Academic Master

Business and Finance

Business Strategy of Breweries Industry


The case analyzes the growth of breweries industry in the United States. It traces the revolving of the industry since 1800s and turbulences the industry has faced. The industry has had challenges which have made it impossible for several companies to survive. According to Mitchell and Koopman (2015), several breweries companies could not managed to survive in the market due to government strict regulation and therefore, they decided to quit the market leaving few which managed to concentrate on specific region and market segment as well. The breweries industry in the United States is very competitive since there are several companies across the state competing for the same market. Research established that around 1876 to 1900s there were about six breweries firms in the U.S. competing for the customers (Ford, 2015). The competition was very stiff and large breweries could not manage to survive forcing many of them concentrate on a specific region. And by 2012, the list of breweries across the U.S. had grown to fifteen and therefore, the competition environment in the breweries industry is very stiff and needs a lot of strategies for a company to survive.

However, there are several barriers which make entry to the breweries industry very difficult. As stated by Ford (2015) one of the major barriers is the government regulations. Research indicates the amount of capital investment required to set up a brewery company is high and therefore, it scares many interested investors. High competition is also a major barrier to entry into the brewery industry because it will take longer before breaking even. The introduction of Lagunitas’ beer in 1900s was not without having some issues. Even though it had a successful beginning, the company faced some internal wrangles since Tony and Magee the founders of the company disagreed and then Magee kicked out Tony remaining with the name (Mitchell & Koopman, 2015).

It is also noted that Lagunitas beer faced the problem of expansion since Tony never wanted to grow big but immediately the company started to realize profit, he decided to more nationwide. Mitchell and Koopman (2015) noted that though LBC was tip to grow, Magee was conscious about that and it never believed in the strategy since, LBC was meant to grow. It creates a big financial problem for the LBC which was needed for expansion of business to other regions. Lack of clear strategy is also one of the challenges which LBC faced during its introduction. The company did not have an expansion strategy though it wanted to go nationwide and such lack of strategy made the company to delay several of its plans like the commissioning of Chicago plant.

Based on the long term objective of the LLBC it is essential for the company to allocate resources to capital. The long term objective of LBC is to expand to the international market and such expansion requires a lot of capital investment and therefore, would allow LBC to expand its production to other regions where it has not established its presence. The company should allocation of resources priority so that it can facilitate its expansion plan to other nations and regions.

Due to the story presented in the Lagunitas cases, the recent news regarding craft beer is not surprising. It is because the high number of beer companies which is being reported across the United States is also analyzed in the case study (Hahn, 2016). Latest news also indicates that the craft beer focus on the taste therefore, most craft beers have a lot of calories. It is as a result market competition which is compelling every firm to do value addition to the beer and this is not healthy. The same was witnessed during early days when different Beer Companies was producing different taste and color of beer, so it is surprising to me.


Ford, M. (2015). Beer Brewers Industry Analysis . , 2-38.

Hahn, F. (2016). America now has more breweries than ever. And that might be a problem. , 2-37.

Mitchell, M., & Koopman, C. (2015). Bottling Up Innovation in Craft Brewing. A Review of the

Current Barriers and Challenges , 2-34.



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