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Market Analysis and PlanResearch and AnalysisTrends show that Paper

Words: 1425, Paragraphs: 105, Pages: 5

Paper type: Analysis , Subject: Beer

Market Analysis and Plan

Research and Analysis

Trends show that quality of drink selection and proximity are the prime decision makers when

choosing a brewery. According to the Brewers Association, demographics of breweries are

transitioning from 40-year old white males in highly concentrated areas to a more diverse crowd.

Young women (21-34) are coming into craft beer accounting fo 15% of total craft volume. 3 The

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bottom 60% of households now consume 40% of craft volume. There are currently 243 craft

breweries in the state of Florida producing over 1.4 million barrels of craft beer per year. 4

Based on our surveys we determined that the three biggest drivers for consumers is Quality of

Product, Proximity to Home, and the Atmosphere of the venue. GCB will be poised to meet all

of these needs by placing ourselves within a large population center and offering quality

products.

Market Segmentation and Size/Target Market 2

GCB plans to market primarily to Escambia and Santa Rosa counties. The veteran population

currently comprises 11% of the total population within the two counties, along with over 2

million annual visitors to the Pensacola Bay Area. Outside of veterans and tourist, we plan to

stay on trend targeting the traditional craft beer drinker. Our target market equals approximately

89,000 people within the two counties.

Competition

State Considerations: The state of Florida and the Pensacola / Escambia county area are

underserved in terms of volume of beer brewed per capita. Florida is seen by many as ripe for

brewery market expansion given its strong history with breweries such as Cigar City and Funky

Buddha gaining national prominence. Additionally, laws passed in 2015 allowed brewers to fill

64 ounce growlers on site, opening up a large revenue stream for brewpubs. Historically, the

Florida legislature has been more lenient in permitting beer licenses, while liquor licences have

been limited to a greater degree. Therefore the threat of substitution from liquor distilleries is

low.

Local Considerations: There are relatively few brewpubs per capita in the Pensacola / Escambia

county area. In our assessment, Pensacola is relatively underdeveloped in terms of beer and

brewery sophistication. There does not exist a major craft brewery competitor such as Cigar City

or Funky Buddha who have national recognition but are headquartered in other cities in Florida.

Our research methodology into existing competitors included in-person visits, surveys, and

online reviews. We identified four main competitors with each competitor utilizing the brewpub

model. Three of the competitors are located near Pensacola Beach. Given the high rent prices

and geographic saturation, we have decided to operate just north of Pensacola Beach, near Ferry

Pass.

In researching our competitors we identified Perfect Plain Brewing Company as our primary

competitor in the local market. Perfect Plain is a hyper local brewpub targeted at a niche, “hip”

crowd, yet is able to attract the general population with its quality and variety of beer. Moreover,

Perfect Plain has a strong charitable focus with a monthly partnership with local non-profit

organizations. While we view Perfect Plain as a competitor, we also view them as a proof of

concept regarding a hyper local brewpub with a strong mission orientation and non-profit ties.

Entrance Strategy

In order to successfully enter the local brewery market, our strategy will entail a multi-channel

approach to build a strong, loyal base of customers. Central to building a loyal customer base in

the beer market is having a compelling beer menu. We believe we will be able to offer a strong

initial lineup of beer styles including IPAs, lagers, and ales. Prior to the opening of the brick and

mortar brewpub, we plan to test several recipes with friends and family, as well as with other

brewmasters and brewery associations. The multi-channel approach for building awareness and

customer base will entail engaging local veteran associations, non-profits, and bases to introduce

the idea of a veteran-centric brewery. Furthermore we will utilize traditional marketing tactics

such as building social media awareness, creating pop-ups, and pursuing traditional advertising.

Pricing

The current pricing strategy for breweries in the area is as follows:

Lower Quality Product: $5.00 per pint

Medium Quality Product: $6.00 per pint

Higher Quality Product: $7.00+ per pint

As such, for our estimations, we used $6.00 per pint as an estimate for revenue. We will produce

medium to high quality, perceived, products and price them accordingly.

GCB will host “Stock Market Nights” at least once a quarter where we will utilize variable

pricing based on customer demand. The less a beer is requested, the lower the price goes, while

a more requested beer increases its price. We will still utilize the $6.00 – $7.00 pricing scheme

as our baseline for the start of each round.

Future Product Offerings

In the craft industry, the best way to remain relevant is to continuously offer new products. We

will invest heavily in Research and Development (R&D) and utilize current market trends and

customer feedback to develop new flavors and offerings. Sour beers are becoming increasingly

popular as well as barrel aged products. As such, these offerings are less differentiators and have

more requirements to compete.

As we increase our capacity, we will open our systems up to local homebrewers. These

homebrewers will be afforded the opportunity to brew on a commercial system and get their

product into the market. GCB will recoup our cost for the venture and take a cut of the revenue

generated by the homebrewer tap. GCB will retain exclusive production rights and license the

recipe from the homebrewer; in the event the beer is popular both entities will be able to generate

revenue from the collaboration.

GCB plans to collaborate with other breweries in the area on collaborative beers and market

focused promotional nights. To build the market, we need collaboration among the other

breweries to grow network effects. This will require Coopetition from all of the players.

Sales

The majority of GCB’s sales will come from its taproom. The contribution margins are 100%

compared to working through a distributor. Due to Florida alcohol laws, we will have to work

through a distributor if we sell any product off of the premises. Doing so reduces our

contribution margins significantly, to roughly 17%. Instead of earning approximately $700.00

per keg, we would only earn around $130.00 through a distributor.

As such, we will limit our off-premise sales to special circumstances and targeted opportunities.

We plan to collaborate with local restaurants and bars to produce exclusive specialty offerings to

build lasting relationships.

Additionally, we will collaborate with local restaurants to offer them an opportunity to increase

their customer outreach by serving their food at our location. Although we won’t generate any

revenue directly from this relationship, this will facilitate an increase in volume sales with people

more willing to spend extended periods of time on-premise. GCB will be the only authorized

beverage seller on-premise so as not to cannibalize our revenue.

Financing

GCB wants to relinquish as little ownership of the company as possible in order to prevent the

dilution of its owners. The Founders will hold 90% collectively of the company leaving 10%

ownership for the Employees.

Initially, the company will seek support from Friends and Family in an initial attempt to raise

capital. We are hoping to raise approximately $200,000 – $500,000 from in order to fund

operations during the initial roll out and through the year. Ideally, we would accept the funds as

a donation for a good cause; however, we anticipate our friends and family would like to reap a

benefit. As opposed to relinquishing equity stake, we will treat these like loans with a repayment

date of no later than five years with an interest rate equal to the current market return. If we are

unable to repay the debt in the alloted time, the debt will be converted to equity shares, taken

from the owner’s shares, based on the current value of the company at the fifth year.

We are taking advantage of two loan options available to us. The first, a traditional Small

Business Administration (SBA) loan in the amount of $350,000. This will be used to purchase

the brewery’s production equipment; the Brewhouse, Fermentation and Conditioning Tanks,

Packaging Equipment, etc. The second loan is provided to veterans, called the Patriot Loan, in

the amount of $500,000. This will be used for a down payment on the building and support the

buildout of the taproom, outdoor entertainment space, and the quality control laboratory.

We want our customers to feel like an extension of our family. As such, we plan to offer

ownership stake up to 20% for our most loyal customers. No customer may own more than 1%

stake individually. The 20% will come from the Owner’s Shares reducing overall ownership to

70%. The purpose of this offering will be two-fold. First, it will enable us to raise capital for

future expansion opportunities such as increasing production volume, expanding our physical

footprint, etc. Second, it will build a stronger core customer group and increase our relationship

with the surrounding community. Although there is no planned exit currently, if an owner

decides to exit the venture, we would offer up those shares to our employees and the public;

effectively handing over the brewery to those most loyal to the brand.

About the author

This paper is written by Sebastian He is a student at the University of Pennsylvania, Philadelphia, PA; his major is Business. All the content of this paper is his perspective on Market Analysis and PlanResearch and AnalysisTrends show that and should be used only as a possible source of ideas.

Sebastian other papers:

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