Start-up Beer Company Plan, Essay Example

Company

Bold Beer Company is a privately held organization that aims to differentiate itself from the competitionon both the taste as well as innovative features of its products. The company’s beer is sold in patented ‘cool-can’ aluminum containers that keep contents cold for up to six hours.

As indicated above, the company is privately held and the management raised start-up capital from the private equity funds in return for a 40% stake. The management doesn’t plan to take the company public for at least another ten years so that it cancontinue to focus on operations and not be distracted by the short-term expectations of the market regarding financial performance. The involvement of private equity funds has also been beneficial because private equity funds are usually run by entrepreneurs who have experience helping start-up companies navigate successfully through the struggles of their early years and manage their limited resources efficiently.

The disadvantage is that sometimes the private equity managers become a distraction through their continuous interference and affect the ability of the management to perform with absolute authority. In addition, it is also possible that the management may have sold the initial stake too cheaply if it underestimated the future growth potential of the company. The management has also been avoiding debt-funding because the financing costs will be a drag on the company’s profitability and may also hurt operational liquidity.

The company’s mission is to provide our customers with quality beer in an innovative packaging to maximize their drinking pleasure. The company strives to be a place where its employees feel at home and are excited to work at.The management also plans to increase sales by at least 10 percent each year.

Marketing

The company targets its customers primarily on lifestyle basis. The company is pursuing a nationwide distribution policy because beer is one of the America’s favorite recreational beverages and, thus, the size of a market is not a concern. The market is big enough to support multiple players of various sizes and still allow all of them to be profitable provided they execute their strategies well and operate efficiently.

Our targeted market segments are college students, sports fans who arrange viewing parties, beach enthusiasts, and consumers who enjoy outdoor activities, concerts, live sports events, and picnics etc. We know from personal experiences that cold beer is often sold at huge margins at places like stadiums, beach, and picnic spots because consumers want cold beer and they don’t have any choice but to pay the high price. Even though, we charge a 25% premium as compared to the competitors’ products, our pricesare still a great value. We emphasize the fact in our marketing promotions that our customers actually save money while getting convenience at the same time. This is because since our beer remains cold for up to six hours, so our customers do not have to buy their drinks from the street vendors. They are able to enjoy the beer in places where they may be no retail presence and our customers also save on the costs of ice. We coverall of these facts in our ads, in both electronic and print media.

Customer samples and trials are an important aspect of our overall marketing strategy because nothing is as effective as practical demonstration. We send representatives to concerts, stadiums hosting games, tourist areas, beaches, and picnic spots. Social media is also an important part of our overall marketing strategy and we have both Facebook and Twitter accounts for our product. We primarily distribute our products through retail chains and convenience stores but continue to explore other possible distribution channels.

The company has positioned itself on the quality of its product and the convenience to the customers instead of price. We emphasize the overall consumer experience and remind our consumers that in some instance, our products are better value despite higher prices.

Competition

While the beer market in the U.S. is highly competitive, we have not seen many innovations in the case of packaging. At our heart, we are a beer company but we seek to differentiate ourselves on other elements as well such as innovative packaging and greater convenience to the consumers. MillerCoors LLC did come up with a packaging in 2007 that turned blue when the beer was cold (Denver Business Journal) but it was more a temperature indicator rather than temperature preserver. Thus, we entered the market with a novel idea that has the potential to fulfill a long unmet need and earn significant profits in the process. Our beer comes in a container made of aluminum with patented cool-temp indicator which tells the customers the remaining time they can expect the content to remain cool and as of today, no other competitor offers a packaging with similar features.

Overall, the beer industry could be classified as an Oligopoly in which there are few large players such as Anheuser-Busch, MillerCoors, and Pabst Brewing Co. and numerous small players such as BigSky Brewing Co. and Stevens Point Brewery Co. (The Brewers Association).  

Globalization

Globalization has created both opportunities as well as intensified the competition. The opportunities lie in the area of supply chain and Bold Beer’s management has been exploring opportunities abroad to produce its patented aluminum packaging more cheaply because it constitutes a major portion of the overall product cost. But the competition has also intensified due to lower trade barriers and the internet which has made it possible to increase brand awareness for international market players such as Corona and Heineken.

Globalization has forced the management to continuously seek opportunities for cost reduction and operational efficiency because many inputs such as rice can be obtained more cheaply from countries like India. It has also become more difficult to obtain reliable distribution partners due to the sheer number of competitors competing for shelf space. This has transferred significant negotiation power from small players like Bold Beer to the retailers which is why the company is trying to differentiate itself through innovative packaging and increasing brand awareness among the consumers.

SWOT Analysis

Strengths: One of the company’s main strengths is its products’ features including taste and specifically packaging which is the only one of its kind in the industry. In addition, the company has low debt which helps it to have a healthy liquidity position. The company is still private which helps it focus on long term goals instead of being distracted by annual financial targets.

Weaknesses:The weaknesses include size of the company which puts it at a disadvantage against the competitor with higher efficiencies of scale and better distribution networks. Another weakness is its low brand recognition though that is also due to the company being young. The management has been trying to increase brand awareness in a number of ways including social media and sending marketing reps to college campuses etc.

Opportunities:There are tremendous opportunities in international markets but the management wants to go for controlled expansion. The management does expect to expand overseas but before that it wants to establish itself in its home market. The company can also increase revenues by expanding into other product lines such as sports and energy drinks that would be able to take advantage of its patented aluminum packaging.

Threats: The main threats are from international players that would further increase the competition and drive profit margins low. There is also a possibility that a competitor comes up with a revolutionary packaging technology of its own. Similarly, it is possible that the private equity stakeholders force the management to go public earlier, causing disruption in some of the long term plans.

References

Denver Business Journal. MillerCoors unveils new cold-can technology. 2 May 2011. 19 November 2011 <http://www.bizjournals.com/denver/news/2011/05/02/millercoors-unveils-new-cold-can.html>.

The Brewers Association. Brewers Association announces top 50 breweries for 2009. 14 April 2010. 29 November 2011 <http://beernews.org/2010/04/brewers-association-announces-top-50-breweries-for-2009/>.