Boston Beer Company

Boston Beer Case

Introduction:

This case presents a dilemma where the business Boston Beer Company (BBC), is at a position where they must re-evaluate their product line due to the loss that has been incurred and declining sales. The company has many key elements that must be considered as to the decision to be made in the future. This case describes the events of BBC as they delved into the craft brew industry upon formation and established themselves in the beer market. Due to the diminishing industry BBC has been forced to consider possibilities of change that could be undertaken in order to successfully continue in the overarching beer industry. This case can be viewed as a problem-solving case, as we are faced with the dilemma of falling sales and growth. The aspects that must be considered are whether Lightship should be repositioned, or whether it requires greater recognition through marketing efforts. In addition, they could choose to introduce a new light beer, but they would have to reconsider the existence of Lightship in the product line. The decision for the new light beer would entail its own positioning, marketing, pricing and other issues.

Analysis:

Lightship, BBC’s existing light beer, had initially been quite successful despite its minor contribution overall to BBC. Recently, however, Lightship had dropped dramatically in sales and believed that it wasn’t providing enough sales to provide a return on its investment. While the light beer market has been growing and presented itself as an attractive opportunity it is key to consider whether Lightship could be rebranded or repositioned with which to enter the market, or if a new brew should be introduced. BBC has demonstrated that is could effectively establish itself in the craft segment, as Boston Beer and over the years has maintained a significant share of the specialty market as forerunner from 1990 – 1997, as it captures approximately 25% of the market. Not only does this indicate successful market integration, but it demonstrates that it is clearly seen as the major recognizable brand in this segment. In Exhibit 1 it is evident that while the craft brews market is growing, it is comparatively the smallest market in the beer segment. Light beers represent a very large segment that appears to be experiencing growth in sales. This is what is sparking the opportunity to expand the product line into light beers. It is key to note that Koch has established the craft brews segment along with its definition as, “full-flavored beers… without such adjuncts as rice… used to lighten beer for mass production and consumption”. It is vital that the position of the company with regards to light beer is evaluated, as this definition seems to contradict the very essence of light beers, which could lead to conflict. In addition, the view of the company in consumer eyes is key as they may feel betrayed or hostile if they align the company with these values. Another issue that sparked doubt was the diminishing growth in the industry overall, as the light beer industry was experiencing growth in the double digits. There are many factors to consider.