Porter’s Five Forces Analysis of Craft Beer Industry 

Craft Beer Industry outlines the production of beer in the small from the craft in microbreweries or craft breweries. Craft breweries are usually under the ownership of individual people and they market unique tastes, a variety of methods, and excitement. Today, we’ll discuss Porter’s five forces analysis of Craft Beer industry; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Porter’s five forces analysis of Craft Beer industry would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s Craft Beer industry Porter’s five forces analysis of craft beer brewery business as follows;

Porter’s Five Forces Analysis of Craft Beer Industry

Let’s discuss Porter’s five forces analysis of Craft Beer Industry as competitive forces in strategic management and they’re as follows;

Bargaining Power of Suppliers in Craft Beer Industry

The bargaining of suppliers is moderate and low in the Craft Beer Industry as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the Craft Beer Industry Porter’s five forces analysis of craft beer brewery business are as follows;

I-Raw Supplies & Equipment

The raw supplies, equipment, materials, production staff, and utilities are easily and conveniently available to craft beer manufacturers. The suppliers of craft beers are easily available in various countries across the globe. However, the easy availability of raw material suppliers decreases their bargaining power of suppliers.

II-Quality Material

If the craft beer producers want quality material, the latest equipment, and top class production facility. The quality material suppliers are limited in the market, and they charge premium prices for the material and equipment. However, the quality factor amplifies the bargaining power of suppliers.

Bargaining Power of Buyers in Craft Beer Industry

The bargaining of Buyers is Higher in the craft beer brewery business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the Craft Beer business five forces analysis of the Craft Beer industry are as follows;

I-Alternative Beer & Alcoholic Drinks

While buying beers and alcoholic drinks, customers have multiple types of beers in a variety of tastes available to them. They have to make the choice based on their taste preferences, companionship, and budget. Multiple beer alternative options increase the bargaining power of ordinary buyers.

II-Marketing & Loyalty

The sale of beer or any other product heavily relies on marketing and promotional campaigns. If the craft beer company is investing a significant amount of resources in marketing, branding, and promotional campaigns; it has the potential to influence the buying decisions of customers. Taste and quality should be unique, good, and extraordinary.

Threat of New Entrants in Craft Beer Industry

The threat of new entrants is low in craft beer brewery business as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the craft beer brewery business five forces analysis of Craft Beer industry are as follows;

I-High Initial Cost

Starting the craft beer-producing business comes with heavy initial production equipment costs, material, raw supplies, employees’ salaries, utility bills, and other costs. When you combine all of these costs, then it becomes a significant amount of high cost and expense for an individual investor.

II-Certificate & License

Along with heavy initial cost and expense, the craft beer brewer needs to earn a license and certificate to start manufacturing and selling beer at the commercial scale. The government food and safety department would check and evaluate the quality and safety of beer to make sure it is healthy and safe. After getting the license and permit from the government, the craft beer company could start its business.

Threat of Substitutes to Craft Beer Industry

The threat of substitute products and brands is higher in the craft beer brewery business as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the craft beer brewery business five forces analysis of Craft Beer industry are as follows;

I-Multiple Beer Alternatives

There are multiple craft beer breweries and they all offer unique tastes with their own production methods. A customer could easily switch from one beer brand to another just for the sake of enjoying the taste, without incurring any cost. The easy availability of multiple craft beer brands increases the threat of substitution rate.

Competitive Rivalry in Craft Beer Industry

The competitive rivalry among Craft Beer industry is very high in the Craft Beer industry as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in the Craft Beer business five forces analysis of craft beer brewery business are as follows;

I-Competition

The craft beer industry has become highly competitive in recent years. There are various craft beer breweries, and they have earned a significant portion of the market share in different regions. Winning the market share for a single brand is highly difficult in a tough competitive environment. They have to do something extraordinary in terms of taste, quality, or marketing to win the market share.

Conclusion: Craft Beer Industry Porter’s Five Forces Analysis |5 Forces Analysis of Craft Beer Industry

After an in-depth study of Porter’s five forces analysis of craft beer industry; we have realized craft beer is the world’s leading microbrewery business. If you are learning about the Craft Beer industry five forces analysis of craft beer brewery business; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.