PESTLE Analysis of the UK Brewery Industry Essay

PESTLE Analysis of the UK Brewery Industry

The macro-environment of the UK brewing industry are the major external and uncontrollable factors that influence its operating organization’s decision making, as well as its performance and strategies. To identify and assess its key factors, using the PESTLE framework will provide a comprehensive list of influences and key drivers in six main categories, which are: political, economic, social, technological, legal, and environmental. This method allows businesses to consider and explore how their external environment might change so that they are prepared if things should change.

PESTLE analysis of the UK Brewing Industry
Political

Changes and reforms of Licensing Laws in line with Government policy

Relaxation of opening hours and late night opening

National minimum wage increase affecting salaries and wages

EU influence and legislation regarding measures of drinks

EU and National Government guidelines regarding health

Local and National Government concerns regarding negative aspects of ‘binge drinking’

Budget increases in duty on alcohol

Government plan to increase taxes equating to around £8million

Increased duty on beer to 9% and inflation by 2%

Economical

National and international economic downturn means people generally have less disposable income for socialising

Rise in staff wages due to National Insurance and Minimum Wage increases

Cut price offers for alcohol in supermarket promotions

Increases in transport costs in line with Fuel pricing

Steadily falling employment

Pubs create 18 jobs per pint than the supermarkets who only create 3

Rising costs of energy, food tax and employment

Social

Culturally pubs are the centre of social life, place to meet friends and for locals to socialise

Easily accessible as pubs are generally situated close to Town Centres or on main routes

Localised venue known for gigs, live music, themed nights for younger consumers

Demographically increased local student population

Media concern with negative aspects of ‘binge drinking’

Increased awareness of health concerns

Increased advertising on mainstream media of consuming alcohol responsibly

Wider choice and taste of alcoholic drinks in supermarkets for consumers

Technological

Developments in delivery of cold beers and chilled ale

Development of wide range of flavoured alcoholic drinks

Local interest in nightlife promoted via multi-media, websites, blogs and social networking

Advertisements for alcohol awareness and responsible drinking on mainstream media

Increased advertisement for alcohol brands via multi media

Legal

Smoking Ban

Stronger enforcement of underage drinking regulations on local and national level

Changes in Drink Driving Laws

EU legislation on measures of drinks served

Environmental

Recycling

Waste, litter, refuse produced in local area

Transportation and delivery costs of goods

The Macroeconomic Environment??
Key Drivers
The Changing Nature of the Competitive Environment
Present a Five Forces analysis of the competitive environment of the UK beer industry and discuss the changing nature and effect of these forces (30 marks)
The brewery industry is highly competitive and highly saturated business. There are a number of forces at work here all of which can provide an insight into how appealing the brewery industry is, in terms of whether it is the type of industry to enter or leave; if there is room to exert any type of influence and how the competitors within this industry affect its performance (Johnson,2009). To help provide an analysis of the brewery industry and develop a business strategy, using Michael E. Porters Five Forces Model will determine its competitive intensity or attractiveness of a market.

Porter’s Five Forces Analysis for the UK Brewery Industry
***NOTES FROM WORKSHOP: The industry is unattractive and unprofitable, the forces reduce the profits the firm can make…it’s getting worse

The Strategic Directions of Adnams
Against the background of a declining industry, the brewer and pub operator Adnams seem to be bucking the trends. Assess the strategic directions chosen by Adnams that have aided their progress. (40 marks)
Adnams is a British brewery founded in 1890 in Southwold, Suffolk. In 2008 in spite of the economic downturn, Adnams began to make changes in how the brewery process operates to reduce its impact on the environment. In doing so Adnams decided to work more closely with local farmers and producers who supply their breweries and hotels; in addition to this through a partnership with a local business Adnams installed an anaerobic digestion plant to turn brewery and food waste into biogas, which has been a huge success.
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