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BrewDog is a significantly young craft beer maker in the U.K, taking the industry by storm. Owned and operated by two friends from their schooling age, the brewery exhibits significantly unique qualities that distinguish it from the rest. Many people, particularly moralists, regard the business as immoral and obscene due to its hyped campaign towards drinking, something with a dark history in the U.K. Dickie and Watt are the owners of BrewDog and mainly distinguish the firms products through rare marketing skills.
Dickie owns a bachelors degree in brewing, while Watt is a fisher. The two investors are beer enthusiasts and love breaking the norm and questioning traditions and dogmas. A critical look into their operations and business reveals a rare understanding of the contemporary business world where differentiation determines ones success. Beer is a substantially old product with a significantly simple processing procedure that almost everyone can follow. Being a common product among many traditions means that following ordinary business tactics exposes one to excessive competition. Accordingly, Dickie and Watts infrequent understanding of the marketing aspect leads to the concept of the so-called crazy business idea, causing global confusion.
Key Drivers of Change in the Macro Environment
The PESTEL model reveals an organizations macro environment and prospective factors with the ability to affect the firm and the whole industry. The craft U.K. and international craft beer industries are driven by multiple aspects whose change determines a businesss ability to succeed. PESTEL stands for the political, economic, social, technological, environmental, and legal factors that affect investments in a setting (Pan, Chen, & Zhan, 2019). The following discussion provides BrewDogs PESTEL analysis by presenting the specific facets under each domain affecting the organization.
Political Factors
Politics and the laws resulting from politically elected leaders play a principal in a businesss long-term profitability. BrewDog Operates in the U.K., a political block comprising four independent nations, Scotland, Wales, England, and Northern Ireland (Magennis et al., 2021). The firm exports its products to several international destinations, including the U.S., Canada, Asia, and Africa. Accordingly, almost all the states in which BrewDog operates experience political stability. Military invasion risk remains substantially trivial in almost all the political settings where the firm operates.
The U.K, the U.S., and many other European states where BrewDog sells its beer have mature political establishments, giving the organization noteworthy support. The U.K. has a mature business control system that ensures adequate protection for intellectual property, according to Dirani and Ponomarenko (2021). Product labeling, employee benefits laws, taxation, brewing regulations, and pricing protocols are the other vital political aspects affecting BrewDog and the entire craft beer industry.
The U.K.s laidback conventions on these factors give the craft brewer a favorable chance to operate with minimal concerns. Particularly, Chancellor Gordon Browns 2002 reformist beer duty that exempts young brewers making below three million liters of beer a year from excessive taxation (Ciont et al., 2022) gives BrewDog an operational advantage. Consequently, selecting the U.K. as BrewDogs home country grants the business noteworthy political benefits not available in many countries globally.
Economic Factors
Aspects such as fiscal cycle, inflation, interest, saving, and foreign exchange rates comprise fundamental economic influences worth affecting businesses operating in a given economy. Other essential facets under this category include a nations consumer spending trends, which affect business growth course. BrewDog concentrates its operations in the U.K., which assumes a market economy (Panizzut et al., 2021). Siu (2020) defines such (market economy) as a free system where proprietors, firms, and communities exhibit the freedom to choose what to produce, how to distribute it, and who to sell to. Cuervo-Cazurra, Gaur, and Singh (2019) cheer the market economic structure as the best arrangement for promoting innovativeness. Competition is real in the market economic scheme, with the threat of cut-throat rivalry being a major concern (Comunian and England, 2020).
Basing operations in Scotland grants BrewDog the opportunity to enjoy a stable host currency. The U.K. market is efficient, making BrewDogs activities fluent, while exchange rates, inflation, and interest rates, together with labor cost stability in the U.K., cause real economic benefits. Similar effects come from the high education and workforce skills levels in the region, implying a supportive economic environment for businesses.
Social Factors
Social factors connote things such as societal culture and other related aspects forming a business environment. A populations beliefs and attitude towards a product constitute a primary dynamism affecting marketers comprehension of customers. Other issues falling under the social aspect include a populations demographic and skills level, power and class structures, education level, gender roles, leisure interests, and the general entrepreneurial spirit. Accordingly, the U.K. community features diverse cultures that share several values. For example, drinking is not a distinctive social ill, with many people, young and elderly, appreciating quality brands (Banister, Conroy, & Piacentini, 2019). The population cherishes locally manufactured brands, particularly those meeting specific groups interests.
The young generation in the U.K. adores the gangster culture that BrewDog promotes. This aspect explains the companys growth despite criticism from some members and competitors (Spence, 2019). Education-wise, the U.K. has one of the best curriculums globally, with the nations graduates bearing important skills and knowledge. Being a local product with a significant penchant globally makes BrewDogs flag product, Punk IPA, a highly esteemed commodity in the local market. Craft beer has the highest alcohol content, 55% (Morgan, Thomas Lane, & Styles 2022), thus offering unique results to the many beer enthusiasts bored by the common low-alcohol content brands. Therefore, the social situation in Scotland and other U.K. nations grants craft beer producers and marketers a rare spot to realize their best.
Technological Factors
Technology is a critical unsettling element that impacts many industries worldwide. The facet mainly affects aspects such as supply chain, communication, transportation, and many others. Formulation and product processing techniques are other vital business issues impacted by technology, which firms need to observe to remain competitive. Businesses need to focus analytically on the recent developments in the tech field to survive, according to Sun Jiang, Jia, and Wang (2022). Adopting the appropriate technology helps organizations to cut costs, thus growing revenues while holding onto old technology threatens the businesss existence.
The U.K. and the U.S. are technology-intensive markets (Savolainen and Collan, 2020). Corporations and individuals in the two regions, together with China, often employ innovations before such spreads to other parts of the world. Therefore, it is necessary that BrewDog embraces technological innovations to survive. The businesss choice of stunts-based marketing reveals significant collaboration with the local social environment, thus explaining the realized success.
Environmental Factors
Each economy has altered environmental canons and standards that can impact an organizations viability. Even different regions in a nation can have dissimilar obligations and laws concerning the environment. It is imperative that businesses clearly and carefully examine and weigh the environmental principles of the economy in which a company operates. Weather, climate change concerns, environmental pollution laws, waste management regulations, renewable energy focus, and attitudes toward ecological products are fundamental environmental aspects critical to every business. BrewDog currently does not have an elaborate environmental management plan based on the businesss information accessible online. What the firm seems to care much about presently are its brand and the marketing concept. Unpleasantly, the organization uses wild animal shells to package its bottles for branding purposes, leading to significant concerns that may affect it in the long run.
Legal Factors
A markets legal factors concern all the set laws regarding different operations and issues. Almost every economy has regulations touching business operations, property ownership, copyrights, consumer protection, employment deals, discrimination aspects, and data protection, among others. The U.K. is known for stern property protection laws limiting the degree of duplication among competitors. Patents, copyrights, intellectual property, and health and safety regulations further hold a vital place in the economy. Businesses operating within the block must comply with the strong unionization decrees or risk facing dire consequences. Therefore, it is necessary that BrewDog appreciate the various regulations affecting its operations to keep enjoying the present market dominance.
Brewdogs Positions Relative Stability in the Industry Using Porters Five Forces Model
Porters five forces analysis measures an industrys microeconomic activities to determine the level of competitiveness in an economy. The technique looks at new entrants threat, the threat of substitute products, customers bargaining power, rivalry among competitors, and suppliers bargaining power (Parker, Taylor, Johnson, & Thomas, 2019). The craft beer industry differs significantly from many other subdivisions based on Porters five forces. The following work details Porters five forces situation in the sector with a focus on BrewDogs situation.
New Entrants Threat
The U.K. and international beer industry exhibit a significantly high threat of new entrants. Craft beers homogeneity and commonness make it easy for new investors with money to venture into it and generate money like the old players. The sectors association with high profitability makes the condition worse as almost everyone wants to get a share. However, high initial costs requirements act as a major hindrance, especially to potential investors struggling with cash. Some of the industrys initial costs include the general plant setup, equipment acquisition, high supply costs, and legal compliance.
Other necessities, such as environmental protection requirements, make the cost high, thus creating a barrier for those with little funds. Established foreign investors in the beer industry pose the largest threat as new market entrants as they often compete with the locals unfavorably (Baiano, 2021). Businesses thus use tactics such as cost amendments and superior quality provisions to promote customer loyalty and discourage them (patrons) from going to the new players.
Threats of Substitute Products
Variations in quality, style, and flavor of craft beer brands make different products serve as each others substitutes. Customers readily and easily switch from one manufacturers products to another due to the absence of shifting costs (Villacreces, Blanco, & Caballero 2022). The charged cost plays a major role in attracting or discouraging consumers from a brand, with many customers favoring the low-cost brands with high alcohol content, making them drunk faster and affordably. Shunning a companys products in favor of another leads to noteworthy losses due to the involved high costs of making and distributing the product to customers.
Competitors thus use product differentiation to distinguish their beers from those of rivals. However, some utilize packaging, product strength, and marketing strategies to set their products apart from substitutes. BrewDog uses brand strength and marketing tactics to convert the beer into an experience, the gangster experience, thus making it a cause as opposed to a mere substitutable craft beer.
Customers Bargaining Power
Customers bargaining power in the beer industry is substantially high since many people can live without the product. Taking or failing to consume craft beer thus remains an individuals choice, which affects the industry direly. Therefore, players in the sector aim to produce products that attract and retain customers, not quit. Unique and persuasive marketing help brewers realize this objective, with BrewDog excelling significantly in the area.
Competitors Rivalry
High profitability in the beer industry leads to an excessive rivalry between competitors. The existing firms share the market profits and readily acquire each others clients through tactics variation. Thus, winning customer loyalty is a great achievement, mostly through cost cuts and marketing strategies (Jernigan, 2022). Setting a vibrant brand, establishing a quality like no other, and providing variety make firms serve a wider range of customers due to differences in customer tastes. Persuasive and consistent marketing campaigns are also necessary for businesses seeking to succeed while establishing unique products provides an ultimate advantage to a business (Lengeler et al., 2020).
Large players with the capacity to support batch production and realize economies of scale cushion themselves significantly from the happenings of the smaller rivals. Accordingly, governments and market regulators frequently use competition laws to ensure balance and sanity in the craft beer sector.
Suppliers Bargaining Power
Suppliers controlling the flow of essential beer inputs have a significant influence over the industry. Such suppliers determine the levels of prices charged by individual brewers as they pass the cost burden to the clients, making the suppliers bargaining power high. Notably, craft beer markets with fewer raw material suppliers suffer substantially from the suppliers effect (Nave et al., 2021). Brewers intending to regulate this weight utilize strategies such as innovations and supplier contracts, where they pay raw material providers above-average rates at all times to get quality, undisrupted supplies. Bulk buying by individual brewers helps them overcome shocks in ingredients supply, thus managing the suppliers power. However, areas with high numbers of suppliers offering quality inputs exhibit reduced supplier bargaining power.
Brewdogs Competitive Advantage and Potential
BrewDogs unique products and marketing strategies give it rare competitive benefits, unlike many other players. The firm offers the strongest craft beer in the market at 55% alcohol by volume (Hill and Friel, 2020). The firm adopts a unique technology to realize its quality, making it hard for competitors to copy the strategy. Moreover, having determined and experienced owners make BrewDog unique. James and Martin are two crazy characters with the ability to exceed boundaries without fear of being judged. The two fellows have an intensive understanding of the U.K. drinking culture and the craft beer industry.
James owns a brewing-related college training and has vast experience in beer marketing. Equally, understanding beer and the consumers special needs that ordinary brands cannot meet grants BrewDog meaningful competitiveness. Such, plus the unique branding aspect of using animals, makes the product unique, with many fearful competitors finding it very hard to duplicate the strategy (ThurnellRead, 2022). Above all, BrewDogs presentation of self as a gangster brand blends adequately with the young generations desire to appear free and distinct, allowing the firm to reap massively.
SWOT Analysis
SWOT analysis depicts a firms relative strengths, weaknesses, opportunities, and threats. Having a successful, strong brand, winning customers around the globe, and a passion for unique marketing and formulations are an example of BrewDogs strengths. Other advantages include the establishment of outlets in strategic positions where the young generation intending to appear unique can consume and interact freely without many struggles. BrewDogs excellent relationship with the government also grants it the ability to operate without trouble, making it the fastest-growing brand in the EU. The association of the brand with social misfits constitutes the most critical weakness (Mellor, Hanna-Khalil, & Carson 2020). The business faces noteworthy opposition from a considerable number of citizens, making it hard for it to realize full liking by all generations.
Seeming unauthentic substantially limits the BrewDogs success as only a specific population associates with it. The ability to explain itself and correct several strategic issues to meet the broad consumers concerns provides BrewDog with significant business opportunities (Hardman, 2021). Moreover, the craft beer growing fondness globally implies the brands potential to expand beyond the U.K., thus a principal opportunity. The likelihood that the U.K. and other nations worldwide will heed consumers claims and enact laws limiting the use of dead animals in brand promotion exists as a threat to BrewDogs unique marketing strategy (Callejo Tesfaye, González, & Morata, 2019). Equally, adopting the premium products policy makes Punk IPA, BrewDogs flag product, expensive, subjecting the brand to unfavorable competition during economic crises.
Stakeholders Analysis
The stakeholder theory provides a significantly appropriate mapping technique for the sustainability of the craft beer sector. The model compares the quality of relationships between different players and how their roles variations with time may affect the whole industry. Collaborative working is a necessary factor in the craft beer domain. Business establishments must work together with internal and external partners to succeed.
Crucial stakeholders in the sector include workers, customers, distributors, suppliers, community organizations, and lending groups, among others. The power-interest-attitude matrix describes the various stakeholders relationships in the craft beer industry. The mapping technique classifies the various parties into a savior, friend, saboteur, irritant, sleeping giant, acquaintance, time bomb, and tripwire. The stakeholder theorys basic tenet is that an investment can maximize its financial performance when the investor proactively satisfies the specific desires of the pertinent participants in the sector (Pinto, 2019). Stakeholder collaboration promises craft brewery owners a more stable market relationship with reduced cut-throat competition and partnerships with the locals for social change.
The Likely Future Scenarios for the Craft Beer Industry on a Global Basis and possible BrewDogs Survival Tactics
BrewDogs current success is significantly sustainable but may not go beyond the U.K. in the long run. The craft beers homogeneity and the resulting hype towards the high alcohol content drinks among the youth will likely trigger the initiation of similar brands elsewhere in the world, weakening BrewDogs competitiveness. The U.K.s dwindling influence over the global markets exposes BrewDog to significant limitations. Similarly, the desire by other nations citizens and consumers to build local brands they can associate with, especially among Americans and Chinese youths, leads to significant doubt concerning BrewDogs future. BrewDog must establish collaborations with emerging innovative players to remain relevant in the industry as a survival tactic.
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