Adnams a living company

Timeline Company
Adnams is a regional brewery founded in 1872 in Southwold, Suffolk,
England, by George and Ernest Adnams. Adnams Brewery has a long and rich
heritage. Beer has been brewed on the same site as the present brewery for at least
670 years

1890, Ernest Adnams and head brewer Thomas Sargeant signed the
Memorandum of Association establishing Adnams & Company Limited.

1902, Jack and Pierse Loftus acquired a stake in the brewery.

1954, Adnams won the Challenge Cup for the best beer at the Brewers
Exhibition beating 755 other companies. These were the days when Britain
was still thronged with local breweries.

1987, Adams first Cellar & Kitchen Store opened at the back of The Crown
Hotel combining top quality kitchenware with a full range of wine.

2002, Too much acclaim, Adnams, Beer from the Coast advertising campaign
is launched.

2007, With its commitment to the environment, Adnams reduces the weight of
its 500ml bottles from 455g to 299g making them the lightest 500ml beer
bottle on the market.

Suffolk connections
A famous landmark in southwold is the landlocked lighthouse
Sixteen of the Swan hotels room are named The lighthouse Rooms
Because they look out on the lighthouse

Family connections
The Loftus family bought a stake in Adnams in 1902.
This means that the two families, Adnams and Loftus, have jointly given about
250 years of service.

Customer connections
Adnams using Norfolk show and other festivals attract local people and
holidaymakers.
Adnams also formed partnerships with local football club (Ipswich Town) to
host events.
Renewal
Sustainability is one of Adnams value. It becomes a trendy to be
environmentally conscious.
The firms bottles are the lightest and greenest on the market

Portfolio
Beer brands of Adnams are sold through three channels:
Direct through the 70 Adnams licensed pubs, Adnams shop and hotel.
Large pubs-owning companies and wholesalers for distributes throughout the
UK
Supermarket and off-trade outlets.

Internal connections
Staff turnover at Adnams is low and people have a sense of belonging
because employee feels they are one of the cornerstones of the company.
Communications is important of organizations succeed. There are no dividing
walls between teams.

1. How would you describe the strategy at Adnams? What is making this
company successful?

The Focus Strategy

Adnams use focus different strategies concentrate on particular niche markets and,
by understanding the dynamics of that market and the unique needs of customers
within it, develop uniquely well-specified products for the market. Because they serve
customers in their market uniquely well, they tend to build strong brand loyalty
amongst their customers. This makes their particular market segment less attractive
to competitors.

Key success factor

There are many Key success factors that Adnams gain as the following:

Suffolk Connections

Family Connections

Shorten the distance between suppliers

Renewal

Adnams and Loftus have jointly and stewardship company

Customer Connections

Brand are linked to its Soutwold and the Suffolk environment

Making great products without costing the earth

Innovation

Its interesting and seasonally changing range of splendid ales (Good

wines too

Internal Connections

Staff turnover at Adnams is low and people have a sense of belonging

2. What influences are at play on the strategy?

In the case, Adnams used focused differentiate strategy

It has many factors are influences the strategy of Adnams included PESTLE
analysis, SWOT analysis and Five force analysis.

PESTEL
Political
The government plays a key role in how the brewing industry operates. The
growing bad publicity concerning the so called 'binge drink culture' in the UK, has
forced the government to take action against social behavior. Current UK
government proposals are seeking to tackle alcohol misuse by implementing
additional regulation and further punitive taxes. This has resulted in an increased
cost burden on both the sector and its customers (Beer and Pub Association 2008).
In the 2008 budget the duty of beer was increased to 9%, and through a tax
escalator the treasury has mapped out 2% above inflation increase over the next
four years. The increasing availability of low cost alcohol in the UK has been closely
examined by the government and local authorities. These policies could help local
brewers to compete with larger supermarkets who are able to sell beer at lower
prices.
A recent poll shows that the public are against the governments' current policy
agenda on tackling alcohol misuse through increased taxes. 86% say increased
taxes will not significantly reduce binge drinking. Taking this into account this would
affect the brewing industry because if these taxes were further implemented the
purchasing of beer will drop.
Inflation is currently estimated at 4%, due to the increase in value-added-tax (VAT).
According to keynote that beer prices may witness significant increases over the
next couple of years.

Economic

It can be argued that economic factors are perhaps the most important to the
brewing industry. In the current economic climate, it has become increasingly hard
for the beer and pub sectors to experience growth and strive. The downturn is
affecting both businesses and households throughout the UK. The ongoing credit
crunch and continuing inflation increases is adding more and more pressure on
individuals, families and businesses. Individuals generally have less disposable
income and this in turn has meant that overall sales of alcohol in the UK have
declined. Expensive global commodities and rising energy prices are also having a
severe effect, particularly in relation to input cost.
Pubs raise almost twice as much tax with every pint sold compared to a pint sold in a
supermarket.

Social
There is increasing concern about the developing of a 'binge culture' in the UK. In
recent time's society as a whole has found it acceptable for individuals to drink large
quantity of alcohol on a daily basis. More and more individuals are regularly going
out to social events with the aim of consuming as much alcohol as possible getting
drunk and misbehaving. This has highlighted the need for dramatic changes to the
way alcohol is advertised and distributed to the public.
Large consumptions of alcohol has caused many social problems in Britain and it is
that "A large number of people blame alcohol, in some way, for street violence,
marital problems, lack of productivity at work and poor performance at school." This
has resulted in 78% of the UK population being in favor of introducing. These
additional instructions could be detrimental to the brewing industry if implemented by
the government because it deters customers from buying their products.

Technological
New innovative technology available this has significantly changed the processes
within the industry. Developments in technology and equipment such as refrigeration
and motorized transport allowed for the consolidation of the brewing industries
around the world. It has also allowed brewing companies to experiment with using

different flavors and textures to help them appeal to new customers for example the
new flavors of cider that are widely available across the UK.
Advances in technology have also meant that breweries can become more efficient,
reducing production costs. For example Adnams was able to save 30% off their
energy costs by introducing new energy renewal technology. This resulted in
increased profit margins.
Breweries were traditionally attached to public houses and supplied beer to their
local area however improvements in distribution channels have meant that they can
now supply their products globally. This has caused rapid expansion of brewing
companies around the world. The use of Global Positioning systems (GPS),
Electronic funds transfer (EFT) and portable data collection terminals at present is
used by the majority of beer distributors to aid the distribution process.
Moreover, they use social media to promote their brand. In the case Andy Wood
said that I think we were the first real beer brand to go on to twitter and we have
many thousands of followers. We use blogs regularly to get our message out there
this sentence show that Adnams is the first mover in the market of beer brand and
they have strong local position.

Legal
UK legislation currently states that the legal limit of alcohol consumption before
driving is 80 mg of alcohol per hundred milliliters of blood. This will affect the brewing
industry because sales in pubs, clubs and other venues that sell alcohol may suffer
from a reduction of sales, since customers are now limited to no more than two pints
of beer this means customers may not be able to consume as much beer if they are
driving. The plans to reduce it to 50 mg would cause server decreases in sales which
could then lead to orders from brewers declining because that would be equivalent to
one drink to reach that limit.
The smoking ban accelerated after 1 July 2007 has affected pubs across the UK,
this ban has caused them to lose a large amount of trade. The smoking ban can
have a direct effect on beer sales because 60% of beer sales are sold in pubs, clubs
and bars that increased consumption of alcohol at home and finally it increasing
awareness of health-related issues and the dangers of alcohol misuse then Adnams
needed to innovate to keep pace with this challenging market and finally that led the
market with new beers.

Environmental
The brewing sector has reduced CO2 emissions by twice the amount since the 90s
and is on track to make its target in the next few years. Adnams also have to called
greenest warehouse in the country. They use construction materials and a reed
-covered-roof that doesnt need heating and air-conditioning systems to maintain and
it was also a low carbon build. The company focus on green and to reduce carbon
emission by 30%. To achieve this, an anaerobic digester plant was opened in 2010
on the Adnams Bio Energy site. The digester is fed by food and brewing waste and
the biogas produced is used as fuel for Adnams trucks that deliver wines and ales.
Dual-fuel trucks (biogas and diesel) are more expensive to buy than straight diesel
vehicles, but the operations director estimated that when the whole fleet was
converted the annual diesel bill could reduce to 60,000 rather than the predicted
cost of 350,000.

Porter's Five Forces Analysis for the UK Brewery Industry (Adnams)

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. To help provide an analysis of the brewery
industry and develop a business strategy.

The threat of the entry of new entrants

Legislation is one of barrier to entry, as taxation on beer becomes increasing
expensive. However facts shows there are now more than 700 breweries in Britain,
the largest number since the Second World War and more per head of the
population than anywhere else in the world.
Enhancing your marketing/brand image, utilizing patents, and creating alliances with
associated products can minimize the threat of new entrants.

The threat of competitive rivalry

There seems to be an increase in rivalry in the brewery industry as firms battling to
achieve market leader status. Anheuser-Busch InBev UK, Heineken UK, and Molson
Coors are the three top brands in the brewery industry.
Within the beer industry there are low switching costs as the product itself is
standardized meaning consumer are free to purchase whichever beer they favors,
however, consumers are very much brand loyal. Beer companies spend millions of
dollars annually on advertising. The advertising is not necessarily created to increase
demand, however create brand awareness. A new business will have to be prepared
to invest heavily in advertising if there are to compete in the market Threats of rivals
can be reduced by employing a variety of tactics. To minimize price competition,
distinguish your product from your competitors' by innovating or improving features
also trying to form stronger relationships and build customer loyalty.

The threat of substitute products

There are no substitutes for the beer, because there are no substitutes for hop.
Brewery industry is very specific, because new products from this area are rarely
launched to the market. However, they don't influence the beers consumption. Even
non-alcohol beers haven't increased its volume sales.

The threat of bargaining power of buyers

The brewery industry have three main types of buyers-direct consumers,
wholesalers/ retailers, and pubs /bars. Apart from the pubs and restaurant the main
buyer of the brewery industry are the large supermarket Tesco, Sainsbury, ASDA,
Morrison etc. Sales of beer have switched popularity from on-trade to off-trader
meaning wholesalers and supermarkets have gain more bargained bargaining
power.
It can be argued the industry overall has low buyer power as it consist of large
companies supplying to a number of different buyers. Market is shared between the
four top companies and a large number of wholesalers. Regional buyers experience
low power whereas national buyers experience high bargaining power.
Beer is a standardized product which can be purchased from a number of other
suppliers giving buyers a degree of power. Buyers also experience power in an
industry when the products represent a relatively large expense for your customers;

because beer is relatively low priced buyers will rarely feel the need to compare
prices giving the buyer less power.
The brewery industry seems to have high/ medium buyers power due to the fact that
direct consumers have multiple options for entertainment, and wholesalers and retail
outlets have thousands of beer brands to choose from. Therefore, a new business
owner must be creative in dealings with consumers, usually by offering loyalty
programs and increasing perceived value.

The bargaining power of Suppliers

The bargaining power of suppliers in the brewery industry can be preserved as low
due to the fact there are a number of suppliers available to a brewery. The main
supply decisions lies with the key product ingredients, hops, starch sources, Yeast
and Clarifying agent also the packaging material the aluminum glass etc.
There are a number of farmers which can provide a new business with the raw
material which it needs, leaving suppliers with less power. The suppliers cannot sell
directly to customers, as a result they need the partnership with the breweries in
order to survive and continue trading. This will give a new business more bargaining
power with their suppliers.
However when the resources required are unique it becomes costly to switch
suppliers. In the manufacturing of beer certain specialist ingredient such as enzymes
are used in the manufacturing process, changing to another supplier may require a
business to change their entire manufacturing process. This may be very costly and
will reduce price negotiation leading to reduced bargaining power.
Contracts and positive relationships with suppliers and producers are another way
new business can manage the uncertainty and power of suppliers.

The Strategic Directions of Adnams

Minimize their environmental impact
Maximize their operational efficiency and,
Achieve and maintain a superior return on investment.

SWOT
Brewery industry is one of the most developing industries in the world. Its internal
(strengths, weaknesses) and external (opportunities, threats) factors can be audited
by using the strategic environment analysis called SWOT analysis.

Strengths shown in the table are their resources and capabilities that are used in
order to develop their competitive advantage on the market. There will be always a
high demand for beer, and developed technology will be the background for the
products improvement and making it more attractive for the customers. This creates
a relationship between both, product and its consumer.

Weaknesses are high advertising costs are a main financial burden for the smaller
and medium players. Moreover, because of the low budget they have to deal with the
narrow product line, and thus the weak and slow distribution.

Opportunities that appear during the analysis of the environment, it may observe
some growth and generate more profits. Demographic increase and smaller range of
age for drinking alcohol help reach a wider range of customers.

Threats are tax increases, changing customers tastes, or anti-alcohol campaigns

may threaten actions taken to improve the financial situation within the industry

3. What should the future Adnams strategy be?

As Admans has many strength, and they keep improving the quality of their products
and make the process of production more efficient. Also, the company is such a
modern company that concern about the environment and help to reduce the carbon
footprint. Admans has perfect public praise, not only because of good taste and
packaging of product but also they do a lot of charity.
This stability has served the business well during turbulent times for brewer/pub
owners such as Adnams because the equity structure provides some safeguards
against irreversible transactions taking place on the basis of temporary market
sentiment.
Adnams have made substantial investments in the business over the last ten years,
replacing old and inefficient plants and relocated distribution operations to the
outskirts of Southwold. Investment has focused on environmental improvements
and long-term sustainability.
Adnams has also built a chain of shops and a distillery over this period. The beer
business has been undergoing radical change in the last few years. Overall
consumption has been gradually declining, drinking at home has gained relative to
drinking in pubs and beer styles have changed. Recently we have seen cask ales
make a modest comeback against the long term rise of lager.
Having a solid long-term supportive equity base has been vital in giving us the
confidence to invest, to brew new styles of beer, to add a distillery and to
demonstrate our environmental commitment and credentials.

4. If SME was acquired (by, for example SAB Miller) what might change?
Change on Culture
Change on culture of company because Adnams had long traditional culture
around 670 years at Southwold, England. So culture of Adnams is unique and be
strong but SAB Miller was established around 120 years and have different culture
with Adnams. It can conflict on culture when acquired because each company
believes on own culture.
Change on Strategy
Change about strategy because two company have different on strategy,
Adnams is focus on preference of customer and work on local but SAB miller is
company that want to expand market around the world and focus on sale volume
more than preference of customer.
Change on Employee
Change about employee when was acquired because two companies has
different culture. Adnams is small firms and employee has a strong on internal
connections. On the other hand, SAB Miller is a large firm and expands business a
lot of country. So, employee has weak of internal connections. It means working of
employee of two companies is different and can cause conflict on working.
Change on Structure
Structure of company is to be
management in two companies. Due
employee can flexible time to work but
has subsidiary more than 80 countries.
strict on time of working and more rules.

change because different of structure to

to, Adnams Brewery is small firms that
SAB miller Brewery is large company with
So, the structure of company is large and