1)Introduction
Marketing strategy plays a vital role in an organisation for the creation of its target customer. Thus marketing strategy is developed to provide a firm or industry meeting their customer’s requirement by some offerings. Thus a company has to develop a value that changes time to time to sustain in the market and also create the future value for the consumer. Regarded as one of the least customer goods globally of all, there are proper trends available in terms of “world beer brewing industry for developing global companies similarly role act like the “Coca-Cola” drinks company(Lakew et al., 2017). In this report, the focus will be made for developing an adequate market plan in the micro-breweries business world. It will find the current issues and how it can be solved will be critically analysed and described. It will also describe the organisational structure of the company that should be measured in terms of success in business strategy and also the feasibility of the decision based on the evaluation for future success.
2)Generation of Idea
Presently micro-breweries industries are faced several challenges to carry forward the business. Some of these challenges must be taken into consideration to survive its business in the global market. These issues are beneficial in terms of farm brewery, brewpub or nanobrewery and are discussed in the following points.
Present problem and solution on marketing strategy
2.1)Small Budget of the business
Micro-breweries are faced with a lot of challenges, just for other small businesses like a small budget.“Neither has enormous marketing budgets to carry forward about 50,000 units that are going to sustain them for around six months.
This means to say that craft breweries are required to run a factor that could be from 100 bottles to even 1000 bottles(Kozák , 2017). This means to say that craft brewers are needed to select special occasions and put out some of their things such as “anniversary editions”. By applying
These small techniques of special events like anniversary breweries will get more benefit into their bucks. In this regard, another aspect of digital printing price will also help to lower the price rates for this smaller run business.
2.2)Finding a suitable target market
Micro Breweries need to focus their attention on specific target markets. It can be a challenging task to put down the focus on a narrow area for a specific geographical area for business success(Raevuori, 2019). Evaluating the resulting form the various social media like Facebook or Instagram will be quite helpful in this respect.
It has been seen that the growth of craft beer is dependent on Millenials pocketbook. Millennials develop a high factor in authenticity(Masotti et al., 2016). If a beer brand fails to do it in their marketing strategy, then consumers pick up on that issue. By studying posts on social media, it will be easy to get an idea to market in a specific geographical area.
Fig 1: Marketing Strategy route for Success
(Sources: https://www.businesswire.com/news/home/20191015005475/en/Creating-Route-Market-Strategy-Experts-Infiniti-Provide)
2.3)Non-availability of in house department of marketing
It is one of the challenges that has faced by many micro-breweries companies that it has no proper in the house marketing team to carry forward the business. It can start with a search in the google to outsourcing marketing requirements(Sperandio et al.,2017). It’s a quite good idea to search for a company that have all the latest technologies like “social media marketing” and “search engine optimisation (SEO)”.
Evaluating these types of companies helps to start up a business regardless of craft breweries or any other small scale business. This strategy helps to carry forward small businesses with the help of “digital marketing companies” before going for massive campaigns.
2.4)Choosing the right team for market
After starting up the small businesses, there is a chance to fill space on teams as soon as possible that should be taking time to choose the right one for the team(Herold et al., 2016). Generally, it relates to personnel regarding the marketing department. In this regard, an interview with multistage level will be quite helpful to find the right people for building the team. It is an adequate way to ensure any applicant to connect with its business culture of the firm.
2.5) Sustaining a healthy cash flow
It is regarded as one of the marketing challenges for all small businesses. Taking care of healthy cash flow is essential to keep a competitive role(Pesonen et al.,2018). On the starting up the time, it will always be better to keep the vendor to put some credit on the business to carry forward the business.
Personally, meetings with local suppliers will be quite helpful in this regard. Also, it will be taken into account to the commission given to customers as extending credit so that enough money is available to carry out the business.
Along with the above reasons, some other factors have to be taken into consideration to develop a solid marketing strategy regardless of present difficulties. These are
2.6)Pricing is a factor of differentiate
To differentiate with other related products, one of the most challenges faced by the small industry is about the cost of the product(Kapaya, 2019). It is a very challenging job to create a lower value of the product to the customer as small businesses have some barriers to maintain it properly. It should be done carefully to cost the product so that the availability of money will be adequate. But to differentiate it with other products, it is necessary to lower the cost so that consumers can use it, which in turn creates profitability(Ramukhwatho et al., 2016). That’s why it has been found by the breweries industries price of the product has not fluctuated effectively among all competitors. And the comparatively low price of beer provides an opportunity to generate huge profits in volume rather price.
2.7)Promotion of the product
Promotion is also a vital and challenging factor for sustaining small business like breweries industries. However, it is not possible to promote the brand value of the business but in the global prospects of a promotional strategy to promote the logo of the brand with the help of posters or radios or television. Beer company like “Heineken” has developed a general promotional strategy that includes “advertising on television” and “substantial sponsorship”.
3) Organisation culture of the company
Making any business sustainable in the market is essential to employees’ contribution toward its goal(Bernetti et al., 2020). How people are trained and skilful,how they behave with other employees and communicate with them to share the information, how their training facilities will be provided so that they can be up to date with their knowledge all of these factors has to be taken into account carefully for development and growth of the whole company. All of these factors belong to a company’s culture that is followed by its employees so that they can give their best effort individually for the fulfilment of organisation aims and objectives. Organisation culture helps the company along with its employees to grow and achieve the target.
3.1)Organisation Culture that should belong to the Micro Breweries industry
The beer industry also regarded as recession-proof for long has been one of such bright spots in the ongoing economy throughout the globe. Craft brewing businesses are flowing steadily, many of which are startups and also small businesses where the owners of the company are regarded as a brand. Along with being head “marketer” and “strategist” these business owners find themselves in the character of “forklift driver” and “chief washer of the bottle”. It is required to thrive an organisational culture and requirement of “workforce planning” as the brewing business is launched.
3.2)Providing a healthy culture to the company
When different variables are unknown, it is a quite challenging task to do workforce planning(Carvalho et al., 2020). Several factors have to be taken into account to doing this like
Whether the business can be penetrated in the existing market where already there are different bosses in there and if it is capable of production rate to its requirement level. All these situations required a proper workforce plan like Plan A and the other plan Plan B, in case of business, goes better than expected.
According to Bill Butcher, founder of “Alexandria Beer Company” how he started up the brewing company and it was then required for top-level brewer to make his business plan turn into reality(Fastigi et al., 2018). But due to the new in the market, it is available to find a suitable guy who is best suited for his company. Regarding this, after interviewed with around 150 peoples, 20 persons have to be found as suitable for the best fit in the organisation.In this aspect, human resources are played the most crucial role where it has to carefully observe the importance of personnel’s opinion along with self-opinion because the workforce has a specific value to the organisation. As human resources are the critical element to hire the best fit personality into the organisation, and it has taken almost three years to find the right people for Butcher(De Vries Hugo et al., 2107). SO how useful human resources are to get the numbers of employees for their business is also a focus area to be concerned about. To hire the right people and provide them with proper training to upgrade their knowledge as per business requirements and motivate them to give their best contribution that value to the company. Human resources of any organisation act as nourishment to its employees for business success. It strengthens the business with an adequate and suitable workforce to carry their goal and sustain the business into the market.
3.3)Paving the way of the talent into the brewing pipeline
Bill Graham, the co-founder and co-owner of “Ska Brewing Company” in Durango in Colorado has been in the market for around a lifetime regarding brewing companies(Karafolas et al.,2020). Graham’s approach to hiring people is the same as other companies like attractive salary and benefits packages and considerable health insurance and retirement packages. By in-depth research, it has been found that the organisation culture that followed by Graham is its uniqueness. According to Graham “What makes the people feel happy is beer and they should translate their people at the brewery as well”. Graham also stated the location of the organisation in the high mountains of Colorado, and it is an advantage to the high place of work of the company(Cortese et al., 2017). So employees related to top-level management are provided with ski passes and also different lottery facilities available for other staff of the company makes the organisation culture quite attractive to its employees. Company has also provided “employee wellness programme” where the employee could benefit through membership of corporate sports club activities, Yoga(instructed yoga training at the brewery only for $5/hour) and “evening Durango wheel club road bike on Wednesday” all of these are quite benefited the employee to keep their jobs in the company and not let them leave the services and look for a better one(Teichmannová, 2017). This company culture towards the employee surely benefits the company to retain its best employees for their business goal.
Also, Butcher has been working with his team to give a contribution to the community where he stated that “our team has designed afloat to take part in St.Patrick Parade. A six-pack human a large 5 ft tall “wooden six-packed” to “rolled down in the streets of in Alexandria”.Concerning these, it has been found that for “Alexandria VA based Port Brewing” all is about community and beer.
“Sedibeng Breweries” has applied to its corporate culture as paying competitive packages to the hired personnel for their “agreed” and “tasks set out”. Sedibeng Breweries has negotiated the provision of the payment of incentives against agreed target achievements regarding the enhancement of productivity, savings and “other specific successes” in terms of “performance management system” related to its organisation culture.
Human resources strategy applied by Sedibeng Breweries are revolved around-
- Communication transparently and openly manner to the employees and addressing trusted and strong relationship bonds with them like internal and as well as external communication, also inclusivity of stakeholder.
- Promoting and responding issues like human rights, such as community relations and equity in the workplace
- Adoption of “good remuneration packages” to develop employees skills by training, group initiatives and benefits of the employee.
- Proper maintenance of safety and health structures of the employee and helping hand to the surrounding community.
By evaluating all of the above factors, it has been taken into consideration that breweries should focus more on employee development that in turn make its profitable relating proper utilisation of its employees to business profit and by retaining them with attractive offerings.
3.4)Management style
One of the other aspects that have been found in the organisation culture of the Sedibeng Breweries company is its contribution to the management team(Sullivan, 2017). The management team of the company, which mainly consists of shareholders of the business has broad knowledge and expertise about markets and products, and they have well organised plans to make the company’s goal into reality. Its organisation culture of which management style belongs to the company has believed it is that it should treat all its employees as a community and nurture them all(Rogerson, 2016). It is not intended to be always or over hierarchical. So that employees can easily approach the top-level management regarding any issues, ongoing initiatives of market sharing and sales drive and productivity will also be proven as additional inputs to the success of the organisation.So the management style is also essential for success in breweries or any other industries, whether it is small or large and must be aligned with organisation culture to carry forward the business. Organisation culture of the company needs to provide sufficient strength to its management style to manage the business activities properly.
3.5)Training and development of employees
Along with external training facilities, it is also required to provide “in-shell” training of the employees when it comes to any new developments in the market(Rogerson et al., 2019). This will ensure any brewing industry to anticipate the market requirements and choose a “proactive approach” towards its business strategy through its organisation culture. This will ensure the ability of the employee to up to date their knowledge according to the latest manufacturing processes and techniques and raise their standards or benchmarks according to its organisations. Internal training of the employees not only provides market trends, aids of new technology, management of time, customer knowledge it will also provide information regarding technical and product aspects.
Concerning the above facts, it is to be concluded that successful recruiting of the personnel, motivates them properly, procedures of discipline are all of the parts of the organisational culture of a company which must be carried out and maintained by the
Organisations for its business survival, whether it is a small business like breweries and the large scales manufacturers.
4)Success feasibility of the market
Consumers have become comparatively aware of the difference between generic and craft beer. The popularity of craft beer in the premium category has been increasing since the “micro-brewery boom” in the early 1970s(Nesse et al., 2019). The explanation of beer availability and the increase in the number of micro-breweries due to the establishment of legalisation of “brewpubs” in 1978. This law provides marketing advantages and tax breaks which supports small micro-breweries industries to stay competitive in the market like with the enlarge scale manufacturers. Enthusiastic beer has never had different choices due to the “long decade expansion of the craft beer” industry. There are more brewing facilities available throughout the world which offers a greater variety of products to its consumers. According to the data collected from the ” Canadian Craft Brewers Association,” there were about 1,005 craft breweries are active in operation nationwide as per June 2019 with an additional about 195 to be opened for the business requirement by 2020″.
This success of a business is appreciated with consumers and at the same time, creates anxiety. This market of breweries shares information regarding overcrowding signs. It potentially puts the viability and stability of new startups along with other micro-breweries they are all vying for retreating their base of consumers(Nesse et al., 2019). So it will require feasibility of business strategy to the stable footing in the market of the beer or making the breweries attractive to its customers.
4.1)Challenges to the expansion of breweries
Several barriers are applicable for expansion or growth of the breweries and to enforce to stay small in size. Expanding to multiple geographical locations, it is difficult to bear the new distribution and production cost of the product. Generally, brewers owners try to remove their micro-breweries from populated urban areas as these places do not possess the fact of transportation for distribution of their product(Malcolmson, 2016). Ascertain geographical locations are such that it is complicated for the micro-breweries to expand their own business. Some micro-breweries operate in such communities that are not so much populated to expand the breweries as there is no fact of profit available for that community.
Then it comes to the challenge of keeping the product on the shelf space as the more and more product is made to provide it to the market, the focus should be made based on the imperative level to keep the product in the shelf place(Goldman, 2018). Many breweries preferred new products instead of the old. Stores may choose a product that is too high and too low in cost as the product influences them with high margins that are capable of selling into the market quickly. As such respect brewers may not make the quality-price when selling to liquor stores. That’s why some brewers owners distribute their beer to local bars only.
4.2)Seeking for the signs of warnings
Whether it will be a new start-up for the breweries market or seasoned brewers or someone who is considering getting into the market should always take care of the play state and whether the business will be within these states, viable and in control(Downs, 2017). There are some warning signs for viability in future which must be looked upon.
- Despite best efforts, there is an inability to gain a share of the market.
- Unprofitable product or business lines
- Increasing competitive factors in the local market
- Regarding inventory sell, there is a struggle to reduce the price.
- High level of expanses causes operating at a low level.
- A business that experiences low on margins.
- Downwards trend in “cash flow.”
4.3)Capital
Having enough money is available to start up a brewery, there are many industries available that have an undercapitalised business, and it doesn’t work. Brewer owners should think about “30% topper” to determine sufficient fund’s availability. It should be better to track an additional 30% of the initial start-up cost brewery as a safe number including “equipment cost”. If equipment cost and “build up” cost for a brewery start-up is about $1million, for example, it should have an additional amount of “$30,000” for working capital to carry out through the “initial months.” However, this looks like a tremendous amount of capital most of that consumed by “marketing” and “figure salaries” in very less time.
Capital sources are family or friends, investors or banks,” crowd investing” or “crowdsourcing.” So it should be carefully aligned to right “legal” or “financial teams” to structure receiving money from them. In this regard, one wrong turn will have a significant impact on the business.
4.4)Planning
It should be regarded as the most critical aspect of breweries industries. This is not about traditional business plans for ‘winemakers” it is regarding breweries industries that are beer. In business, whether it is wine or beer or any other commodities, a profound and substantial plan is required to build a marketing strategy of the product. It should consist of the layout of the brewery, different strategic plans, benchmarks, marketing and staffs all of these related to planning. Because the future of the breweries cannot be predicted, but it can be possible to plan the future.
Fig 2: Planning Process of Marketing
(Sources: https://www.smartsheet.com/strategic-marketing-processes-and-planning)
It seems like planning is simple in the initial stage as “wholesale revenues” vs “testing rooms.” Although it looks like simple that act as a foundation for more “complex matrics” in the business future. As time is passed away, it will be matured as the information received from the various sources like production, financial process and marketing.
It is always a difficult task to properly plan new breweries. Management of capital, customer dependency, location of the liquor store etc. are the essential factors that need to be carefully evaluated in terms of adequate planning of the micro-breweries business. It should be mandatory to follow some steps before making any decision brewery business plan. These are-
- It should be better to research the brewery industry in terms of journals, texts, articles, books and case studies—all of this help to gain the knowledge of how a brewery business operates.
- It would be better to connect with other successful breweries to gain information about pitfalls that must be avoided at the time of starting brewery businesses.
- Beer’s name should be brainstormed and research whether these have been adequately trademarked or not. This step is necessary to prevent wasting money on promotional and marketing materials only to find out permissibility of the user name.
The following questions will be quite helpful to clarify the vision of starting a micro-brewery or craft brewery.
- Has any commitment been done to examine any state or federal law in the brewing industry that is heavily regulated?
- Whether it will be better to choose a “brewpub” or “production brewery.”
- How it differentiates with other breweries
- Whether it will be one location or more than one
All of these above factors should be focused correctly in terms of adequate planning of the business.
4.5)Distribution
Distribution is the one that plays another significant role to carry forward the business. There are several questions regarding this as-whether self-distribution preferable or to prefer a prominent distributor. At the initial stage, it is ok to self distribute the product, but after the time passes away contact with a distributor will be like an insane to the owner.
Distribution selection should be a slow process to find the right one to take care of the product of the business owner. Different interactions”(and drinking beer)”should be made with persons who are capable of doing so. Generally, distributors have years of experience in the market they know exactly than any other what “brand” or “product” should be sold and by which quantity. They will better understand the more volume focused accounts also they are aware of “retail account” which is focused on “hand-selling” characterised by variety and choices.
It is on the brewer dependency what they want actually and select the right one for their business. It would be more useful to study the past 5-10 years of market sales projection for best partners about distributors. With the help of this strategy, it will be easy to find out which distributor’s style, philosophy or portfolio matches with the owner’s business. Also, shipping and pricing cost should be acknowledged.
If it comes to state about relationships between distributor and breweries owner, always some points should be remembered for choosing and maintaining the distributors are as follows-
- Will distributor carry breweries line product line overall.
- Did distributor have any space of refrigeration for breweries
- Will owner has a specific brand manager.
- Will the agreement is for on that period of 5 years from the present state.
There is a great deal that takes place by both breweries owners and distributor partners. As no distributor wants a product that does not work for them, distributor always have some questions about breweries owners for themselves such as-
- What is the relationship of the product with others in the market
- What does owner envision for this product
- How does it correctly layout in a specific “on promise” account
So in this way challenges regarding the distribution of the breweries product will be evaluated and appropriately managed to start up the micro-breweries business.
4.6)Importance of back Office
Although the specific requirements of back-office may vary according to the organisation or business, many back-office requirements are common factors for every company, whether it is beer or other any commodities. Essential functions of administration of the business include market research or data collection, data entry, processing of the order or much more all of these related to back office.
Although it is not possible always to put some budget on the back office and complete the all required administrative work within the store for small business, as the business is increased day today, it will also require experienced personnel who are aware of the industry processes regarding administrative work as it is utmost required to keep a record on several data with a proper manner for a successful business strategy for survival. It has been found that for micro-breweries industries owner prefer to store cash in the bank. This would increase the portability, but at the same time, it should keep record the data for organised and confident growth. Some of the facts that have to be taken into account to develop the back office for the future of the business thrive-
- Cost is cut
It is a difficult task to maintain the infrastructure of back-office along with other business expenses like employee turnover, cost of labour, investment on innovative technology all of these are significant expanses factor after this it is difficult to put the budget on the back office maintenance it will be a great advantage of outsourcing the back office that cut the overall cost of the businesses.
Outsourcing of back-office support is a comparably affordable situation for using well-maintained infrastructure along with the low cost of “labour” offshore that allows much more “affordable option” to carry out the business.
- Get back the expertise
Finding the right people with adequate skills is a tough job to hire from the tight market of labour. But in this term, outsourcing can help the right one to the business to carry forward the business. Whether it is existing breweries business or the entirely new in the market “BPO” helps to find out the right personnel with the adequate administrative skill to handle the back office support.IN this way, it creates an excellent service value with good quality and keeps the business alive.
Along with the above factors, it can be stated that back office support plays a vital role in case of any small or large business for its business survival.
4.7)Innovation challenges in the craft beer
One of the most challenging factors of the craft brewing industry is innovation. Significant characteristics of craft beer in comparison with so-called “industrial lagers” is “innovation” and “variety”. It’s all about the “fascinating” and “enormous” beer universe to the pleasure and joy of the drinkers and also for the craft brewers. In the case of craft breweries, the business owner must list down the selling activity of the product according to region basis. Then it should be taken into account what type of product is most preferable. Also, customers feedback in this regard on social media or the internet will be quite helpful to find out the product and specification that is mostly desired by the consumer. As it varies from region to region, liquor owners should also be aware of specific products that belong to that region. Some change in proportion by which the product is made with comparatively less price will surely get benefit to the business to thrive.
Fig 3: Marketers Focus on facebook
(Sources: https://sproutsocial.com/insights/facebook-marketing-strategy/)
Innovation is the key to success in any business organisation. Whether it is a larger manufacturer of the wine industry or it is a beer industry or craft breweries innovation should be applied correctly in business strategy. Like in the occasion basis of “EVE” or “Christmas” breweries always provide discounts or some other offerings to its consumers that significantly increase the sell of the product as compared to its competitor. Also, there are specific products that are most preferable to the customer on specific seasons. So it would be easy to find out the innovation in product and strategy to take the business further and sustain in the market.
5)Conclusion
Increase of micro-breweries like craft breweries or nano breweries or farm brewery businesses is increasing day by day. This form of success is mainly due to its consumer preferences and drinker, who is always looking for some unique and joyful experience through beer. But it cannot be denied that these small businesses have also faced different challenges which internally and as well as externally applicable. In this report, the challenges faced by the micro-breweries to start up a business has been discussed. Several factors that affect the small business to grow and the challenges it faced is also discussed. But as it is business, it requires a business strategy to carry out that also has been discussed in this report. But as the consumer specification and needs are evolving from time to time, the challenges and solution to the business strategy will also change and evolve from time to time. So it is required to research thesis challenging factors shortly to find out the future of the business. Although it is mentioned an adequate solution to route a market plan regarding micro-breweries,and techniques applicable for the sustainability of the business as a whole it further requires more intense research in the topic to get the fruitful results in terms of breweries industries success.
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