Lager Market Analysis

Lager Market Deep Dive – PESTLE, Porter, SWOT

The lager market is a dynamic segment of the global beverage industry, with a wide variety of products and a range of offerings that cater to different tastes and trends. Craft brewing is a growing phenomenon, and as it does, established lager brands are looking to maintain their relevance while also competing with the new offerings from craft brewers. The lager market is influenced by many factors, including changing consumer tastes, health concerns and the growing demand for premium and artisanal products. Also, the impact of the growing emphasis on sustainability and the environment is shaping the production and packaging methods used in the brewing industry. The lager market is on the cusp of a major transformation, as consumers seek out new and authentic flavours and experiences. This is both a challenge and an opportunity for both established players and new entrants.

PESTLE Analysis

• Political:
  In 2023, the beer market is influenced by a number of political factors, such as the state regulations relating to the manufacture and sale of alcohol. For example, the European Union has passed a directive stipulating a minimum tax of 10 cents per liter on beer, which has an immediate impact on the pilsner brewers' marketing strategy. The United States of America has imposed stricter labeling requirements for alcoholic beverages, which imposes a duty on manufacturers to list the ingredients and nutritional content of their products. The breweries are obliged to list the ingredients and nutritional content, which is a problem for more than 10,000 breweries.
• Economic:
  In 2023 the brewing industry will be characterized by a volatile raw materials market. The price of barley, which is a key component of brewing lager, will be 250 € per ton, which is an increase of 15 % compared to the previous year due to adverse weather conditions and crop yields. In addition, the rate of inflation in the world is expected to be at a level of 3. 5 %, which will affect the spending habits of consumers and will lead to a shift in the consumption of lager towards cheaper brands, which will affect the volume of sales.
• Social:
  Social trends in 2023 showed a growing preference for craft brewers’ beers. In the United States, approximately 40% of beer drinkers preferred craft brewers’ beers to the mass-produced varieties. The craft brewers’ beers, which were sought after for their unique taste and local provenance, had a strong following. The craft breweries, which employed approximately 150,000 people in the United States, were small, family-run businesses. The health-conscious consumers’ growing preference for low-calorie and low-alcohol beers had also forced the beer producers to diversify and expand their range of products.
• Technological:
  The brewing industry is one of the most important sectors in the brewing industry, especially in terms of technological progress. By 2023, over 30% of breweries had adopted automatic brewing methods, which greatly improved the efficiency and consistency of production. In addition, the use of data analysis in the operation of beer-making was also increasing, and by 2023, more than one quarter of the beer industry had introduced data analysis methods to optimize the supply chain, reduce waste, and increase profits.
• Legal:
  In 2023 the legal factors influencing the beer market were: The ban on advertising and the ban on the sale of beer. The U.S. government has fined companies that have advertised their products incorrectly over five million dollars. Besides, many countries have made the verification of the age of their consumers buying alcohol on the Internet stricter, with fines up to one hundred thousand dollars, which forces beer producers to be very careful.
• Environmental:
  In the beer market, the issue of the environment is becoming more and more important, and the concept of sustainable development is gaining importance. By 2023, 60 percent of pilsner producers have agreed to reduce their carbon footprint by using alternative energy sources such as solar and wind energy in their operations. Using water in the brewing process is also being discussed, and the average brewery is aiming to use a maximum of ten liters of water per liter of beer.

Porters Five Forces

• Threat of New Entrants:
  The beer market in 2023 faces a moderate threat of new entrants. The craft beer movement has lowered the barriers to entry for smaller breweries. However, the capital investment and regulatory burdens remain considerable obstacles.
• Bargaining Power of Suppliers:
  Suppliers on the lager market have little bargaining power. The market is characterized by the wide availability of raw materials such as barley and hops, which are readily available from many suppliers. Large breweries often use their buying power to negotiate favorable conditions.
• Bargaining Power of Buyers:
  High—The buyers in the Free Market have great bargaining power, and this is due to the great variety of goods available to them. There are a great many kinds and brands of beer. The consumers can easily change from one to another, and the companies are thus forced to compete with each other as to price, quality, and brand loyalty. This gives the consumers considerable influence over the prices and the quality of the products.
• Threat of Substitutes:
  The threat of substitutes in the lager market is high, because consumers have a wide choice of other alcoholic beverages, such as ale, cider, and spirits. Moreover, the growing trend towards non-alcoholic and low-alcohol beverages increases the threat of substitutes as health-conscious consumers are increasingly seeking alternatives to traditional lagers.
• Competitive Rivalry:
  The competition in the lager beer market is fierce, with many established brands and an ever-increasing number of small breweries competing for market share. The resulting competition is driving innovation and marketing, as companies try to differentiate their products and capture consumers’ attention. Price wars and aggressive promotions are common, as companies try to maintain or increase their market share.

SWOT Analysis

• Strengths:
  • Strong brand loyalty among consumers for established lager brands.
  • Diverse product offerings catering to various taste preferences.
  • Robust distribution networks ensuring wide availability.
  • Growing popularity of craft lagers enhancing market appeal.
• Weaknesses:
  • High competition leading to price wars and reduced profit margins.
  • Perception of lagers as less innovative compared to other beer types.
  • Dependence on traditional brewing methods may limit scalability.
  • Vulnerability to changing consumer preferences towards healthier options.
• Opportunities:
  • Expansion into emerging markets with growing beer consumption.
  • Increased demand for low-alcohol and non-alcoholic lager options.
  • Potential for product innovation through unique flavors and ingredients.
  • Collaboration with food and beverage sectors for pairing promotions.
• Threats:
  • Rising health consciousness among consumers impacting beer sales.
  • Regulatory challenges and taxation affecting production costs.
  • Intensifying competition from craft breweries and alternative beverages.
  • Economic downturns leading to reduced discretionary spending on premium products.

In 2023, the beer market is characterized by strong brand loyalty and a wide range of products, which are considerable advantages. However, the market is also faced with the challenges of competition and changing consumer preferences. Opportunities to grow lie in the demand for new products and in emerging markets, while the threat of health trends and the impact of the economy on sales could have a negative impact on the beer market. The breweries must build on their strengths and explore new opportunities while also being aware of the competition and the threat of competition.