For a company to be competitive and sustain its operations, it is important that they understand their environment. A significant shift in consumer preferences and buying patterns is threatening the Brewing industry. Seven years of stagnant production in the US labor market between 2007 and 2014 was the result. Another essential market, like Germany, France and the United Kingdom has seen a 10% drop in production volume. Large breweries face more challenges from small breweries due to the fact that most customers are moving to smaller brands. There are many options available to customers, and this influences how they make their purchasing decisions. Small brewers produced 18% more beer than the industry average of 0.5% (Rutishauser and co., 2015). Between 2007 and 2012 beer product sales increased fourfold, fivefold, and threefold in France, Spain, Czech Republic and France respectively (Rutishauser, et al. 2015). Changes in distribution channels, as well as the increasing demand for innovation have caused an increase in production and operating costs. In order to attract more customers, falling revenues from the client sector could also threaten the sustainability of the beer sector.
External factors are variables that can impact the long-term viability of an organization. Using PESTEL, SWOT, and Porter’s five forces, one may examine the external environment (Kotler & Killer, 2016). A consumer’s purchasing power, or their behavior and buying habits, is a key factor in the economic impact of beer businesses. In order to maintain market share, breweries who target low-income markets are forced to lower their prices due to increasing economic volatility. Due to higher operating costs, the reduced pricing puts the company at greater risk of financial collapse. Breweries such as German Lager producers used discounts of 20% to 70% in order to increase their income. The premium market is a strong competitor, which means that the company faces greater competition. The societal factor driving beer products is the demand shift. Customers are increasingly concerned about their health, especially with the increase in lifestyle-related diseases. As a result, there was a noticeable drop of 10% in sales in some markets. The availability of new brands also affects turnover rates. The sector is being affected by the increasing demand for premium beer. Brewers must invest in market research and product development to develop new brands that meet the needs of their market. In order to improve quality innovation, some businesses are forced by intense competition to set up regional innovation teams and supply chains. The corporations may use acquisitions or mergers to increase their market position.
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