Question

What does your strategic group map of the craft beer industry look like? Which strategic groups do you think are in the best positions? The worst positions?

Answer 1

Students may use any grouping on the matrices, but the case provides the justification for a price/quality and geographic distribution juxtaposition. In developing a strategic group map similar to what is shown in Figure 1 below, students should recognize that: a) Nano- and micro- breweries are in a very narrow/local distribution. Local nano- and micro-breweries generally occupied a high price/quality position, which could vary from above average price /quality to exceptional price/quality. b) Global producers occupy a global distribution and low to moderate pricing given the portfolio of brands offered. c) Regional producers may be located at both the regional and national level, while offering prices in the moderate to high range

FIGURE 1. Strategic Group Map of the Craft Beer Industry High Micro and nano breweries Boston Beer Craft Brew Alliance Price/Perceived Quality AB InBev Low Local Regional National International Scope of Geographic Distribution

It should be recognized that global producers are the dominant competitors, and presented significant threat to the regional and local producers. As found in the case, the regional producers maintained success through either a regional affinity and distribution (Boston Beer) or through agreements with larger distributors (Craft Brew Alliance). Students may also identify how smaller producers present a larger threat to each other, as they erode the ‘local’ niche amongst themselves, eventually leading to saturation at the local level. Acquisition may be considered a viable exit strategy for smaller producers