Blue Moon Beer Case Study Solution

Situational Analysis

Background

China is considered one of the largest exporters of beer in the world as a result of several popular local brands which include Snow Beer and Tsingtao Beer. Moreover, China has been brewing Beer since 7000 BC, and the first beer crafted by China was the Lao Li, a rice beer offered in the Xia and Zhou Dynasty. Lao Li was replaced by Huangjiu which was known as yellow wine, which included rice, millet, sorghum and wheat as the main ingredients. Interestingly, many people are still drinking Huangjiu but the lager beer i.e. the modern local beers specified above has replaced Huangjiu in the 19th century.

At the end of the 19th century, the European immigrants visited China and shared their expertise in beer brewing which resulted in the establishment of various beer brewing companies and brands among which Tsingtao Beer and Manchuria Beer were the most popular(Mentalich , 2020). Moreover, from 2013-2017, beer amounting to approximately 92.5 million dollars was imported by foreign countries to Beijing. (Statista , 2020) This is due to the fact that the number of young, high-income urban professionals is high in Beijing city of China. (DCCI, 2019)

PEST Framework

In order to analyze the external environment for Beijing, the PEST framework has been used.

Political:The global beer brewing industry requires a large amount of government regulation. Brewers can be regulated by the federal government, state governments, and localities.In addition, the wine and beer production in China has to comply with stringent regulations which include National Food Safety Standards, National Heath commission and Ministry of Health (SUO, 2019). As a result of the U.S. – China trade war, China faced 39% import duty on beers which affected the beer industry (Wang, 2018) as China is a large importer of Beers from U.S. (Wright, 2015)

Social:The beer market in Beijing has huge growth prospects considering, Beijing’s population comprises of the high number of millennials and people with high income which prefers high-quality craft beers with specialty flavors and sophisticated taste over the local lager beers. This has resulted in increased demands of beer in Beijing. (Agriculture and Agri-Food Canada, 2019)

Economic:It is expected that the China Beer market will grow by 2.3% annually in the next four years. Moreover, the average per capita consumption of the beer market appears to be 29.9 L in 2020(Statista, 2020). In addition, Beijing is a key tourist destination for both domestic and international tourists (Market Line, 2019)therefore, launching the beer in Beijing has huge growth prospects as the tourists will be visiting the local breweries.

Technology:The beer industry relies heavily on technology to develop and refine distribution channels. Without this technology production and distribution of beers will be difficult.However, as Beijing is the innovation hub and a technological center with over 9000 tech firms, it is likely that advanced technology will be used in the brewing process of beers and in using effective distribution channels. (Jing, 2018)………………………….

 

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