Accounting Essay Example

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Accounting 3

What has happened?

People are reducing on the amount of beer they take since 2008 but the consumption of wine has been on the rise according to Australian Bureau of Statistics (ABS). Australians are also drinking fewer premixed drinks annually though consumption of cider and spirits has risen over the five years. However, Australians are generally drinking 56 fewer standard alcoholic drinks annually than in 2008. Craft beer has also become increasingly popular with brewers and consumers as mainstream beer consumption declines thus threatening the mainstream beer market. This has caused the number of breweries to increase from 25 small breweries to 160 of them dealing with craft beers. The same changes have taken place in China’s beer market.

What has caused the change?

The changes in the alcoholic drinks market have resulted from the distinct flavors provided by craft beers Produced by smaller breweries with an aim of reclaiming the market from the larger beverage makers. This has caused a change in consumer taste according to Chuck Hahn of Malt shovel Brewery. The consumers now taste beer as opposed to drinking a lot of it and are not just seeking easy to drink larger. They want beers with more distinct flavors and malty.

The key stakeholders

The key stakeholders in the industry include

  1. The big brewers – these mainly deal with the production of traditional mainstream beers and have of late faced intense competition from craft beers that are known for their unique taste. They include Carlton& United breweries and Lion.

  2. The smaller breweries which are mainly involved in the production of craft beers and have posed a great threat to the mainstream brewers. They include such brewers as coopers and Murray’s craft brewing.

How the stakeholders are affected

The craft beers have brought a revolution in the industry and his has really affected the big brewers. The market sizes for the mainstream beers have been shrinking while that of craft beers has been rising. This has triggered a war between the big brewers trying to maintain their market margins and the smaller brewers trying to reclaim the market currently held by the big brewers. Some of the strategies employed by the big brewers to the disadvantage of the smaller brewers include;

  1. Craft brewers are being locked out of clubs and pubs by the biggest beer makers which drinkers may not understand while it may not be easy to convince the completion watchdog.

  2. The two big brewers CUB and Lion in a bid to chase the strong profit margins and sales growth in the craft beer market have acquired some well known brands including Stella Artois, Corona, Matilda bay and Cascade among others. This has the effect of intensifying competition for the smaller brewers.

  3. The big brewers have gained almost full control of beer taps in pubs and clubs in addition to other unfair trade practices to keep the smaller brewers out of the market while consolidating their market positions.

  4. In addition, the entry of Coca-Cola Amatil in the market is expected to further intensify completion in the market.

All the above factors have affected the smaller brewers negatively by denying them chance for fair competition in the market. However, the competition authority is investigating the alleged unfair trading practices by the big brewers.