ZHONGRU 12-11-2016

The Growth of the Craft Beer Equipment


In the craft beer equipment, there are a large number of small independent breweries and there are also the larger firms which operate internationally each offering a differentiated product brewed with various hops and spices to achieve a unique taste. The location, air (salt), and water play a big role in how the beer tastes and can also play a role in the location of the brewery. With that in mind, unique taste alone is not enough to generate profits and growth. Therefore, small independent breweries must also take into account several other aspects of the business in order to thrive against larger firms such as Anheuser-Busch Inc., MillerCoors, Pabst Brewing Co., and D.G. Yuengling and Son Inc. Small independent breweries should also take into account the following aspects:

Brand awareness - The presence of the larger more well-known firms makes it hard for smaller independent breweries to get their name out there. They must spend heavily to overcome customer loyalty. To combat these issues, small independent breweries are fighting to provide excellent customer service, offering tours, and brewing various differentiations to accommodate seasons and special events in order to capture the market effectively.

Concentration and balance - Small independent breweries have to be careful where they concentrate their business and balance growth carefully. If a brewery takes on accounts and cannot fill orders, their tabs are taken out of bars and restaurants. Tabs in which they have to compete with other local breweries and larger firms. Breweries also have to compete with breweries in other regions in which their product is distributed and vice versa. The craft brewery industry has become very territorial so once a tab is taken out of a bar or restaurant it is harder to get a tab back into a bar than it was initially the first time due to a tarnished quality / service image that the bar or restaurant has of that particular firm.

Distribution channels - Recently more consumers have become interested in crafted beers and the market is growing rapidly. Some small independent breweries have the opportunity to have their products distributed through the larger firms' distribution channels which provide high levels of service and excellent contacts within the retail market. However as the industry continues to grow the market continues to become flooded with more craft beers. As a result, fewer distributors are interested in taking on more brands, leaving small breweries to fend for themselves. Fortunately, these difficulties have created a niche for specialty distributors who make the extra effort to distribute craft beers.

Absolute cost advantage - In order to achieve a cost advantage in the craft beer equipment, brewers must learn to perfect their recipes and brew times to decrease lead times and increase turnover. Brewers also need access to the necessary inputs to achieve an absolute cost advantage. This means that small independent breweries must purchase the proper machines and equipment to do their job as effectively and efficiently as possible. In addition, brewers must also be capable of acquiring the necessary inputs such as hops and spices used to brew the beer. Hops are grown in various regions and things such as the soil, weather, and treatment can affect the taste even if the product is the same. Larger firms such as Anheuser-Busch Inc., MillerCoors, Pabst Brewing Co., and D.G. Yuengling and Son Inc. have even begun to buy out hop farms to protect their business. As a result, it has become harder to find suppliers who are committed to their craft and service.