Milestone 5: Assumptions and Contingency Planning

Assumptions

 For the creation of the business plan for the new craft beer, Anheuser-Busch has made some assumptions: resources, customers, and competition. These assumptions are meant to be used to develop a forecast and building a plan of action for the launch of the new craft beer. Using these assumptions, Anheuser-Busch will also need to recognize risks associated the expectations for the new beer. Along with those assumptions, a contingency plan will need to be developed to help lessen the influence of the risks.

Resources

 Craft beer is not necessarily a new market for Anheuser-Busch because of the recent acquisitions of established craft breweries over the last 10 years. Anheuser-Busch will hope and ensure the project will have enough raw materials and staffing needed for all phases of the launch: before, during and after. The key resource is utilizing a brewmaster from Goose Island, one of the brewery acquisitions will help lead the purchasing of the raw materials and is familiar with the process of a brewery’s schedule. A reason to use an “outside” brewmaster is a different viewpoint on how the beer should be developed and flavored. It is important Anheuser-Busch utilizes a brewmaster who knows the business well and who better than someone who’s company was recently acquired.

An alternative instead of using a brewmaster from Goose Island then is an internal candidate could be an option because the internal candidate knows the Anheuser-Busch culture. Should Anheuser-Busch have no success with using an internal brewmaster, they should try to recruit outside applicants if they have a background in a brewery setting.

Customer Base

 The craft beer industry is booming, the global market for beer sales is poised to grow at a compounded annual growth (CAGR) of 5.7% over the next decade to reach approximately $890.3 billion by 2025 (Reportlinker, 2016).” According to other statistics provided by the Brewer’s Association: “Growth of the craft brewing industry in 2010 was 11% by volume and 12% by dollars compared to growth in 2009 of 7.2% by volume and 10.3% by dollars (Manage Growth Brewery, 2012).”  The assumption made here is the growth is going to continue into the foreseeable future. Anheuser-Busch has a strong hold on the US market except in the younger demographic. The younger millennial demographic is the one targeted audience this beer is intended to pull in. A way to reach that audience is to try and survey as many consumers to ensure this is what the customer base is looking for.

 Anheuser-Busch will conduct the surveys with their customer base effectively. The information that will be on the survey will ask age, how often their purchase alcohol, what is their favorite brand, what is their preferred type of beer and do they like Anheuser-Busch. This type of data will allow Anheuser-Busch to analyze and add to their business opportunities.

Competition

 Anheuser-Busch assumes they will continue to have a healthy market share due to their opportunity to purchase breweries, as well as, create new beers for their existing brand. Anheuser-Busch also has the resources from a financial sense and marketing to keep up with all changes in the landscape of the beverage industry. For example, Miller Brewing Company was Anheuser-Busch’s largest competitor but in 1972, Miller created the first light beer; Miller Lite (Lite, n.d.). Anheuser-Busch created three light beers: Natural Light, Michelob Light and of course Bud Light and this was the answer to Miller Brewing Company attempt to take market share.

 Although Anheuser-Busch is financially secure, there will be a continuous improvement process to ensure all markets and areas of choice fit their targets as well as their financial goals.

Cross-Cultural, Economic, and Geopolitical Factors

 The new beer being developed by Anheuser-Busch plans to be a reintroduction in the craft beer market because this is an organically developed beer and not an acquisition. With the addition of this beer, Anheuser-Busch is committed to increasing profits while decreasing costs because the previous acquisitions have been quite expensive. Anheuser-Busch believes this new product will provide them with the opportunity to increase their market share from 20%. The targeted market is the millennial age group because this is the most eclectic group. Anheuser-Busch may face some challenges in attracting sales in that age group but with testing, Anheuser-Busch will hopefully sell this new beer in the best areas.  With the increase in disposable income because of a booming economy, the hope is this beer will sell well in all demographics. If it does not, there is a possibility it could be downsized to reduce costs. Anheuser-Busch will need to prioritize the aspects that are essential to make sure this venture is going to meet the organization’s goals.

Legal and Ethical Operations

 Anheuser-Busch will continue to abide by all Sarbanes Oxley regulations, Security

Exchange Commission (SEC) and Food and Drug Administration (FDA) regulations to ensure the ingredients are posted on all boxes, accounting, and finance rules are followed and acquisitions are appropriately done so a monopoly is not created in the United States. The management team will continue to monitor all long-term and short-term goals for Anheuser-Busch to make sure business is done in a legal and ethical manner. This team will also evaluate each year’s achievements and make sure they are aligned with Anheuser-Busch’s corporate principles and best practices.

 Additional responsibilities for this group will be reviewing changes in any regulations pertaining to the sourcing of the raw materials needed for the new beer. Also, the management team will be required to update senior leadership on these changes in law and regulations and any new requirements from the FDA.

Stakeholder and Customer Diversity

 Anheuser-Busch has a goal to focus strategy and is trying to grow because of that mindset. Anheuser-Busch’s culture has a framework in the place called: “Dream, People, Culture (Anheuser-Busch, 2016).” It is important for Anheuser-Busch to retain a group of employees who represent these values because they allow Anheuser-Busch to bring on new employees even though the ones employed there already would welcome them with pride.

Corporate Social Responsibility

 Anheuser-Busch has a social responsibility is encompassed by these 3 pillars.

Alcohol Responsibility

Community

Sustainability

(Anheuser-Busch , 2016) 

Anheuser-Busch will continue to follow the strategy already in place making sure their message of drinking responsibly. “Anheuser-Busch and our wholesaler partners have committed more than $1 billion to national advertising campaigns and community-based programs to prevent underage drinking and drunk driving. We strive to reiterate the importance of responsible drinking habits to ensure that our consumers are enjoying our products in a safe way. We’re proud of our tradition of promoting alcohol responsibility and will continue to invest in new ways to drive awareness around this issue and help reduce the harmful use of alcohol through evidence-based approaches (Anheuser-Busch , 2016).” Over the past 20 years, Anheuser-Busch has made charitable contributions to various organizations as well as helping to rebuild areas devastated by natural disasters. Anheuser-Busch has tried to help communities in need to make it better. Whether it is helping to rebuild structures or providing cases of canned spring water, Anheuser-Bush has made the commitment to help as many as possible. Anheuser-Busch has also made it a long-term goal to help create a sustainable company with the use of innovation. By 2025, Anheuser-Busch has 4 goals to accomplish:

Reduce the carbon footprint by 25% with the use of renewable electricity and reducing carbon emissions

Create a water reduction process to be more efficient with the resources at hand

Create a smart agriculture process where farmers are financially empowered and grow the best hops available

Reduce packaging waste by making it returnable and made from recycled products.

The goals are ambitious, however, investing in the future state of Anheuser-Busch will help secure stability in the company for the foreseeable future.

References

Anheuser-Busch . (2016). Alcohol Responsibility. Retrieved from Anheuser-Busch : http://www.anheuser-busch.com/index.php/our-responsibility/alcohol-responsibility-our-families-our-roads/

Anheuser-Busch. (2016). Our Company. Retrieved from Anheuser-Busch: http://www.anheuser-busch.com/

Lite, M. (n.d.). Out History. Retrieved from Miller Lite: https://www.millerlite.com/our-beer

Manage Growth Brewery. (2012, February 6). Retrieved from Orchestrated Beer: http://www.orchestratedbeer.com/blog/manage-growth-brewery

Reportlinker. (2016, August 24). Global Beer Market Analysis & Trends – Industry Forecast to 2025. Retrieved from PR Newswire: https://www.prnewswire.com/news-releases/global-beer-market-analysis–trends—industry-forecast-to-2025-300317715.html