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Beer is one of the oldest and most consumed alcoholic beverages in the world with
its origin dating back to Neolithic period. Beer is extremely popular with all-age
drinkers. The global beer market was valued at 498.66 billion USD and is expected
to reach 710.89 billion USD by 2025 with a CAGR of 3.72% for the period 2021-
2025. One of the most significant changes in the beer market is the consumer
preferences shift to low and non-alcohol beers as well as craft beers [ CITATION
Dou12 \l 1033 ]. Craft beer is a beer manufactured by small, independent and
traditional brewers. The craft beer industry has been increasing with micro and small
pubs. The growing popularity of global craft beer can be attributed to availability of
different flavours consisting barley, chestnut and honey. We can see the similarities
in the homebrew market as well with innovation. Homebrew market can be called as
a natural expansion of craft beer market.
In 2018, almost 18 pubs a week were closing down in Britain. Britain reported 476
closure in the first six months of 2018. The reason was high cost of drinking due to
the rises in beer duty, VAT and business duty. This has led millennials to switch
drinking beer at home and rises in craft beer [ CITATION BBC18 \l 16393 ] . In U.S., beer
sales were down by 2% in 2019 while craft beer sales continued to grow by 4%.
Craft beer accounts for 25% of the US$ 116.0 billion beer market (Data, Watson,
Gatza and Obenchain, 2020). According to a report of DSM where they surveyed
3300 craft beer drinkers, 80% said that they don’t believe craft beer is passing fad.
The market for craft beer has increased tremendously where consumption of craft
beer in US has increased by 500% in a decade. In Europe, the craft beer market is
projected to grow at a CAGR of 11% and the market is also increasing in Central and
South America (DSM, 2020). The Asia-Pacific market is largest market for craft beer
and anticipated to grow at a CAGR of 10.5% with China and India with major sales.
Over the last five years, China has shown a growth of 250% in the craft beer market.
The growing demand, rapid urbanisation and the rise in disposable income has
contributed towards the positive trends in craft beer market
(Fortunebusinessinsights, 2020).
Products:
There are two types of products available for home brewing namely which can be
found in manual or automatic mechanism:
a) Mini-brewer
b) Full-size brewer
The equipment found online for the purpose of home brew includes:
2) Fermenting
They come in variety of styles such as carboys and jugs, traditional plastic
bucket. Plastic bucket are mostly preferred by homebrewers as they are
lightweight and easier to handle.
3) Boiling & cooling
Hot liquor tank where the hot water will eventually turn into beer and
thermometer to check the temperature.
4) Pumps & plumbing
It helps to extract the beer and simply move from one vessel to another. This
is not a mandatory equipment but makes the brewing easier.
5) Testing & Measuring
The thermometer, PH meter are required in this section. The PH meter will
help to identify the concentration of the alcohol in the beer.
6) Cleaning & sanitation
The cleaning equipment is for the purpose of cleaning the vessels and
equipments used in the brewing process.
7) All grain brewing equipment
The all-grain equipment is the easiest method for homebrew. It just requires
some grains, water and creativity of brewers to brew fresh beer at home.
Competitive Landscape
AB In Bev, Heineken NV, Constellation brand, The Boston Beer Company and Sierra
Navada are the prominent players in the beer market due to the product innovation
in terms of flavour and packaging. In the past, people were consuming low alcohol
beers while there is a shift towards craft beers especially in European countries like
Sweden (marketintelligence.com, 2020). Therefore, craft beer market is growing.
The graph below shows the beer sales volume globally in 2019 where the major
market is captured by AB InBev (29.3%) followed by Heineken (12.6%).
Figure 1 https://www.statista.com/statistics/257677/global-market-share-of-the-leading-beer-
companies-based-on-sales/
Evaluation of Suppliers
All range equipment for home brewing beer and wine seller since 1993 and the
products are sold worldwide through the website
2. Morebeer, US
Homebrewing kits for beer, wine and coffee as well as commercial beer equipment
suppliers and the products are shipped free for the order above $59.
3. Homebrew supply, US
Reusable beer making kit capable of brewing differed flavours. Easy return policies
within 30 days. Free shipping to Alaska and Hawaii.
$199
4. Aristham, India
5. Degong, China
Degong was established in 2009 and ships to US, UK, Australia, Russia and Canada
currently in overseas market. The products are ISO 9001 certified and the complete
equipment set is available at $4000.
The brewery is based in China and ships to North America currently. It releases 2-3
new products every year. The company offers fermentation tanks, Brite tanks and
packaging equipments to set up a brewhouse.
Yolong has been providing equipment for novice, amateur homebrewer since 15
years at an affordable price. The company provides consultation too along with the
equipments.
Brewcraft has been in the business since 15 years and retained in US, Canada, U.K
and South African markets. The complete microbrewery kit capable of making 30L
craft beer is priced at 3500 rupees.
The custom duty in China is 10%, US is 25%, 5% in Canada, 26.85% in India. After
evaluating the above suppliers, HopTech Homebrewing Supplies, US seems the
best at affordable price. The company is quite old and ships worldwide which would
be easy for Tribal Brewing.
Country Screening
Country screening is the process to recognize overseas market that qualify in these 3
criteria: Accessibility, Profitability and Market Size (Wankel, 2009).
According to the report of NBWA, 18% of beer is imported in US for the consumption
and the craft beer has increased by 500% in the past decade. Beer is the most
consumed alcohol in US comprising of 38% among all alcohol drinkers. 25.9 gallons
of beer was consumed in the year 2019 and 75% of the population are of legal
drinking age in the US (NBWA, 2020).
Why India?
About 60% of the microbrewery equipment are imported from China but due to the
outbreak of pandemic, the distribution has disrupted. Every month, around 10
microbreweries are being set up in India. The craft beer is currently only 1% (1.5
million cases) of the total beer market (390 billion cases) (Giriprakash, 2020). The
alcohol intake in Southeast Asia between 2010-2017 increased by 34% with
increases in India, Vietnam and Myanmar while the intake of alcohol in India
increased by 38% (4.3 to 5.9 litres per adult per year) (Livemint, 2019). The craft
beer market comprises of 7% of bottled beer business and the number of
microbreweries is estimated to reach 200 by 2020 from 45 in 2016 (export.gov,
2019).
1) SCLEPT Analysis
The sclept analysis helps to understand the opportunities and threats
prevailing in the market to develop an understanding of the attractiveness of
the market. It helps to identify the macro environmental factors that may help
a business grow or understand the hinderances caused by these factors.
2) 12 C Framework
The 12 C framework is a powerful framework to analyse the international
markets and their potentiality. The factors help to screen the market and
identify better opportunities.
4) McKinsey’s 7 S Framework
The 7 S Framework is an internal analysis of a firm to enter the market. The
micro environment of the firm is assessed to understand the readiness of the
firm to enter an international market.
The SCLEPT analysis will help Tribal brewing to understand the opportunities and
threats in the potential markets which is US and India.
3) Economic The GDP growth rate in The GDP growth rate in India is
US in 2.9% while the 4.2% while the inflation rate is
inflation rate is 2.24% 7.7%. The outbreak of covid-19
(worldbank.org, 2020). has disrupted the economic
The world’s biggest growth rate (worldbank.org,
consumer market 2020). World’s third largest
(Euromonitor, 2016b). economy with a PPP-adjusted
The GNI Per Capita is GDP $8721Billion (IMF, 2015).
$62,850 and categorised India ranks 63rd in the ease of
as high income economy. doing business and is
US ranks 6th in the ease categorized as lower middle
of doing business income economy with GNI per
(worldbank.org, 2020). capita of $2020 (Economic
Times, 2020).
Country Attractiveness
High Medium Low
Company’s compatibility with each country
USA
High
India
Medium
Low
USA
Beer is the most consumed alcohol comprising 38% of the alcohol market.
The craft beer has increased by 500% in the past decade.
GDP is $62794.64. Per capita disposable income is also higher than India.
Consumption of craft beer has increased by 4%.
Business culture is similar to that of UK.
India
*Ease of doing business and logistics performance index is also better in USA than
that of India. Therefore, after analysing the countries on the criteria of SCELPT
factors and 12 C framework, it is concluded that USA has the higher potential for
tribal brewing market and Tribal brewing should enter USA for their supplies.
McKinsey’s 7S Framework
https://strategicmanagementinsight.com/tools/img/mckinsey-7s-model.png
1) Strategy
The business strategy of Tribal Brewing is to purchase the home brewing
equipment from overseas and resell the equipment in international markets.
The company should focus on engaging with the customers as there is high
competition in the market.
2) Structure
The business structure should be of a formal setting and divided into different
departments: administration, finance, retail, packaging, marketing and sales,
IT, compliance and testing. IT department is important because the
consumers will be attracted through website and social media. The work
setting should be collaborative in nature with continuous communication and
professionalism.
3) Systems
The procedures of testing should be formal as the quality and consumer
satisfaction comes first while the work culture can be informal and
encouraging two-way communication. Co-ordination among the retailers,
suppliers, and distributors is extremely important for timely and cost-efficient
sales. The sales forecasting and analysing systems should be contemporary
such as Google Analytics.
4) Skills
Brewery business requires innovation and addition of new flavours and
recipes from time to time. Therefore, the skills required in the employees of
Tribal Brewing are risk taking, authenticity and creativity. The members need
to be trained for dealing with the clients.
5) Staff
Tribal brewing should hire enough employees with good soft and hard skills to
cater their customers and conduct several training programs to enhance the
skills of their employees. The employees can be motivated through various
schemes such as off on their birthdays and culture of drinks on last Friday of
each month to make them a part of family.
6) Styles
The leadership style should be open and engaging so that a culture of
learning and improvement can be established. The democratic leadership and
freedom of speech culture will encourage employee participation and motivate
them to work for the benefit of the organization.
7) Shared Values
Customer-oriented
Quality and assurance
Innovation
Co-ordination
The above-mentioned values should be shared across the organization and make it
a part of their work-culture. Also, it will help to maintain synergy in the firm.
Entry Strategy
The entry strategy for the US Market is recommended by studying the Ansoff’s
growth matrix.
The penetration strategy is used to sell more of same products to the same market.
The product development strategy is when the company sells different products to
same people. The diversification strategy is used when different products are sold in
different markets. Finally, the market development strategy is where the firm targets
new markets with existing products.
Old New
Procure equipment
from Suppliers Package, brand and Sell directly to the
(HopTech modify the product customers through
Homebrewing as per the need brick and click.
supplies, USA)
The competition in USA is huge as new microbreweries open every year in USA. In
2019, the total number of craft beer companies reached 8275 from 7346 in 2018
(Arthur, 2020). According to the Brewers Association, the top craft brewing
companies in the USA are: D.G. Yuengling and Son Inc, Boston Beer Co, Sierra
Niveda Brewing Co, New Belgium Brewing Co, Duvel Moortgat and so on.
Sales (Barrels)
D G Yuengling & Son
Boston beer
Sierra Niveda
Figure 2 Number of operating breweries in USA
New Belgium brewing (2006-2019)
Duvel mootgart
Sales (Barrels)
https://www.statista.com/statistics/267549/number-of-operating-craft-breweries-in-the-us/
Looking at the statistics, the marketing campaign suggested for Tribal Brewing is as
follows:
It is very important to have a effective and integrated marketing campaign due to the
advancement in technology and competition among the brands.
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