Redhook Brewery
Essay Preview: Redhook Brewery
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Introduction
The distribution alliance Redhook formed with Anheuser-Bush in 1994 was to run for 20 years, but could be terminated after 10 years under certain conditions. Under the alliance, A.B. invested in Redhook and gained a 25% stake in the companys equity, and made its nationwide networks of 700 wholesale distributors. Redhook retained full control over production and marketing. Distributors who participated in the alliance were to be given exclusive distributing rights in their territories. Redhook believed they could gain acceptance and much greater exposure with this alliance with Anheuser-Bush, but the alliance was viewed controversial be many.
Strengths and Weaknesses
Regarding strengths and weakness, we found that one of Redhooks weaknesses was that management wanted to make it too big in the craft beer industry too fast. For instance, once Redhook started making a profit they replaced the first brewery with a larger capacity with state of the art equipment. Redhook also has a problem regarding the structure of the industry and the quality of the companys management team. Another weakness for Redhook was the age group that was buying their craft beer. One of Redhooks strengths was that they had an agreement with one of the biggest beer distributor Anheuser-Busch to distribute their product. However, one could probably turn that into a weakness for Redhook as Anheuser-Busch may not promote Redhooks product as well as their own. The table below shows the strengths and weaknesses of Redhook.
Strengths
Major source of revenue and profit
Craft Beer
Market share of the company
4.7%
Strong company brands
Blonde ale
Marketing and advertising effective
Yes. Articulate plans in place
Major focus of the company
Production to produce high quality beer
Skilled workers
Trained, educated and prepared
Stock price track record
Varies. Down now
Technology efficient
Company has embraced technology
Company proactive about change
Yes. Company proven change can work
International trade
Company goal is to compete in the international market
Weaknesses
Competitiveness
Intensified competition
Major Brand
Unknown brand name
High cost structure
Price cutting for craft and specialty beers, wine and imports
Beer industry offensive attack to reach dominant position
Industry Saturation
Market saturation
Merger Opportunity and Weakness
Merged with Busch
Maturity of beer market induced lower prices
Opportunities
Some of the opportunities for Redhook, was their involvement in the community, the major beer distributor promoting the product and the visitor tours. Redhook faced the threat of Anheuser-Busch taken over due to them being such a major distributor. Also, the other Craft beer distributor stayed within their territory, therefore having their community support.
Opportunities
Customer Need
Unfulfilled customer need and awareness
Technology
Arrival of new processing technology
Distribution
Regional national distribution
Profit
Exporting to Foreign nations
Growth
Development of new markets
Introduction of new products
Threats
Changes in external environment
Competition
Increase trade barriers
Sales decline
Shift in customer product use
Shift in customer taste
Substitute products
Emergence of new products
New regulations
Highly regulated by government
Core Competencies
Redhooks main core competency is that they obviously brew premium, high quality craft beer. They have a good grasp on what they want to accomplish in the beer industry, we are not sure if they have the ability to do so with so many competitors in such a small market. We also think the Redhook home page is a nice touch. Anyone remotely interested in Redhook can find out anything they want to know about any of their products, brewery tours, or Redhook sponsored concerts on the home page. Customers can even take classes on brewing through Redhook University. We think this is a very innovative and refreshing idea.
Core Competencies Distinctiveness
Refused to pasteurize – reduced shelf life
Taste