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The Increasing Competition Among the Beer Brewers and Manufacturers

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A strategic group map of the craft beer industry would be extremely interesting to evaluate. I would notice two main strategic groups – a cluster of smaller craft beer brewers grouped together in the lower area of the map – these brewers are the small craft beer companies that cater to niche markets, with lower percentages of market share and revenue gained, as well as higher prices. In the craft beer industry, these are considered the more premium beer brewers in quality; while their revenue is lower and they produce less barrels of beer than their major competitors, their sale price is greater. Then, on the other hand, I would see some brewers grouped on the map significantly higher in those regards, which would represent the larger craft beer companies with a much larger market share, and most likely slightly lower prices. These major brewers produce beer that is not quite as premium quality as the smaller brewers, they still sell high-quality product for only slightly less than most of the small premium brewers.

It may be interesting to note, however, that some brewers now are trying to combat this high level of business competition by creating their own strategic group. This usually reflects with the company deciding to position themselves as a brewer for mid-range beer, which lowers the price along with its quality. This is a very different approach; revenue is usually lower, as well as sales, but the market share for these mid-range brewers is increasing over the smaller beer companies. This reflects that this attempt to create another level of a strategic group may be working in this highly competitive industry.

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Because brewers that have a high level of revenue therefore have a higher profit margin and have usually higher levels of potential than their smaller competitors have. I would say these larger companies are in the best position, because they can use their high revenue to invest in resources that give them an even greater competitive advantage. They are able to spend more on advertising and in some cases, lower their prices to gain more power over the consumer. On the opposite end, it looks to me that the smaller brewers are in the worst position – they must maintain their high quality of premium beer or easily lose business to a competitor, whether it be larger or the same size. At the same time, because they gain less revenue, they cannot have any leeway in their prices, so the consumer has much more power – they can easily go to another brewer if they have similar quality beer with lower prices.

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