Assessment Four – Individual Case Analysis.

1. Evaluate Hajjar’s decision to start a boutique artisanal brewery in Lebanon? Is

Lebanon the right place and is Hajjar the right person for such a brewery? (You
may want to conduct a SWOT analysis to help you address this question)

Hajjar and partners have started a business in a politically unstable country within a
monopolised market which has no anti competition laws. This is very brave and contains
a high level of risk and complexity, as there are many threats to 961 Beer operating in
Lebanon. However, the brand is actually successful partly based on its location, which
Hajjar has been able to turn into a strength, therefore I believe Lebanon is the right place
for 961 Beer. Whilst a different location could still be successful, one could question if
being in a different location would make 961 Beer just another microbrewery amongst
other aspiring brewers without the story to accompany the brand. The fact that they’re
able to start and develop a brand out of a war zone and promote ‘change’ as a metaphor
for both beer drinkers and macro environment alike, makes for a strength and opportunity
out of what would ordinarily considered to be a weakness in location. External
complexities make Lebanon a tough place to do business, but also present opportunities
to fill a niche in the under represented craft brew market.

I believe Hajjar is the right person to operate such a brewery, but is not the right person to
do the brewing. Hajjar has the persistence, tenacity and determination to setup and grow a
business in the middle of a war, in a market monopolised by a large competitor. An
experienced entrepreneur with a diverse business background, Hajjar is a not afraid to
take risks, which makes him the right person to run a brewery in such a risky
environment. By his own words, “stubborn and determined” are exactly the qualities
necessary to operate a brewery in Lebanon.. However whilst Hajjar was able to learn
brewing techniques and succeed through trial and error (sometimes sheer luck), an
experienced brewmaster could have avoided most of the setbacks that 961 Beer faced at
many of the setup and growth stages.

1. Explain how the competitive and macro environment may affect the company? Is the
boutique brewery a good business opportunity?

Absence of anti-competition laws leaves 961 beer vulnerable to larger competitors who
could abuse market power. As a new startup Beer company with the challenge of
‘introducing people to beer’, the challenge to defend itself against the larger players is
even greater as opposed to an already established brand. Access to distribution channels
could prove to be problematic also, as larger competitors have ability to take advantage
of buying/distribution power and block 961 Beer from further growth.
Local bars who stock the 961 brews but also compete against the 961 bar have began
seeing the rising success of 961 Beer as a threat, which has potential to affect company
performance if they were to stop selling the brand.
 After looking at 961 Beer through a PESTLE model, there are effects on the company
which prove to be challenging. The macro environment has a high degree of complexity
and is quite dynamic, as political and social instability greatly affect the performance of
961 Beer. This is evident through constantly changing governments, fragile security
situations and frequency of visitors through beer pub dropping when bombings take
place. Environmental instability could affect the performance of 961 Beer also as
damaged infrastructure could potentially create problems in supply chain of materials.
I believe 961 Beer is a good business opportunity. With many un-educated beer drinkers
in Lebanon and a growing craft brew market, 961 beer has opportunity to capitalise on
market trend. Whilst there are big risks involved with 961’s macro environment, there is
still opportunity to fill a gap in market and develop brand loyalty through the education
of new consumers and connection with 961 story.

1. What has been 961 Beer’s strategy for entering and developing the market for boutique
beer in Lebanon? Why has it been successful?

Essentially starting as a ‘greenfield’ business by brewing in buckets in a kitchen, the

mode of entry which 961 Beer used was ‘small scale’, allowing time to learn about the
market and develop consumer tastes as the business grew organically. This could also be
considered as ‘first mover’ advantage, as Hajjar and 961 Beer team were able to identify
a gap in the beer market of producing good quality craft beer and used ability to test beer
on friends and family, eventually growing large enough to build sales volume, thus being
a big contributor to their success.

Hajjar and 961 Beer have used an external strategy to enter and develop market by trying
to influence their environment. This was done through the setup and operation of the beer
pub, strategically placed in a buzzing nightlife hotspot in Beirut with the focus on
consumers being able to experience ‘change’ with new types of beer and connecting with
the company’s story. Connecting with consumers has been a successful way of
developing the market for boutique beer in Lebanon. This has created brand loyalty and
value creation, essentially creating a competitive advantage in the market.

Tenacity, persistence and determination to stay operating through political and

environmental instability has also been key to 961 Beer’s success. These attributes have
helped see the company through setbacks and potential disasters (e.g., setting up ‘lego’
type brewery from Canada), enabling them to continue growth and add to their story
along the way. Alongside this is the company’s philosophy of making the best possible
beer whilst having fun. This has helped to develop a culture of innovation within the
company, allowing them to offer new selections of beer to the market and service the
growing number of beer drinkers in Lebanon.

1. What are some of the recommendations that you would suggest to Hajjar in terms of
expanding the business further so as to remain competitive without compromising
the values that constitute 961 Beer?

Some suggestions for 961 Beer to remain competitive would be to employ a

differentiation strategy in order to increase attractiveness of 961 Beer products. This
could be done by creating brand uniqueness through marketing the company's underdog
story of “being a Lebanese brewer, raised forms the ashes of war, fighting the huge multi-
national Heineken”, therefore creating a stronger competitive advantage over companies
who are importing products or acquiring local breweries.

961 Beer could also create location economy by partnering with local farmers in order to
bring down cost of materials and strengthen differentiation from large competitors. This
could allow 961 Beer to expand into larger premises to brew larger quantities in order to
create economy of scale and close gap between production cost and revenue per case.

Another option to consider would be a joint venture with a larger brewer such as
Heineken. By doing this, 961 Beer will eliminate the high risk of anti-competitive power
form Heineken in Lebanon and have access to their large buying and international
distribution network, Heineken benefit from access to local partner knowledge, get to buy
into 961 Beer story of ‘change’ and also service the craft brew market which they
currently don’t have presence in. On the other end, 961 could form a strategic alliance
with local competitors operating on similar scale in order to share fixed costs (production,
materials, etc), gaining advantage over larger companies selling in area by forming craft
beer group that provides to local restaurants, bars, etc.

On a global scale, 961 Beer could license the brand and recipe to foreign brewers, who
would brew the 961 beers in their own countries using 961 recipes and labels. This
removes production cost from 961 when going international and still provides market
presence in countries outside of Lebanon.