d regional brewers. Product characteristics vary among the markets. In the national market the beer is highly standardized and heavily advertised. The beer is inexpensive. There is some product differentiation in the market with the broad product offerings that the national brewers can give. ex. Light beer, Amber beer, Low Alcohol, And Malt Liquor. Imports are perceived to be better quality: when in fact, they are really not. Because of this perception, Import beer costs more than domestic beer does. Imports are differentiated by taste and packaging. Small brewers offer a superpremium product that is not very differentiated. The main differences can be attributed to the brewing process, price, and packaging. Scale economies is high among national companies due to their large size. Their ability to distribute fixed costs is easily done because of the large volume that is produced. Their is also economies of scale in product extension and brand proliferation. Regional companies have moderate economies of scale. Regionals do not produce as much as larger natioanal companies but, they can still spread some of there costs over their moderate volumes. Local brewers have low economies of scale. Production is so small that it is very difficult to distribute costs. A local brewer cannot spread the cost of advertising over their product without having to raise the price of their product considerably.Capacity utilization in the U.S. Beer industry is between 75% and 85%. The beer industry is suffering from overcapacity. Despite this, a few companies are still expanding while others are closing down some operations. Because of flat sales, their is no need to overproduce.Industry Profitability is decreasing due to heavy taxation and a declining market. Beer is one of the most heavily taxed consumer products. There largest cost in the price of beer is the tax that is placed on it by local and state governments. The industries p...
