Essay About Threat Of New Entrants And 1950S Beer Brewing Industry

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my name is maryam a student of business and interested in joing your website i did a degree in business before and want to study banking in future. i have worked in bank before in pakistan. Threat of new entrants: New entrants to an industry can raise the level of competition resulting in a reduction in its attractiveness. The threat of new entrants heavily depends on the barriers to entry within that industry. The following are barriers to entry that existed in the 1950s Beer Brewing Industry. The US brewing industrys distribution was from producers to consumers through wholesalers and retailers. There were number of producers and sellers of beer so caused product differentiation through brand creation and building brand loyalty. That was largely done through advertisement, segmentation and packaging. Government Policy was not much interfered but several regulations regarding the brewing of beer in the 1950s applied. Economies of Scale for a standard brewery cost around 250$-300$ million. In the 1950s the MES (Minimum Efficient Scale of output) was only 100,000 barrels output per year. In 1970s this had dramatically increased to 5,000,000 barrels. Hence capital requirements in the 1950s were much smaller than in the 1970s and after. Threat of substitutes: There was overall a minimum pressure of substitutes. Little pressure through different intensity depending on type of products, like strong pressures were produced by meal beverage from wine. Whereas, moderate pressures were produced by thirst quenching beverage like soda and water. Very weak pressures were produced through social beverage like mixed drinks and soft drinks. In 1945, only 3% of the beer produced in the United States had been canned. Bottled and kegged beers were sold the main market share. The brand effects lead the popular beers share of volume had decreased from 86% in 1947 to 58% by 1970. Customers can switch their choices in a same segment of domestic beers. Since 1945, off-premise outlets share of beer volume had increased from 42% to 67% that had a little increased substitutes threats to local smaller brewers.