Environmental Analysis
Contemporary Issues in Leadership and Management
Introduction
"Diageo PLC is a British multinational alcohol company, selling alcohol in 180 countries, with a substantial presence in 30 countries. The company was created in 1997 by the merger of Guinness PLC with Grand Metropolitan PLC (GrandMet)" (diageo. com). At that stage, it was a large multinational with interests in food as well as drink. Today, the company has shed most of its food interests to concentrate on alcohol, acquiring new spirit brands. Diageo engages in the manufacture and distribution of spirits, wines, and beer worldwide. With a collection of outstanding brands, Diageo is the world's leading premium drinks business. The company manufactures its products under names of Smirnoff vodka, Johnnie Walker Scotch whiskeys, Guinness stout, Baileys Original Irish Cream liqueur, J&B Scotch whiskey, Captain Morgan rum, and Tanqueray gin. "Diageo PLC operates in more than 180 markets across the world with over 20,000 employees, a market capitalization of 1.5 billion and turnover of 8 billion" (diageo. com).
Diageo projects an image of itself as a clean, friendly and ethically oriented company with a commitment to corporate social responsibility. This includes both a professed concern with the harm alcohol can cause, and statements about what a great service the company is providing by producing such well-loved brands.
We have selected Diageo to conduct an environmental scan of the industry and remote environments to identify potential opportunities and threats that may arise in the near term. We will describe and evaluate our findings and provide recommendations for responding to the issues and opportunities that we have found in the environmental scan. Our assessment includes the following:
Availability of substitute products and threats of new entrants and competition
Diageo has long been the front-runner in the premium drinks business. Its brands include Guinness, Smirnoff, Bailey's, Johnnie Walker, and Cuervo complimented by broad range of local and specialty brands from around the world. In 2002, Diageo held a 15% (United States-Spirits, 2002) market share and was by far the leading manufacturer of spirits in the United States followed by Pernod, and Fortune Brands, Inc. The market is expected to have 9.8% (Huddleston, 2005) growth in the next three to four years, so new entrants may find the going hard unless they have capital to sustain themselves.
The ready to drink (RTD) market is an industry sector that has good growth potential and room for competition because it has not been saturated with products.
Market penetration involves with entering a new market with an existing products (Ansoff, 1957). Red Bull can make changes in the products they offer by introducing different flavours and non-caffeine drinks to penetrate the new market. This diversification of products will show their innovative skills to their customers. The company should improve their existing product and use market research, product adaptation analysis, and legal review to seek expansion for the existing products (McDonald, 2007).
The aim of this report is to examine Innocent Drinks position within the market and to see how their position of strength can be built upon, both in the current market and any potential new markets.
Diversificationthey have recently entered into other industries to achieve more growth such as the Philip Morris Capital Corporation. This is an investment company whose portfolio consists of leveraged and direct finance lease investments and other tax-oriented and third party financing. Altria also has 28.6 percent interest in SABMiller, which is the world's second largest brewer (Altria, 2008).
As stated in the case, “the market for energy drinks was growing; between 2010 and 2012, the market for energy drinks had grown by 40%. It was estimated to be $8.5 billion in the United States in 2013 [and] forecasts projected that figure to reach $13.5 billion by 2018” (pg 5). However, much of this market’s revenue -- 85% in fact -- is dominated by five major brands, while the remaining 15% is split between approximately 30 regional and national companies. (pg. 5). With this saturated market, it might not be best for Crescent Pure to enter as a completely new product to the industry, as there is the possibility that it will be squeezed out of the profit shares by more established brands -- especially if it is not properly secure in its identity. In addition, while the market for energy drinks appeared to be growing at an exponential rate compared to the market for sports drinks -- which increased only 9% in five years and would be at approximately 60% of the rate for energy drinks in 2017 (pg 6) -- the consumers appeared to be wary of partaking in the market for several reasons, which would potentially harm the reach of Crescent Pure. These concerns included rising news reports discussing the safety of energy drinks (pg. 5). Taking into consideration the data provided in the case that concerns reasonings of why consumers choose specific drinks over others, there
Monster Beverage Corp. shows that they understand their customers’ needs. They are a successful business with higher growing revenue every year. Their revenues did decrease during the economy’s recent recession (2008...
Technological change, change in economic climate, natural occurrences and such-like are matters that concern the macro-environment of a business. These external, uncontrollable, influences can and will impact hugely on the success or failure of a business. One of the tools that are applicable in considering these factors is PESTLE. Political; Environmental; Social; Technological; Legal and Economic considerations will need to be engaged in order to prepare the business for macro-environmental influences. For this reason, PESTLE will be the most appropriate tool to use to identify and outline the main macro-environmental factors that may affect my business.
Compared to the industry as a whole, Mondavi is not responding to the changing marketplace and demands. While there has been some growth in the ultra and luxury premium market segments, the explosion in the last 15 years had been in the popular premium ($3-7 per bottle) and super-premium ($7-14) sector. Mondavi’s own Woodbridge offering is responsible for 76% of its case volume and 57% of its revenue as of 2001, but seemingly exists in isolation amidst all the high-end offerings from the company. Competitors that have established themselves in jug wine, beer, and other spirits are taking advantage of their sales volume and migrating upward. While E&J Gallo, Constellation, and the beer producers may not have the reputation for quality and craft that RMW possesses, their substantial financial weight has allowed them to develop or purchase brands that could compete in the higher altitudes and price segments. Meanwhile, competitors with similar histories in premium winemaking are taking advantage of lower production costs to horizontally integrate, acquire land, and build new wineries in different countries, as Kendall Jackson has done with the Villa Arceno (Italy) and Yangarra Park (Australia) wines.
aspects: Carbonated soft drinks industry's structure, evaluation of driving change factors in this industry and finally analysis of key strategic factors it is faced with.
The brewing industry was once held to competition among many breweries in small geographic areas. That was almost a century ago. The U.S. brewing industry today is characterized by the dominance of three brewers, which I will talk about in this paper. There are many factors today that make the beer industry an oligopoly. Such factors include various advancements in technology (packaging, shipping and production), takeovers and mergers, economies of scale, barriers to entry, high concentration, and many other factors that I will cover in this paper. Over the course of the paper I will try to define an oligopoly, give a brief history of the brewing industry, and finally to show how the brewing industry today is an oligopoly.
Diageo is a relatively new company that was created in its current state 1997 as a result of a merger between Guinness and Grand Metropolitan (a property conglomerate headquartered in England). Diageo is most well-known for acquiring high end brands of spirits, wine, and beer and successfully marketing
After 1996, the U.S. beer industry had consistent growth with about 3,500 brands on the market in 2002 (Alcoholic Beverages, 2005). The U.S. exported beer to almost one hundred countries worldwide. The beer industry peaked production with 6.2 billion gallons in 2003 (Alcoholic Beverages, 2005). The U.S. beer industry haws over 300 breweries. However, this industry is dominated by three companies: Anheuser Bush (45% of the industry), Miller Brewing (23% of the industry), and Adolph Coors (10% of the industry) (Overview of the U.S. Beer Industry, 2005).
Strives to be the leader in micro brewing while maintaining the core values it started with and had employee buy in even before it went” 100 % employee owned in2013” (Gorski, 2013).
The beverage industry is highly competitive and presents many alternative products to satisfy a need from within. The principal areas of competition are in pricing, packaging, product innovation, the development of new products and flavours as well as promotional and marketing strategies. Companies can be grouped into two categories: global operations such as PepsiCo, Coca-Cola Company, Monster Beverage Corp. and Red Bull and regional operations such as Ro...
The five segments are Micro Brewery, Brewpub, Farm Brewery, Regional Brewery, and Macro Brewery. Heineken falls under a Macro Brewery, which means that it is too large or “economically diversified” to be considered a Micro Brewery. Four of the largest brewing companies - Anheuser-Busch InBev, SABMiller, Heineken International, and Carlsberg Group - controlled 50% of the beer market share in 2012. Over 7% of the beer market share has changed over in the last five years from large brewers and importers to smaller brewers and importers, and the rise of these small brewers makes the beer market in the U.S. a highly competitive industry. Heineken went from a 4.0% market share in 2009 to a 3.9% by 2015. Since microbreweries and craft beer companies were more publicly recognized, a slow decline has happened with larger beer brands, such as Heineken. Because of the economic recession, individuals started purchasing their produce locally. This included alcoholic beverages, which lead to the rise in popularity for craft beers. However, this was a downfall for mass produced beer. Craft beer offers drinkers a new culture and community with conventions worldwide, such as the American Craft Beer Week, societies, and even ‘Beercations’. Limited edition beers allow people to compete and collect, which is unlike anything seen before in the mass-created beer industry (Craft Beer Culture Podcast,
The 10 major products of the soft drink industry are produced by Pepsi and Coca-Cola in America. According, to a news post on NBC from research from 2010, of no surprise number one is Coca-Cola. Most Americans prefer Coke products over Pepsi. Number two is Diet Coke. Many people look to drink Diet Coke because it is the “healthier” version of the loved Coca-Cola. Number three is Pepsi. Next is also by PepsiCo which is Mountain Dew at number four. Dr.Pepper is number five and this is very surprising because I don’t see many people drinking it as much as all the other drinks. Sprite is number six in the ten major products. Number seven is Diet Pepsi with Diet Mountain Dew being number eight. I don’t remember seeing many stores selling Diet Mountain