Management Case Study – Beer, Breweries, and Bottled Water

3/5   in the series Management Case Studies

This case study scenario is designed to help students and younger engineers build business problem-solving skills through engineering scenarios. While created to mimic real-life situations, this scenario is hypothetical and for educational purposes only.

Scenario

The client, one of the world's largest brewing companies, is a leading beer brewer in the United States with many well-known brands of beer being sold in numerous grocery and liquor stores. For the last 10 years, the client has been experiencing stagnant sales and flat profits in an increasingly competitive industry. Therefore, the senior management at the client's headquarters is trying to evaluate every possible growth opportunity. The client is facing increased competition from microbreweries and has already explored ways to penetrate the international market. However, this alone will not enable them to meet their current goals of increasing both sales and profits by 200% within the next five years. The following are key problems and issues that the client brought to your consulting firm to develop various growth strategies: ? The client's Chief Marketing Officer (CMO) has noticed a steady and substantial increase in the consumption of bottled water products in the U.S. ? Believing that the assets required to produce bottled water are very similar to that of beer (in terms of supply chain), the CMO wants to recommend to the CEO that they begin production of bottled water products. The CMO has asked your firm to help build the case for why they should enter the bottled water market to achieve their sales and profit goals.

How do you develop the business case for him?

What recommendations would you have for this company?

Comment below with your recommendations, or ask any questions.

Comments

Nemoy's picture

I laughed for sure at your comments about 200% by 5 years. If the client says it, aren't we supposed to smile, nod and just do it? :-) All jokes aside, with so many new water related products, flavored water, flavors for water, I think an acquisition would be the best angle for their already established market and brand. On a side note, I did try looking briefly if a brewery company owned any bottled water brands. A few years ago, Anheuser-Busch distributed Icelandic Glacial Water in the United States.

rani diksha's picture

wooo..seriously ...achieving 200% profit in 5 yrs.... :) . .. still in my opinion .. their core competency lies in production of beer. for the water bottle production they need to get a strategy .. first they should check their new strategy at small-scale and then go for any changes

Ankur Sahni's picture

As per me the question is to why the beer company should enter the water market and not to debate that one should enter the market or not:- hence i would like to say

1. Since water is a basic necessity for life, so majority will go for it.

2. Next not everyone is alcoholic so by entering into this market we are catching a hold on non alcoholic too.Now, obviously here comes the relevance of the pointer as said by Nemoy that research would be required and bring in the flavoured waters to hold a bigger chunk of market.

3.Since i being from the same industry, know the costing of manufacturing of beer- which obviously will be way less the bottling of water, hence we cut on the costing too. But one should focus on "Volume Business".

4.Moreover you get easy sellers for it since you cut down on licensing part which is very stingy (in India especially not sure about States)