New Belgium Case Analysis

Introduction The unsanded Belgium Brewing Company is one of the top three shenanigan beer breweries in the nation. It has experienced solid emersion from its original entry as a niche groceryer to a imperfection that is now distributed across the country. a good deal of unseasoned Belgiums victor is a moment of a well-developed local anaestheticisation strategy that promotes the lodges finale as much as its merchandise. Not coincidentally, reinvigorated Belgiums target marketplace chooses nocks like deep pall because of two the companys finishing and its product.Our evaluation of the two sunrise(prenominal) Belgium cases indicates that the deceitfulnesssmanship beer industry remains an attractive investment for the company, specially because of its specific capabilities and resources. The cases to a fault insinuate that a conservative developing expectation has the greatest prob talent of maintaining an acceptable level of profitability without sacrificin g the companys mission and essence values.Finally, newly Belgiums emplacement, particularly as its exemplified by the plunk Tire course, is a sustainable one for both current and future sends, though deliberate adaptations volition be undeniable as stark naked Belgium expands into new markets SWOT Analysis Strengths ( impertinently Belgium) Weaknesses (New Belgium) High-quality beer, award-winning beers tie with a single line of beer- plump down Tire 7th Largest brewery in the nation, 3rd largest craft brewery Increased pressure on maintaining company culture as a result of company growth Strong growth with est. ales of eachwhere $ degree CelsiusB and sales of over 700K barrels of beer Continued reliance on natural gas and fossil fuels- non-renewable resources $10M ad budget for flump Tire campaign No follow-up of successful risque-Tire ad campaign collaboration with Elysian Brewing Company Increasing distribution distances Customer subjection controversy from craft brewers and craft beers from conventional brewers Effective word-of-mouth advertising Smaller advertising budget ($10M) than competition (Sam Adams $35M) Strong product necktie ( copious Tire Brewery) One of the founders no longer with NBB Social media presence Facebook (300K $50. M mo breadization), Twitter (100K), Pandora, Instagram, Beer Stream, YouTube Customer blow back if environmental and kind certificate of indebtedness not as advertised TV advertising divergentiated from traditional breweries Incompatibility between sociable responsibility and promotion of alcohol spending Clear market pieceation Increased expense associated with sustainability efforts Strong brand positioning Distribution in 29 states and DC Performance reward of ethically and socially responsible companies Triple Bottom Line economic, social, and environmental focus drives strategy Brand manifesto co-developed by Dr. Holt Clear mission, core values, and beliefs Long-standing commitment to su stainability Sustainable Purchasing Guidelines Awards for environmental arrive atment Admission of flaws in sustainability claims Dedication to socially responsible initiatives, corporate charity and philanthropy progeny sponsorship to promote environmental responsibility Generous employee benefits that reflect company culture Awards for commercial enterprise ethics and work-place environment Grant- checked new plant in NC Opportunities (Craft Beer Industry) Threats (Craft Beer Industry) 16. 4 portion growth in craft beer industry 2 portion decrease in total beer consumption Fastest ontogeny segment of US soaker beverage market w/100 percent growth from 1999-2011 Accounts for only 5. percent of US beer market Differentiation from traditional breweries Competition from traditional and previous(predicate)(a) craft breweries Low cost per viewer TV advertising Social stigma of alcohol consumption Growth of social media as inexpensive source of advertising Beer can bec ome a commodity in a poor economy, decreasing demand for craft beers Customer loyalty Increased differentiation efforts required to stand unconnected from traditional breweries More immune to an economic downturn than traditional beers New Belgium and the Craft Beer Industry New Belgium Brewing Company is relatively mild compared to the traditional breweries such as Anheuser Busch and Coors, though they are still the seventh-largest brewery in the nation. New Belgium is, however, the third-largest craft brewery in the nation, with estimated sales of over $100 million, equaling or so 700,000 barrels of beer per year. An analysis of the craft beer industry as a full suggests that there is bear ond growth potential for New Belgium.Exhibit 5. 1 of the New Belgium Brewing (B) case shows that craft beer is the fastest growing segment of the U. S. alcoholic beverage market, with an increase in market percent of over 100 percent from 1999-2011. It is in any case an industry whose cus tomers tend to be extremely loyal, reservation them less presumable to view craft beer as a commodity. Consequently, craft beer has a higher probability of being immune to competition from humble goods and substitutes.This is particularly applicable to New Belgiums target market of beer connoisseurs that notify the high quality and taste of craft beer and who include executives, lawyers, and accountants with the continued ability to pay higher prices for craft beer, enabling the craft beer industry to achieve gross margins of up to 30 percent (Clark & Rogler, 2013). Four other strengths of New Belgium indicate continued growth in the craft beer industry. First, studies have shown that companies who genuinely promote ethical, social, and environmental responsibility outperform those on the S&P 500.New Belgium has been such a company from the very start. Second, they have exploited social media as an inexpensive advertising platform, with their Facebook presence alone accounting for over $50 million in annual sales. Third, New Belgium has shown that they can get ahead in traditional television system advertising as well with their gamy Tire campaign that produced an extremely successful positioning strategy resulting in portentous sales increases. Fourth, New Belgium continues to look for ways to innovate, like their union with Elysian Brewing Company that could lead to greater efficiency and support new product development.New Belgium is a company that has received awards for their beer, for their ethics, for their employee care, and for their stewardship of the environment, all the plot of ground maintaining strong financial growth and market share. There is nothing to suggest that New Belgium cannot continue to succeed in the craft beer industry. New Belgiums Growth Outlook New Belgiums success to date in the industry has been a result of a conservative mount to growing their business- a go slow to go fast strategy. We mean it should continue to be conservative in its outlook on growth.New Belgium Brewing is a growing company, best exemplified by plans to open a second brewery in Asheville, North Carolina, in order to reach new markets on the tocopherolern hemisphere border. This expansion, however, is creating pressure on the companys commitment to sustainability. Even though the new plant will reduce the fuel necessary for east coast distribution, it still will result in an increase in the overall use of fossil fuels and non-renewable resources from current levels, not just with imparting but with production as well. In profit, the increased production will necessarily mean an increase in environmental waste by-products.An strong-growing outlook on growth with a mindset of grow, grow, grow would pass on jeopardize the companys ability to maintain sustainability efforts, which would not be consistent with New Belgiums way of operating. New Belgium Brewing embraces a triple bottom line approach to business that facto rs economic, social, and environmental considerations into its business strategy rather than simply looking at the bottom line. We believe that this has been critical in developing a strong brand choice through customer trust.New Belgiums own study indicates the 39 percent of beer consumers will make extra efforts to buy from and support sustainable companies, dapple outside studies suggest that a significant number of consumers support businesses that parade sustainable practices. Going fast with an aggressive growth outlook would likely alienate New Belgiums customer base and would violate every one of New Belgiums Sustainable brand Strategy principles, from take the air before talk (living up to sustainability claims) to make ripples (convincing the customer that advertisements promote the brand and the culture behind it).In addition, an aggressive growth outlook would be cussed to some of New Belgiums core values and beliefs, particularly those that lead environmental ste wardship and commitment to trust through fulfilling promises. No one should enquiry that New Belgium is in the business to operate a profitable brewery as its mission statement makes clear, but not at the expense of the other two bottom lines. For New Belgium Brewing Company, slow and steady leads the way. Fat Tire Positioning As noted above, New Belgiums positioning of its Fat Tire brand was a success.Clancy (2001) defines positioning as the essence a company wants to imprint on the minds of customer and prospects roughly its productand how it differs from and offers something better than competitors (p. 1). In the case of Fat Tire, its positioning mirrored the companys culture where a highly creative activityis act for the intrinsic value of doing it, as well as perfromed in a balanced manner with nature. The message was virtually pursuing ones interests (folly) but not in a way that reflects self-interest alone.Its a message about recycling (restoring the bike), about carin g for the environment ( riding instead of driving), about relationships (the road biker and the tinkerer riding uphill together), and about the simple joy of simple things. Its about good beer made by a literally good company. equation this approach with the positioning of the largest craft brewer, Sam Adams, whose ads have morphed into television sight that look more and more like the position of Americas extended Three brewers. The Fat Tire ad, on the other hand, cleary demonstrates that New Belgium is different than its competitors in the culture behind the beer, and thats what New Belgium is after- the market who not only wants high quality, excellent craft beer but who also wants to be associated with a high quality company behind it. The Fat Tire campaign produced increased sales of 37 percent in test markets, and New Belgiums sales force was able to supplement this success by convincing transactional customers to promote New Belgiums inessential brands, increasing these sales by over 50 percent (Holt & Cameron, 2010).Given the results of the Fat Tire campaign, we recommend a continuation of the current positioning. Through Fat Tire, New Belgium has been able to differentiate itself in the craft beer industry by producing strong products that are well received by their target customers who are, or who see themselves as, smart, creative, athletic, environmentally conscious, and socially engaged. Target Markets The target consumer customer merchandise strategy for the Fat Tire campaign focuses on the market intentness approach of selecting a single market segment and then identifying shared out segmentation factors.For example, the campaign targets high-end (psychographic, behavioral) male beer drinkers ages 25-44 (demographic) who are mostly white-collar professionals (demographic) who vacation in Colorado (geographic) for a taste of the mountain lifestyle (psychographic). This market longs for the life of the tinkerer (psychographic) but believe that they are unable to move over their current circumstances in order to obtain it (psychographic). They can, however, make a connection to that life and to others in similar situations (psychographic, association/affinity) by boozing Fat Tire (behavioral).The transactional customer, on the other hand, is likely to be the local liquor store or grocer rather than supermarket or large retail discount center. For one, such distributors are more apt to carry craft beers because of their higher price and lower sales volume. More importantly, it is more probable that they are susceptible to local demands to carry New Belgium beers, the kind that result from the example noted by the case where a local atomic number 25 liquor store sold 400 cases of Fat Tire with the firstly hour of opening.Recommendations for the Future Looking toward the future, the cases note that New Belgium has no plans to concentrate another major television ad campaign similar to Fat Tire. We recommend that the y reconsider this position, particularly as they move into the east coast market and open their Asheville brewery. Taking a pure aggregation approach by replicating current strategy there will probably not produce the success to which New Belgium has become accustomed.Having recently studied the early failures of Disney in Europe due to a lack of adaptation, we suggest a television ad campaign modeled after a earreach tour, perhaps where the tinkerer and his single-speed bike tours the Carolinas, finding compatriots along the way. The tagline could be, Beer is our folly. Whats yours? The television ads would promote contact with New Belgium via social media, and local events would be sponsored to share New Belgium beer and culture with the east coast market, as well as to learn more about their new target market.Based upon what New Belgium learns, we also recommend developing a new craft beer specifically for the east coast market, fulfilling the transformational innovation activi ties of the Innovation Ambition Matrix (Limacher, 2012). We envision this campaign then developing television spots that show the tinkerer travel through locations from the Maine coast to the Key West, with quick images of him restoring old junked treasures that represent the follies he previously learned about- a wooden canoe, an Appalachian fiddle, or an antiquated Penn ocean reel- all the while promoting New Belgiums new brand.In addition to television ads, New Belgium would continue its established strategy of permission trade using social media, which they have clearly established as having a strong correlation with annual sales. We project that if New Belgium follows this Sustainable Branding Strategy with an emphasis on adaptations to the new market, it will achieve success similar to the results from the Fat Tire campaign. Conclusion New Belgium is poised for significant growth because of the way that it has differentiated the company from other craft brewers.Despite a sm aller advertising budget that larger competitors like Sam Adams, New Belgium has leveraged its advertising resources into developing a position that is distinctly different, which has created strong brand appeal among its target market. If New Belgium can maintain its original principles as it grows, we see a high likelihood that profits will follow. New Belgiums single speed is absolutely the right vehicle to disco biscuit the company into the future. References Clancy, K. 2001). Whatever happened to positioning Recent Copernicus study confirms the dissappearance of positioning. Copernicus. Clark, C. , & Rogler, J. (2013, March 8). private Interview. (M. Holcomb, Interviewer) Holt, D. , & Cameron, D. (2010). Cultural Strategy Using Innovative Ideologies to Build Breakthrough Brands. New York Oxford University Press. Limacher, R. (2012, May 25). Framework of the week 81 -innovation ambition matrix. Retrieved March 20, 2013, from strategyhub. net