerthefollowing analysis: Strengths
Population:1.3billion(worldshighest)(CIAWorldFactbook) Employment:Approximately800millionpersonworkforcewith4%urbanunemployment. Urbanmigrationcontinuestobesignificant.Massiveemergingmiddleclass. EstablishedBeerIndustry:Worldslargestbeermarketwithsteadygrowthinrecentyears. Strongconsumerbasewitharegionalnetworkofsuppliersanddistributors.Manylocalbrands withfavorablemarketshare.Lowpercapitaconsumption.

Weaknesses
HighBarrierstoMarketEntry:Manyfirmscompetinglargelyonprice,whichtendstofavorlocal brewerswithestablishedsupply/distributionrelationships. ChallengingLogistics:Regionalismcreatesmanylogisticalsupplyanddistributionchallenges. Inconsistentinfrastructure,complexregionalgovernmentregulationsandcommunications issuesmakedoingbusinessinmultipleregionschallenging.Thisfragmented,regionalmarket makesreachingeconomiesofscaledifficultandasaresultmultinationalfirmshavetrouble adequatelydiffusingfixedcostsandattainingdesirableprofitmargins.

Opportunities
ContinuedGrowthPotential:Lowpercapitaconsumptionisasignthatthemarkethasplenty ofroomtogrow&highpopulationmeansthemarketcouldgrowsignificantly. AcquisitionOpportunities:Firmsmustcarefullycrafttheirgrowthstrategy.Alotoflocal brewersmeansthattheenvironmentmaylenditselftoanacquisitionstrategy,multinationals wouldlikelybenefitfromacquiringalocalbrewerwithfavorablemarketshareandstrong supplyanddistributionchainalliances.

Threats
GovernmentControl&PoliticalInstability:ChinaisaCommunistStateand,assuch,can exercisecomplexregulatorycontrolsfavoringcertainindustries.Instabilityisalwayssimmering beneaththesurfaceandfastgrowthoftenmeanssignificantgrowingpains.

FinalAnalysis Tremendouslongtermgrowthpotentialoutweighsshorttermchallenges.Environmentseems tofavoracarefullyplannedacquisitionstrategy.Thetargetfirmshouldhavereasonablemarket share,favorablebrandawarenessandstrongsupplyanddistributionchainrelationships.Strict operationalefficiencymustbemaintainedtomitigatethecostsandrisksofexpansion.

EnvironmentalScan TheGlobalBeerIndustry

India
LikeChina,Indiaisoneoftheworldsfastestgrowingconsumermarkets.Arapidlygrowing population,anemergingmiddleclasswithrisingpercapitaincomesandblossomingurban centersmakeIndiaapowerfulemergingmarket.Indiahasanestablishedlocalbeerindustry and,althoughpercapitaconsumptionislow,asthecountrybecomesmorewesternized youngergenerationshavethepotentialtobehighvolumeconsumers.However,regionalism, politicalunrestandthepotentialforgrowingpainstemperthismarketsattraction. Strengths
Population:1.1billion(CIAWorldFactbook) EmergingMiddleClass:Indiahasahealthy,growingurbanworkforcewith7.2%unemployment. Indiasemergingmiddleclassisrelativelyyoung,63%ofthecountryspopulationisbetweenthe agesof1564(CIAWorldFactbook)andaflurryofforeigninvestmentacrossallsectorshas broadenedandwesternizedthetastesofthisyoungpopulation. Steadygrowthinbeermarket:Indiahasanactivedomesticbrewingindustrythatincludes manylocalfirmsandagrowingincreaseinforeigninvestment.Althoughpercapitabeer consumptionisrelativelylow,beersalesinIndiaareforecasttogrowatacompoundannual growthrateof17.2%until2011(mindbranch.com). MarketSaturation:Althoughmarketsaturationisonlyamarginalconcern,itisworthnoting thatarushofforeigninvestment,combinedwithahealthydomesticbrewingindustry,makes Indiaahighlycompetitiveemergingmarket.NoteveryfirmthatexpandsintoIndiawillsurvive andthelongrunforecastfigurestoseethisregionexperienceitsownperiodofconsolidation oncetherushofinvestmenthaswaned. Regionalandlogisticalchallenges:LikeChina,Indiaisahighlyregionalmarketcontaining significantdisparitiessuchasregulatoryissues,pricesandconsumertastes.Thisregionalism createsanumberoflogisticalchallengesforavolumeproducerattemptingtoreacheconomies ofscaleandestablishacountrywidebrand.Furthermore,regionalism,combinedwith inconsistentinfrastructureandurban/ruralsocioeconomicdisparities,hasthepotentialto makeestablishinganextensivesupplyanddistributionchainacapitalintensiveundertaking. ContinuedGrowthPotential:Despitethelogisticalchallenges,Indiasyoungemergingmiddle classofferstremendousupsidegrowthpotentialinurbanareas Favorableagriculturalclimate&network:Indiasclimateisfavorablefortheharvestingofhops andbarley,theprimarynaturalingredientsinbeer.Thereexistspotentialtoestablishsupply relationshipswithlocalcommodityproducers. Politicalinstability:TherecentterrorattacksinMumbaihaveservedasareminderthatpolitical unrestisaveryrealthreatinIndia.Anescalatingconflictorthepersistentthreatofterrorcould havesignificanteffectsonIndiasdevelopmentandconsumerpotential. Socioeconomicgrowingpains:ThedisparitybetweenIndiasthrivingurbancentersand impoverishedruralareascreatesthepotentialforcivilunrest.Indiasrapidgrowthwillrequire anastutegovernmentcapableofkeepingpeacewhilemaintainingafreemarketsystemandan educated,employedpopulation.

Weaknesses

Opportunities

Threats

FinalAnalysis: Despiteitschallenges,Indiasyoungemergingmiddleclassandfavorableagriculturalclimate makethisanattractiveexpansionopportunity.Werecommendanacquisitionstrategy.

EnvironmentalScan TheGlobalBeerIndustry

SouthAfrica
SouthAfricaisoneofthefastestgrowingbeermarketsintheworld.Thisregionhasanactive domesticbrewingindustryandapopulationofhighpercapitabeerconsumers.Favorable agriculturalconditionsexistforharvestingbeeringredientsandconsumertastesareshifting fromsorghumbasedbeertowardWesternstyleproductscreatinggrowthopportunitiesfor lightbeerandspecialtybrewers.However,SABMiller,oneofthelargestbrewersintheworld hasrootsinSouthAfricaandhasastrongmarketpositionthere.Opportunitystillexistsinthis marketforbrewerskeenonpursuingamarketthirstyforwesternimports. Strengths
GrowingBeerMarket:SouthAfricahasarelativelystableeconomyandisoneofthefastest growingbeermarketsintheworld.Consumersareenthusiasticbeerdrinkerswithpercapita consumptionatapproximately60liters,upsignificantlyfromrecentyears. ChangingConsumerTastes:ConsumersinSouthAfricahavebegunenjoyingwesternstylebeer asopposedtoatraditionalsorghumbasedproduct. FavorableClimate:SomebeeringredientsareharvestedlocallyinSouthAfricaandthereisan establishedlocalnetworkoffarmers;therefore,thereareopportunitiestoestablish comprehensiveproductionchainsinthisregion. InconsistentInfrastructure:Outdatedinfrastructurehasconstrainedeconomicgrowthinrecent yearsandin2007SouthAfricaexperiencedanelectricityshortagebecauseofitsmainsupplier hadinsufficientinfrastructure(CIAWorldFactbook).Brewersexpandingintothisareamaybe constrainedbypoorinfrastructure,particularlyastheyattempttoestablishnationwidesupply anddistributionnetworks SABMillersMarketPresence:SABMillerhasrootsinSouthAfricaandisrelativelyentrenchedin thebeermarket.Thisdeepcompetitionmayposeshortrunbarrierstoexpansion. FavorableLongrunPotential:SouthAfricashighpercapitaconsumptionratescombinedwith itschangingconsumertastescreatesamarketwithfavorablelongrunpotential.Intheshort runthismarketseemstolenditselftoanimportstrategy,butlongrunopportunityexistsfor firmskeenonestablishingproductioncenters. HealthIssues:SouthAfricahasexperiencedsignificanthealthissues,particularlyregardingthe AIDSepidemic,whichhasshortenedlifeexpectancies,increasedinfantmortalityratesand slowerpopulationgrowth(CIAWorldFactbook).Anyfirmthatseekstointroduceaproduct containingalcoholshouldalsoexpecttoenactaprogramofCorporateSocialResponsibilityin ordertobuildrelationshipswithlocalcommunitiesandgovernments. Socioeconomicissues:Aswithmanyemergingmarkets,SouthAfricahasasignificantsocio economicdisparitybetweengrowingurbanareasandimpoverishedruralregions.Therefore, firmsmustbeawarethatcivilunrestispossibleandlongrungrowthcouldbeimpactedbysuch disruption.

Weaknesses

Opportunities

Threats

FinalAnalysis: SouthAfricasbeermarketprovidesanattractiveinvestmentopportunityforamultinational firmlookingtocapitalizeonthisregionshighpercapitaconsumptionandchanging, westernized,tastes.Werecommendanimportstrategyintheshortruntoestablishbrand loyaltyandcultivatealocalmarketamidheavydomesticcompetition.Inthelongrun, favorableagriculturalconditionsofferproductionpotential,inspiteoflocalinfrastructurerisks.

EnvironmentalScan TheGlobalBeerIndustry

OtherGrowthAreas:Russia&LatinAmerica
Theearly2000ssawboomingbeerconsumptionratesinRussiawhichspurredaflurryof foreigninvestment,butasubsequentslowdownandstrictgovernmentregulationshavedriven thismarketscostsup.Russiaslongstandingpreferencesforspiritshavewanedandbeeris nowmoreingrainedintheculture,butbrewersmustnowfindopportunityinthehigher marginspecialtymarkets.LatinAmericaisanactivebeermarketwithhighgrowthpotential, largelydrivenbygrowthinkeydemographics,afavorablefarmingclimate,Brazilsdeveloping economyandMexicoshighlevelsofbeerconsumption.

FutureGrowthStrategiesandConsiderations
Consolidation: Flattenedgrowthindevelopedmarkets(USandEurope)willcontinuecausingindustryleaders tomoveintohighgrowthemergingmarkets.Industrywideconsolidationwilllikelycontinueas competitionplaysoutinemergingmarkets.Oncenewgrowthareasareidentifiedaflurryof investmentwilloccur,followedbyaperiodofconsolidationandthenrelativelyconsistent,but lower,annualgrowthrates.Thiswilllikelybethepatterninkeyemergingmarketssuchas China,IndiaandSouthAfrica. Mergers&Acquisitions: Thechiefstrategyforgrowthinrecentyearshasbeenthroughmergersandacquisitions,this willlikelycontinueasthebeerindustryglobalizesandfirmscompetetoestablishmarketshare inhighgrowthareas. ThePriceofIngredients: Asurgeincommoditycostshasinflatedthecostofbrewingandsignificantlyimpactedthecraft brewingsectoroftheindustry.Largecompanieshaveadistinctadvantagebecauseoftheir largerbuyingpower;howeverincreasedbrewingcostswillhaveanimpactonthemarketprice ofbeerandrequireincreasedoperationalefficiencyandexecution.Firmsthathavestrong strategicpartnershipswithcommodityproducerswillhaveasubstantialadvantageintheevent ofanycommodityshortage.Microbrewerieswillstrugglethemostwithanunstable commoditiesmarket ConsumerDemands: Variedconsumertasteswillrequirefirmstocarryamorediversifiedportfolioofproducts.As theindustryconsolidatesfirmswillbechallengedtoreactquicklytochangingconsumertastes. Reactiontimewillbeimportantandfirmsthatareabletoaccuratelyanticipateconsumer tasteswillhavedistinctadvantages.Maintainingabroadportfolioofproductswillputpressure onoperationalcostsandfurtherstresstheneedforefficiencyandexecution(SABMillerAnnual Report,2007). StrongBranding&Marketing: Asdevelopedmarketsarefragmentedbyvariedconsumertastesandemergingmarketsevolve effectivebrandingandmarketingwillbeimportanttofacilitatingbrandloyaltyanddeveloping acustomerbase.
EnvironmentalScan TheGlobalBeerIndustry

SupportingData
Figure1.1showsthatChinasurpassedtheUSastheworldslargesbeermarketin2003.However,as Figure1.2demonstrates,thecountryhasrelativelylowpercapitaconsumptionratessuggestingthat Chinasgrowthhasbeendrivenbyitsmassivepopulation.Whetherthisuniquedynamiclimitsgrowthor representssignificantroomforgrowthwillbeakeyfactorinChinasfuturestrengthasabeermarket. Figure1.3demonstratesrecentgeneralpopulationgrowthtrendsforthekeygrowthdemographicof1534 yearolds.AsiaandLatinAmericahaveshownsignificantgrowthwhiletheUSandWesternEuropehave demonstratedflatornegativegrowthrates.Thisisfurtherevidencethatthekeygrowthopportunitiesinthe brewingindustryareprimarilyinemergingmarkets,ratherthantraditionalestablishedmarkets Figure1.1 Figure1.2

Seema International, 2005

Seema International, 2005

Figure1.3

Competition
Beerwaspartofthebluecollarsocialfabricforgenerationsindevelopedcountriesbutin recenttimesithasseenitsmarketsharereducebytheintroductionofotherbeveragessuchas wineanddistilledspirits.Howeverbeerisgainingpopularityinthirdworldcountriessuchas China,India,RussiaandLatinAmericawherethemiddleclassisopenandwillingtoexperiment withnewproductsisturningtobeerasaformofrecreation. BeerthatwaspopularinmarketslikeUnitedStateandEuropeisreachingapointofdeclineas theuseofbeerhasreducedfrom56%in1999to53%in2004asmoreandmorepeopleare turningtodrinkingotherbeverages.InUnitedStatesthechangestartedwiththebabyboomer generation who for years drank beer but are now moving towards wine due to published studies regarding the health benefits of wine and the baby boomers desire to maintain a healthy lifestyle. The generations after the baby boomers have further increased their preferencebeyondbeerandwinebychoosingdrinkssuchasdistilledspirits.Thedepthofthe dilemma was highlighted in a recent survey by Morgan Stanley that found spirits is the most populardrinkofchoiceamong21to27yearoldsastheseyoungadultsaregettingboredwith beer.Amongthatgroup,40%saidspiritsweretheirfavoritedrinkcomparedtolessthan30%in 2003. This is the young generation that thinks beer has lost its sexiness and they like the taste,qualityandsophisticationofspirits. AsthemarketsintheUSandUKarebecomingstagnantthebeercompanieshavestarted movingtocountriesthataredevelopingsuchasChina,India,Russia,andSouthAfrica.Inthese countriesthebeermarkethasseenabigjumpduetoincreasingmiddleclass.Tobenefitfrom increasingmiddleclassthebeerindustryhasformedmergerswithlocalcompanies.Even thoughtheyhaveformedmergerstheystillfacecompetitionfrombiglocalbrewers,suchasin IndiawhenSABMillerentersthemarkettheywouldfacecompetitionformKingfisherbeerand TajMahalBeerwhohavebigmarketshareinIndiaandlocalsmightprefertheirtastetobeer thatisimported.
Country Canada Mexico United Kingdom Ireland Netherlands Germany AllOther YTDOct YTDOct Volume Percent 2005 2006 Change Change 2,566 2,759 194 10,216 11,725 1,509 859 707 5,013 1,051 1,274 841 678 5,878 1,047 1,457 18 29 865 4 184 7.5% 14.8% 2.1% 4.1% 17.3% 0.4% 14.4%

Figure1.5USbeverage preferencesbaseduponincome TotalImports 21,685 24,386 2,701 12.5% Figure1.4:Representsthecompetitivegrowthofimports.

EnvironmentalScan TheGlobalBeerIndustry

GovernmentRegulationsandIssues
Thebrewingindustryissubjecttoextensivegovernmentregulationsatboththefederaland statelevels,aswellasregulationbyavarietyoflocalbodies.Someoftheregulationsimposed atthefederalandstatelevelinvolveproduction,distribution,labeling,advertising,tradeand pricingpractices,credit,containercharacteristics,andalcoholiccontent.Federal,stateand localgovernmentalentitiesalsolevyvarioustaxes,licensefees,andothersimilarchargesand mayrequirebondstoensurecompliancewithapplicablelawsandregulations.Specificalcohol taxation(asopposedtomoregeneralsalestaxes)isprimarilyafederalandstaterightalthough somestatespermitsomeadditionallocaltaxation.Thebrewingindustrymustalsocomplywith numerousfederal,state,andlocalenvironmentalprotectionlaws. FederalBeerRegulations Untilrecently,nearlyallfederalregulationsinvolvingalcoholwereissuedbytheTreasury DepartmentBureauofAlcohol,Tobacco,andFirearms(BATF),establishedbytheFederal AlcoholAdministrationActof1935andthe1968GunControlAct.However,in2002,under theHomelandSecurityAct,theBureauwasdivided.ThepartremainingintheDepartment oftheTreasurywasrenamedtheAlcoholandTobaccoTaxandTradeBureau(TTB).Anew BureauofAlcohol,Tobacco,FirearmsandExplosives(ATF)wasformedintheDepartmentof Justice.TheTTBisresponsibleforadministeringandregulatingtheoperationsofdistilleries, wineries,andbreweries,aswellasimportersandwholesalersintheindustry.Someofthe specificfunctionsTTBisresponsibleforasrelatedtobeerbrewinginclude: BreweryApplicationApproval ToqualifyasabreweronemustcompleteandsubmittoTTBtheappropriateformsalong withanyotherrequireddocumentation.TTBwillusuallycompletescreeningandprocessing withinsixtydaysofreceiptofacompletedBrewersNoticepacket. ExciseTaxCollection U.S.Governmentinvolvementinthebeerindustryalsoincludestaxation.Thecurrent federalexcisetaxonbeer,ineffectsinceJanuary1,1991,is$18perbarrelfor31gallons. However,areducedtaxrateapplies,atarateof$7perbarrel,tothefirst60,000barrelsof beerremovedforconsumptionorsalebybrewingcompaniesthatdonotproducemore than2,000,000barrelsofbeerpercalendaryear.Thefederalexcisetaxregulationsalso includeotherrules,includingremovalswithouttaxpaymentandinterbrewerypurchases. LabelingandAdvertisingApproval TheTTBimplementsandenforcesabroadrangeofstatutoryandcomplianceprovisionsto ensurethatalcoholproductsarecreated,labeled,andadvertisedinaccordancewithFederal lawsandregulations.Brewersmustfollowthelabelingandadvertisingrequirementsfound at27(CodeofFederalRegulations)CFRPart7,LabelingandAdvertisingofMaltBeverages and27CFRPart16,AlcoholicBeverageHealthWarningStatement. Homebrewing Anyadultmayproducebeer,withoutpaymentoftax,forpersonalorfamilyuseandnotfor sale.Anadultisanyindividualwhois18yearsofageorolder.Ifthelocalityinwhichthe householdislocatedrequiresagreaterminimumageforthesaleofbeertoindividuals,the

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adultshallbethatagebeforecommencingtheproductionofbeer.Thisexemptiondoesnot authorizetheproductionofbeerforusecontrarytostateorlocallaw.

StateBeerRegulations
Inadditiontomeetingfederalregulations,individualsandbusinessesmustcomplywith stateregulationstoo.Thesestateregulations,whichvarywidelyfromstatetostate,maybe morerestrictivethanfederalregulationsandmustbemetinadditiontofederal requirementsunlessthefederallawpreemptsthestatelawwhereintheydesiretodo business. AlcoholicBeverageControlBoards Followingnationalprohibition,the21stAmendmenttotheconstitutionprovidesstateswith broadpowersandauthoritytoregulatetheproduction,importation,distribution,retailsale, andconsumptionofalcoholbeveragesinsidetheirborders.(ThisisinadditiontoFederal requirements.)Eachstatehascreateditsownuniquesystemofalcoholbeveragecontrol. Therearetwogeneralclassificationsopenandcontrolstates. OpenStates Thelargergroup(nowreferredtoas"license"states)licenseallaspectsofprivate production,distribution,andsales. ControlStates Thesmallergroup(nowreferredtoas"monopoly"states)optedtobecomewholesalersand retailersthemselvesforwineandspirits. Licenses Onthestateandlocallevel,thelicenseprocessvarieswidely.Insomeareas,thestateisthe leadagencyforalllicenses(manufacturer'sandretailer'slicenses),andlocalapprovalisnot necessaryexcepttoconfirmproperzoning. RetailerLicenses Somestatesmaycontrolthenumberandtypeofbeerretailersbyissuingretaillicensesand bydeterminingtowhichretailer'screditcanbeextended.Somealsodeterminepermissible locationsforthesaleofbeerforexample:onpremise,inrestaurantsandbars,offpremise, ingrocerystores,gasstations,liquorstores,anddrugstores. Taxation Everystateimposesanexcisetaxonbeerthatisleviedasadollaramountonaspecified volume(inliquidmeasureex.,gallons).OnJanuary1,2008,stateexcisetaxesrangedfrom $0.02pergalloninWyomingto$1.07pergalloninAlaska. ContainerDepositLaws Certainstates,includingCalifornia,Connecticut,Delaware,Iowa,Maine,Massachusetts, Michigan,NewYork,Oregon,andVermont,andasmallnumberoflocaljurisdictions,have adoptedbeveragepackaginglawsandregulationsthatrequiredepositsonbeverage containers.

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LocalBeerRegulations
Manystatespermitlocaljurisdictionstoregulateandseparatelytaxbeersales,andevento prohibitthesaleofbeerwithintheirjurisdiction.Jurisdictionsinwhichthesaleofalcoholic beveragesisprohibitedarecalled"dry"states.Overhalfofallstateshavedrycitiesor counties,andabout4.3%oftheU.S.populationlivesindrycounties.Manycitiesand countiesthatarenotdryregulateoperationsand/orimposetaxesonthesaleofbeer.In additiontothefederalandstateexcisetaxes,somestateshavelocaltaxes,onpremise taxes,wholesaletaxes,andprivateclubtaxes.Georgia,Illinois,Louisiana,Maryland,New York,andOhiohavecitiesorcountiesthatimposelocalbeertaxes.Asmightbeexpected, taxescanpotentiallyrepresentthelargestsinglecostiteminaglassofbeer.

SelfRegulation
Animportantelementofpublicpolicyisdevelopingstandardsregardinghowtheprivatesector communicatesinformationabouttheirproducts. HOWDOESSELFREGULATIONWORK? Selfregulationistheprocesswherebyindustryactivelyparticipatesinandisresponsibleforits ownregulation. Ideally,advertisingismeanttoinformthepublicsothattheycanbeawareofproductsand makeinformedchoicesamongdifferentproductsorbrands.Advertisingis,ofcourse,alsoof benefittobusinessesinassistingthemtoselltheirproducts,whichinmostcountriesisa commercialright.Whilethisprocessvarieswidelyfromcountrytocountry,thefoundationfor advertisingselfregulationisbasedontheprinciplesembodiedintheInternationalCodeof Advertising,issuedbytheInternationalChamberofCommerce.TheCodestatesinits introductionthatadvertisingshouldbelegal,decent,honestandtruthful,preparedwitha senseofsocialresponsibilitytotheconsumerandsocietyandwithproperrespectfortherules offaircompetition.Thisisaccomplishedthroughrulesandprinciplesofbestpracticetowhich advertisersandtheadvertisingindustryagreetobebound. Thebasicelementsofselfregulationaretwofold: Acodeofpracticeorsetofguidingprinciplesgoverningthecontentofadvertisements. Aprocessfortheestablishment,review,andapplicationofthecodeorprinciples. Impartialityisseentobethekeytoaneffectivecodeandpublictrustinit.TheEuropean AdvertisingStandardsAlliance(EASA)recommendsthatthebodyresponsibleforthepractical applicationofthecodeshouldideallybeindependentoftheindustrybodyresponsibleforits initialestablishmentandsubsequentreview. Inreality,theremaybeseveralselfregulatorybodiestowhichagivenalcoholbeverage companymustadhereregardingcommercialcommunications.Forexample,inAustraliathere isacodethatcoversadvertisinggenerally,andanothercodeforalcoholwhichissetseparately bytheAustralianAssociationofNationalAdvertisers,theDistilledSpiritsIndustryCouncilof AustraliaandtheAustralianAssociatedBrewers.
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Inadditiontoselfregulatorybodies,mostofthemajoralcoholbeveragecompanieshavetheir owninternaladvertisingcodes. Selfregulationoftenexistsintandemwithabroadlegalframework,and,indeed,accordingto EuropeanAdvertisingStandardsAlliance(EASA),thisisthepreferredway.Inmanycases,these lawsaddresssuchgeneraltopicsasmisleadingadvertising,unfaircompetitionandconsumer issues,butlessrestrictivecountriestendnottoaddressproductspecificissuessuchasalcohol. Inmorerestrictivecountries,suchasFrance,statutoryauthoritiesandnationallegislation controladvertisingcontentandplacement. POLICYOVERVIEW Policiesregardingadvertisingrestrictionsaredividedintosixcategories.Thecategoryassigned toeachcountrywasderivedbyreviewingtherestrictionsthatwereinplaceregardingalcohol advertisingontelevision,radio,cinema,printmedia,outdoors,andsponsorship.Thepolicy categoriesare(1)selfregulation,(2)statutorylegislation,(3)acombination[ofselfregulation andstatutorylegislation],(4)[advertisingofalcohol]isbanned,(5)somecontrolsand(6)no controls.StatutoryCombinationBannedSomeControlsNoControls Thealcoholbeverageindustryrecognizesthattheadvertisingandpromotionofbeverage alcoholmayneedmorecarefulregulationthanthatforsomeotherproducts.Inaddition, individualcompaniesoftenhavetheirowncodesofconduct.Theselfregulatorycodesthat industryorganizationssponsorgenerallyaddressplacementandcontentofadvertisementsand inmanycases,liketheNetherlandsandSouthAfrica,packaging.Othertopicscoveredbythe codesincludeissuesconcernedwithminors,abuseofproductstrength,social/sexual/medical aspects,physicalperformance,anddrivingundertheinfluence. Table2onthefollowingpageprovidesinformationonselfregulationandrulesrelatingto alcohol.

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 EEFFECTIVENESSOFSELFREGULATION Theeffectivenessofselfregulationonalcoholadvertisinghasrarelybeenstudied systematically,althoughtheissueisoftenhotlydebatedinalcoholpolicycircles.Apparently, theobjectiveofsuchevaluationsistodeterminewhetherthealcoholbeverageindustryis effectiveinpolicingitselfwhenitcomestocommercialcommunication.Howonewould measuresucheffectivenessinpractice,especiallyinacountrythathasbothstatutoryandself regulatorymechanisms,hasnotbeenadequatelyexplored.

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Recently,theAdvertisingAssociationintheU.K.recommendedthatananalysisbecarriedout onthestatutoryandselfregulatorystatusoftheadvertisingofalcoholicbeveragesinthe membernationsoftheEuropeanUnion.TheAssociationsrecommendationstothe Commissionincludedaseriesofanalyses,suchasapanEuropeanstudyonalcoholabuseand consumptionamongyoungpeopleinrelationtoalcoholbeverageadvertising. AUSTRALIA Australiahasminimallegislationandfewmandatoryrequirementsconcerningtheadvertising ofalcoholbeverages.Inthe1980sandearly1990s,concernwasmountingabouttheperceived harmfuleffectsofalcoholbeverageadvertising.Blakeney&Barnesnotedalackofsanctionsin Australiaforoffendingparties,thevariablenatureofadjudication,theprotracteddelaysin determiningcomplaintswhichruncountertotheindustrysinterest,andthelackofhealthand welfarerepresentationonadjudicatingbodies.SaundersandYap,whostudiedthesystemof selfregulationofalcoholbeveragesadvertisingbasedon16advertisements,concluded:the systemofselfregulationofalcoholadvertisingdoesnotservethepublicinterest.Hawks editorializedthatunlesstheindustrydemonstratesthatitcouldregulateitsmembers,the publichavearighttodemandthatgovernmentexercisemorecontroloftheindustry. TheAustralianAssociationofNationalAdvertiserswasestablishedin1928butaselfregulatory AlcoholBeveragesAdvertisingCodeandComplaintsManagementSystem(ABAC)was organizedin1998.Memberscommittedtoabidebythedecisionsoftheindependent ComplaintsAdjudicationPanel.Allkeyalcoholbeveragesectorsmarketing,advertising, media,andconsumerassociationsaswellasgovernmentministersanddepartmentswere involvedinitsdesign.Inaddition,anAlcoholAdvertisingPrevettingsystemwasestablishedby theAustralianAssociatedBrewersandtheDistilledSpiritsIndustryCouncilofAustralia.Its primefunctionistoensurethatbeerandspiritsadvertisementsareconsistentwiththeABAC code. TheCommonwealthMinisterforHealthendorsedandlaunchedthecode,notingthathewillbe monitoringadvertisingcloselytoensurethatthespiritofthecodeisupheldsothatallalcohol advertisingisresponsibleandreflectscommunityexpectations. TheNationalAlcoholBeverageIndustriesCouncillaunchednewselfregulatoryguidelinesfor thename,packaging,andpromotionofalcoholbeverages.Althoughthecodewasvoluntary, eachofthefourmemberswasaskedtosignalegallybindingagreementtoadheretothecode andthecomplaintpanelsdecision. NETHERLANDS TheDutchAdvertisingCode,establishedin1978,governsgeneraladvertisingwithnospecial provisionsforalcoholbeverages.In1987,theDutchparliamentavertedaproposedbanon alcoholadvertisingonradioandtelevisionbyadoptingamotiongrantingthealcoholbeverage industryanopportunitytoexerciseselfregulation.In1990,theCodeforAlcoholBeverageswas implementedwithrulesforalcoholadvertisingandforsalesbehavior.
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InFebruary1999,theDutchHealthMinisterwarnedthealcoholbeverageindustrythatitmust amenditscodeofconductonadvertisingandsponsorshiporfacetoughnewlegislation.The Ministerbelievedthatgovernmenteffortstoencouragemoderatealcoholconsumptionwere beingfrustratedbythegrowingvisibilityofleadingbeerbrandsatmajorsportingandmusic events. ThealcoholbeverageindustryrejectedtheMinisterscomplaintandtheheadoftheindustry commented:Therehasbeennocriticismofthecodeinthepastsevenyearsinfact,onlylast yearthegovernmentpraisedtheindustryssystemofselfregulation.InApril2000,agreement wasreachedbetweentheindustryandgovernmentthatledtorevisionsintheCodeforAlcohol Beverages. ThemainamendmentoftheCoderelatestothebanonadvertisementsforalcoholbeverages. Advertisementswillnotbeallowedtofeatureanyonebelowtheageof25.Cocktaildrinksmust beclearlyportrayedasalcohol,ratherthanfizzydrinks.Astipulationhasalsobeenincludedin thenewCodebanningtheadvertisementofalcoholbeveragesfrompillarsandbillboardsalong motorwaysandroadsoutsidebuiltupareas.Finesforcontraveningthecodehavebeen doubled. UNITEDKINGDOM ResponsibilityforselfregulationintheUnitedKingdomissplitbetweennonbroadcastmedia andbroadcastmedia.TheAdvertisingStandardsAuthority(ASA)wasestablishedin1962to ensurethatallnonbroadcastmediaadheredtothebasicprinciplescontainedinthe InternationalCodeofAdvertising.TheASAcodecontainsspecificrulesonalcoholbeverages. ThePortmanGroup,anindustryfundedsocialaspectsorganization,introduceditsvoluntary CodeofPracticeonthenaming,packaging,andmerchandisingofalcoholbeveragesinApril 1996.Thiswaschieflyinresponsetopublicandgovernmentconcernregardingtheintroduction ofalcoholiclemonadeandothersocalledalcopops,whichsomearguedweretargetedat youngpeopleunderthelegaldrinkingageof18.Thecodewaswelcomed,butwasalso criticizedforitslackofindependenceinmonitoringitsmembers. InSeptember1997,asecondeditionoftheCodewasreleasedwhichincludedstrictcriteria, includingbolderstatementsofalcoholcontentandafocusonmoreadultlabeling.Italso includedanindependentreviewpanel,chairedbytheformerbankingOmbudsman(anofficial appointedbythegovernmentorbytheparliament).Theresultsofthereviewwerepublished alongwithaprevettingcomponentwhichallowedmanufacturerstosubmitrelevantnew productstothePortmanGroupforprelaunchclearance.TheChairmanoftheMinisterial GrouponunderagedrinkingwelcomedtherevisedCodeandalsoindicatedthattherewould benoneedforgovernmentinterventiononalcopops. Itappearsthattheserevisionshavewongovernmentapprovalaswellasindustrycompliance, asisclearfromtheremarksmaderecentlyintheHouseofCommonsbytheSecretaryofState fortheHomeOffice.Hestatedthatthenumbersofcomplaintsandupheldcomplaintshave bothfallen;thefindingoftheindependentpanelhaveenjoyedahighdegreeofcompliance
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andthe[Portman]GroupsRetailerAlertBulletins,advisingretailersnottostockoffending productsintheiroriginalpackaging,hasreducedtheiravailabilitytothepublic. SOUTHAFRICA InSouthAfrica,advertisingispermittedontelevision,radio,inthecinema,inprint,and outdoors.Thisis,however,subjecttothecodeoftheIndustryAssociationforResponsible AlcoholUse(ARA),anassociationofmostofthemajoralcoholproducersinSouthAfrica.The code,forexample,specifiesthatadvertisementsmaynotbetransmittedinthecommercial breaksimmediatelybefore,duringorimmediatelyafterchildrensprograms. TheARAsetupaselfregulatorycodein1989whichregulatesadvertising,packagingand promotionalactivity.Since1989,thecodehasbeenamendedtwice.Inaddressingadvertising issues,thecodeprohibitsarangeofactivities,includingappealtoyoungpeople,inclusionof youthunder25drinkingalcohol,specialpromotionofhigheralcoholcontentbeverages,and promotionofaggressiveorantisocialbehavior.Thepackagingrequirementsincludeusing packagingofthehighestpracticalqualityandattractiveness,andnotpromotingthealcohol strengthofthebeverageastheprincipalsubjectofthelabel. In1996,theAdvertisingStandardsAuthorityofSouthAfricaacceptedtheadvertisingclausesof thecodeastheirowncode,thusmakingtheARAcodeapplicabletononmembersoftheARA aswell.Withtheadditionofthepackagingandpromotionalclauses,theARAcodeinfactis morestringentthantheCodeoftheStandardsAuthorityofSouthAfrica.Anexternal OmbudsmansettlescodedisputeswithintheARA.Generally,itisbelievedthattheseguidelines andcodesarebeingfollowed. UNITEDSTATES ThealcoholbeverageindustryintheUnitedStateshasestablishedseparatevoluntary advertisingcodesinitiatedbytradeassociationsfromeachofthethreesectorsthatmakeup theindustrybeer,wineanddistilledspirits.Atthesametime,theFederalTradeCommission (FTC)isresponsibleforenforcingeffortstostopunfairordeceptiveactsofpracticeand recentlywasaskedtoreviewindustryeffortstoavoidpromotingalcoholtounderage consumers. Generally,thecodesprovidethatalcoholadvertisingandmarketingeffortsshouldnotbe directedatorappealtoanaudiencethatisprimarilyunderage.Inconductingtheirreview,the FTClookedatissuessuchasadvertisingplacement,advertisingcontent,productplacement, onlineadvertisingandcollegemarketing,howeachofthesewereimplemented,andwhatbest practicesemerged. TheFTCreportconcludedthatforthemostpart,membersoftheindustrycomplywiththe currentstandardssetbythevoluntaryadvertisingcodes,whichprohibitobviousappealsto youngaudiencesandadvertisinginvenueswheremostoftheaudienceisunderthelegal

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drinkingage.Thereportalsonotedthatmanyindividualcompanieshadtheirowninternal standardsthatexceedcoderequirements. Thirdpartyreviewthatwouldprovideforanindependentassessmentofcomplaintswasone recommendationcitedbytheFTCtoimprovethecodesstillfurther.Severalbeveragealcohol companiessupportthisrecommendationinoneformoranother,butopinionabouttheneed forthisenhancementisdivided.ThebestpracticescitedbytheFTCincludeprohibitingadswith substantialunderageappealeveniftheyalsoappealtoadultsandcurbingoncampusand springbreaksponsorshipsandadvertising. ThecodesoperatedbytheBeerInstitute,theDistilledSpiritsCounciloftheUnitedStates (DISCUS)havegenerallystrengtheneditsprovisionsovertheyears.Theselfregulationisnot simplyincumbentuponthealcoholbeverageindustrytopoliceitself.Itactsinconcertwiththe agenciesresponsibleforadvertisingformandcontentaswellasthemediathatcarrythe advertising. INDIA Indiahas28statesand3unionterritories.AtangledweboftaxandregulationsacrossIndian statesremainsamajorbarriertobeermarketgrowthinthecountry.Differingregulationson pricinganddistribution,aswellasfluctuatingexcisecharges,fosterinefficiencyinthebeer sectorandmakeitharderforbrewerstoattractconsumers.Onecouldeasilyproducethe amountofbeerdrunkinIndiawithtwotofourbreweries.Thereasontherearesomanyisthe legislation.Transportingbeerisexpensive,soyouneedbreweriesinthedifferentstates.Duty taxonbeerinIndiaisanaverageUS$13perunitofalcohol. Eachstateleviestaxationon alcoholatitsowndeterminedratesandexciseduties,andcontrolsdistributionchannelsinits ownway.Itisastatebystatemarketandnotanationalmarket.Taxesarelevied,oftenat higherratesinrelationtoworldprices,onallalcoholicproductscrossingthestateborders.This makesitessentialtohaveproductioncentersindifferentstates.Thedistributionsystemis sameforBeerasforSpiritsandWine.Operatorsofoutletslikewholesalers,retailers,barsand restaurants,andbondedwarehouseoperatorsmustbelicensedandshouldpaythevarying statelicensefees.BasedonthecurrenttrendofconsumptionitisexpectedthatBeermay shortlybepermittedtosellinmoreoutletsinnearfuture.SouthIndiaisthelargestconsumer ofBeer.Beerisdeclininginthewestduetohightaxes,andtheconsumptioninNorthis increasinginCountryLiquorandBeerinparticular.
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Social&CulturalIssues
Throughouthistorytherehasconsistentlybeenoppositiontothesaleanduseofalcohol.This oppositiontotheuseofalcoholtraditionallystemmedfromamoralorreligiousoppositionto theconsumptionofalcohol.Todayhowever,increasinglyitisntamoralorreligiousreason thatpromptsthisopposition;itsthenegativemedicaleffectsthatabuseofalcoholhasbeen showntohaveonthehumanbody.Societyisalsofeelingtheeffectsofalcoholabuse;itis becauseofthisthatSinTaxeshavebeenleviedonalcohol,asanattemptforgovernmentto findawaysandmeanstoprofitfromthesaleandconsumptionofalcohol.Below,wewill examinesomeoftheissuesthatarechallengestothebeerindustry.

SinTaxes
Sintaxesisatermusedtodescribetaxesthatareplaceonitems,usuallyalcoholandtobacco products.Mostoftenthesesintaxesaresimilartoasalestaxandareaddedtothepriceofthe itembytheretailagencysellingtheproduct. Sintaxesareusedbygovernmentsforanumberofdifferentreasons.Sintaxesareoftenused tobygovernmentstohelppayforthedamagethatsocietyfacesduetotheperceivedeffects thatlongtermuseoftheseproductscanhaveonpeople.Whenitcomestothealcohol industryadvocatesofsintaxesonalcoholoftenliketopointoutthatthenegativeeffectsof drunkdriving,needforincreasedpolicingtoprotectsocietyfromcriminalactivitypossibly associatedwithdrinking,andforthemedicalcoststhatgovernmentsfacefromthetreatment ofalcoholrelatedconditions.Typicaluseofsintaxfundsinclude: Fundingofeffortstoeducatethepublicabouttheeffectsofuseoftheseproducts. Fundingofhealthagencies Promotionalmaterials Fundingoffacilitiesforhealthpurposes Generalassistanceinbalancingofbudgets.

Sintaxesarenotseenasuniversallygoodevenwiththeirpotentiallypositiveeffectona governmentsabilitytoprovideservices,improveinfrastructure,orbalanceabudget.Many seesintaxesasaregressiveformoftaxationbecauseithasamuchlargereffectonthosethat areofalowerincomelevel.Inthiscaseapersonwhomakes$100,000peryearwillpaythe sameamountoftaxona12packofbeerassomeonewhomakes$35,000peryear.Tomany thisseemstobewhollyunfair.Inadditiontothismanyfeelthatthechoicetodrinkalcoholisa personalchoiceandsocietyshouldnothavetopayforpeopleschoices.

Religion
Societyhaslonghadpeoplewhobecauseoftheirbeliefsfeelthattheconsumptionofalcohol wasimmoralandshouldbeoutlawed.Veryfewfaithshavecomeoutandmadetheblanket statementthattheconsumptionofalcoholisnotpermittedhowever.Inlightofthat statement,oneofthefewreligionsthathascomeoutandstatedthatalcoholconsumptionis forbiddenisIslam.IntoxicantswereforbiddenintheQur'anthroughseveralseparateverses revealedatdifferenttimesoveraperiodofyears.Atfirst,itwasforbiddenforMuslimsto
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attendtoprayerswhileintoxicated(4:43).Thenalaterversewasrevealedwhichsaidthat alcoholcontainssomegoodandsomeevil,buttheevilisgreaterthanthegood(2:219).This wasthenextstepinturningpeopleawayfromconsumptionofit.Finally,"intoxicantsand gamesofchance"werecalled"abominationsofSatan'shandiwork,"intendedtoturnpeople awayfromGodandforgetaboutprayer,andMuslimswereorderedtoabstain(5:9091). (About.com,2008) ThisisverysignificantbecausetheMiddleEastandalargepartofthepopulationofIndia,one thefastestgrowingbeermarketsintheworldpracticesIslam.InMiddleEastthebeerindustry andalcoholasawholewillalwayshaveaveryinsignificantmarket.HoweverinIndia,witha growingpopulationandgrowingemphasisonincorporatingmoreofwesternsocietyintoavery diversesocietythereisgreatopportunityforexpansionintothatmarket.Howeverany companythatlookstoexpandinIndiaandothercountriesinthatregionneedstounderstand andbepreparedforsignificantresistancefromtheIslamiccommunities. InadditiontoIslamhereinAmericatherearefactionsandgroupsthatarestilladvocating againstthesaleorconsumptionofalcohol.Asrecentlyas2006theSouthernBaptist Conventioncameoutanddidntjustrallyagainsttheuseofalcohol,butwentasfarasto amendtheirgoverningconstitutiontostatethatanyonewhoconsumesalcoholcannolonger beontheirboardofdirectors. ItwasthiskindofreligiousfervorthatcausedtheUnitedStatestopasstheeighteenth amendmentortheVolsteadActonJanuary20,1920.Womensgroupsandreligiousgroups werethemainproponentsofpassingtheamendment.Todaythechancesofpassingsuchaact inmostmajormarketsisslimtonone,howeveritshouldbenotedthatreligionisadriving factorinthedecisionsmakingprocessofmanycountriesandmaintainingawarenessofthe directionthatthesegroupsaremovingtowardsisveryimportant.

ScienceandMedicine
Longtermalcoholusehasbeenlinkedtoanumberofmedicalconditionsincludingcancer, heartdisease,diabetes,andliverfailure.Aslongaspeoplecontinuetoabusealcoholanduseit toexcessiveamountstherewillbecontinuedeffortsbythemedicalandscientificcommunityto encouragepeopletodecreasetheirconsumptionortoquitusingalcoholoverall.Theeffecton abodywhenextensiveuseofalcoholisdiscontinuediswelldocumentedanditistheseefforts thatpersuadescienceandmedicinetocontinuetoeducating/pushingforpeopletodiscontinue theuseofalcohol.
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Conclusion&PlanningPremise
Asbeerconsumptionindevelopedmarketshasflattenedduetochangingbeverage preferencesandrelativelyslowpopulationgrowthamongkeydemographics,thebrewersmust seekgrowthindevelopingcountriessuchasIndia,China,SouthAfricaandothers,whereglobal middleclassisrapidlyemerging.Meanwhilebrewersindevelopedmarketsmustlookforways toreinventthemselvesbyattractingyoungergenerationswithstrongbrandingandmarketing andbymaintainingadiverseportfolioofproductsinresponsetovariedtastes. Thefollowingplanningpremiseprovidesanoverviewofthebrewingindustry,withspecific focusontheprimaryareasofconcernforanyfirmpursuingsuccessintheglobalbeerindustry.

PlanningPremise
Natural/GeographicDimensionTrendorDrivingForce:Unpredictablecommodityprices Fluctuatingcommoditypricescanaffectthecostofbeerproductionanddriveaneed forprocessefficiency. Threatsinthisarenaarerelatedtoglobalweatherpatternsandtheirabilitytoaffect commoditysuppliesandthecostofproduction.Thiscanbesuddenanddifficultto predict. Multinationalproducershaveadistinctadvantagebecauseoflargercommoditybuying powerandestablishedrelationshipswithkeysuppliers. Firmsshouldseektoimproveprocessefficiencyandestablishstrategicpartnerships withkeysuppliersinestablishedandgrowthmarkets. DemographicDimensionTrendorDrivingForce:Changingtastesofyoungandoldgenerations Statisticsshowthatbabyboomersarebeginningtopreferwineorspirits,possiblydue tohealthstudiesor,intheUS,lowcarbohydratediettrends. Youngergenerationsinestablishedmarketshavedemonstratedapreferencefor distilledspiritsinsteadofbeer.Thisposesanobstacletogrowthandchallengesfirmsto findwaystoestablishayoungconsumerbase. Opportunitieshaveincreasedinemergingmarketsduetothegrowthofaworldwide middleclass. EconomicDimensionTrendorDrivingForce:Thesaturationoftraditionalmarketsisdriving consolidationthroughmergersandacquisitionsinemergingmarkets,resultinginahighly competitivemarketplace. PrimarygrowthopportunitiesareinemergingmarketssuchasChina,India,South Africa,RussiaandLatinAmerica. Threat:Agrowthstrategyinemergingmarketscanbeariskyventureduetodomestic andmultinationalcompetitionandhighbarrierstomarketentry.Suchastrategytends tofavorlargescaleproducerswithlargeamountsofcapitalonhand. Opportunity:Largegrowthopportunitiesinstrategiclocations Social/CulturalDimensionTrendorDrivingForce:Thebeerindustryisconfinedtoareasofthe worldinwhichalcoholconsumptionissocially/culturallyacceptable.

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Evaluationofgrowthareasmustincludeaconsiderationofthesocial/culturalmakeup oftheregion. Threats:Growthinemergingmarketscouldbeconstrainedbythe cultural/social/religiousmakeupofapopulation Opportunity:Emerginggrowthmarketsprovideanopportunitytointroducebeertoa newsocietyandingrainthisbeverageintothecultureofaregion.

Political/Legal/RegulatoryDimension:Firmsmusteffectivelymanagetheneedsof governmentsandinterestgroupstomitigateregulatorybacklash. Selfregulationisnecessaryforfirmstoeffectivelymanagestakeholderrelationships andestablishanattitudeofethicaldevelopmentandsocialresponsibilityasitrelatesto alcoholandsociety. Threats:Improperselfregulationorexploitationofcertaindemographicssuchasyoung populationsmaycreateasocialbacklash.Firmsmustidentifyandmanagethesocialand culturaldifferencesinemergingmarketsandtailortheirapproachtoeachspecificarea toavoidsocialbacklash. Opportunity:Buildingrelationshipswithgovernmentsandinterestgroupsaroundthe worldtoensurecontinuedgrowth. TechnologicalDimension:Newharvestingandproductiontechnologiesmustbeidentifiedto increaseprocessefficiencyandensurecontinuedgrowth. BusinessPractices/ExpectationsDimensionTrendorDrivingForce:Industrywide consolidationcontinuestooccurasglobalcompetitionplaysoutinemergingmarkets. Asfirmsgrowlarger,variedconsumertastesforcemultinationalstomaintainamore diverseportfolioofproducts.Despitetheirsize,firmsmustremainagileenoughto quicklyrespondtoconsumertastesorrisklosinggroundinkeymarkets. Threats:Reconcilingsizewithchangingconsumertastes.Firmsmustworktoadequately anticipatechangingtastesinavariousworldwidemarketsandoperatewithcareful efficiencytominimizecostsandrisks. Opportunities:Globalconsolidationprovidesopportunitiesinemergingmarkets throughmergersandacquisitionsandtargetedimportstrategies.
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 http://www.beerinstitute.org/statistics.asp?sid=2 http://www.asq.org/mediaroom/pressreleases/2005/20051118quarterlyreport.html OtherResources 2007AnheuserBuschAnnualReport 2007InBevAnnualReport 2008SABMillerAnnualReport BeerinIndia.http://en.wikipedia.org/wiki/Indian_beer

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