esAnheuser Busch of the US has twice the capacity of any European brewer. AB could use its vast economies of scale, or its financial resources to acquire an established European brewer to enter the market.- Product DifferentiationHarp Lager held 80% of the lager market in Ireland before Budweiser and Heineken launched massive brand building campaigns . Global brewers can spend large amounts to differentiate their brands from local brews. This strategy could be used by a non-European brewer wishing to gain market share.- Access to Distribution ChannelsA new beer would have to displace European brands from supermarket and bar shelves. Ownership of the distribution chain by existing brewers would make it difficult to achieve this. The power of retail chains would enable a new entrant to deal directly with them their buying power would give any new entrant significant economies of scale. - Government PolicyThe UK government has moved to limit the concentration of companies in the top end of the brewing industry - this offers a level of protection to British brewers against foreign rivals. - Expected Retaliation European industry growth is slow- UK production is to fall by 1 million barrels over 5 years - a new entrant could damage the financial position of European brewers. Supplier Power- The brewing industry is an important customer of European grain producers- if beer sales fall, sales of grain also fall- it is in the best interests of the producers to promote reasonable pricing. Switching costs for the brewers are also low- it would be easy for the brewers to source grain elsewhere. Buyer Power- The retailers market share is now 60% across Europe. 13% of the beer sold is own-label beer . Retailers can source these beers from any brewer, placing downward pressure on the price paid to brewers.- The opportunity to integrate backwards by retailers is low, so retailers cannot use that threat to push down price.- Co...
