Question

Returning to our running case for Shannon’s Brewery introduced in the market share exercise, assume that Shannon’s is currently serving the Austin, TX market and wishes to expand distribution to a six-county area in North Texas: Dallas, Tarrant, Collin, Denton, Wise, and Cook. Before the final decision is made, Shannon’s needs to have some idea of the market potential for craft beer in the six-county DFW area and Shannon’s own sales potential.

According to the Craft Beer trade association, there are 117 craft brewers in Texas. Relevant population data for developing estimates of market and sales potential are contained in Table 1. The data show the total populations of each of the six counties, the proportion of the total Texas population in these counties, and the numbers of individuals over 21 years of age.

Table 1. Population Data for Six-County Area of North Texas 21+ Denton Collin Wise Tarrant Dallas Cook Total Population % of Texas 662,614 3.96% 782,491 4.68% 59,127 0.35% 1,809,000 10.82% 2,368,000 14.17% 38,437 0.23% 5,719,669 34.22% 410,827 485,152 36,659 1,121,598 1,468,184 23,831 3,546,253

1.) Assume the average Texas adult (21+ years of age) consumes 3.8 gallons of craft beer per year. What is the market potential for the six-county area in gallons of beer sold? Round your answer to the nearest full gallon (no decimal places). Do not include commas in your answer.

2.) Assume the average Texas adult (21+ years of age) consumes 3.6 gallons of craft beer per year. Shannon’s market share in the Austin market has been steady at 2.9. Based on Shannon's experience in the Austin market, what is a good estimate of Shannon’s sales potential for the six county area in gallons of beer? Round your answer to the nearest full gallon (no decimal places). Do not include commas in your answer.

Answer 1

1) It says to assume that average Texas adult consumes 3.8 gallons of craft beer per year and total population for 21+ age is 3546253 , i.e. 13475761 gallons (3.8*3546253)

Market potentional means estimated maximum total sales revenue of all suppliers of a product in a market during a certain period.

According to Craft Beer Trade Associations there are 117 craft brewers in Texas. Assuming that each of these 117 brewers get equal market share of the six-county area, Shannon's has a market potential of 115177 gallons of craft beer .  ( 13475761 / 117 )

2) Assuming 3.6 gallons of craft per year , gives total gallons of 12766511 (3.6*3546253) and the total potentional for Austin is 10284133.7 gallons and it ream steady , so the good estimate of Shannon’s sales potential for the six county area in gallons of beer would be 2482377.1 gallons of beer per year (12766511-10284133.7)