• Author / Uploaded
• Utsav Dubey

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Presented by: Shridhar Kayan (2013277) Tapas Shivpuri (2013302) Udit Mehrotra (2013308) Utsav Dubey (2013311) Vainav Shah (2013314) Vineet Agarwal (2013323)

INTRODUCTION • Hudepohl Brewing Co. was founded by Louis Hudepohl in 1885. Thereafter, his descendants looked after the company through various generations. • Bob Pohl was appointed as the new general Manager in 1980 after the sudden death of the company’s president. • The company experienced a disappointing stint during the late seventies as it was operating at less than 40% of its capacity and bore a loss of $538,000 in 1978. • Even after the disappointing results, Pohl was optimistic about the future and predicted growth in the earnings and this was confirmed by a 7% growth in sales during first four months of 1980. • Pohl majorly focused on changing the organizational structure of the company right after he was appointed as the general manager.

Hudepohl’s Marketing Strategy • Hudepohl marketed aggressively in Cincinnati using both push and pull-marketing techniques. • A large budget of $700,000 was allocated for promotion in Cincinnati. This was more than half of the total marketing budget of the company. • Hudepohl’s promotions were mostly focused on sports-related advertising. • The advertising was randomly distributed among its product range with an emphasis on competitively priced products dedicated towards urban, blue collar workers. • According to a local market research firm, Hudepohl customers could be essentially described as “white, lower-income, blue collar, middle-aged male city residents who have a union affiliation and are outdoor sportsman type”.

Willingnes s to Pay

Cost

Value Chain for Hudepohl Brewing Company Firm Infrastructure Human Resource Technology Development

Procurement

Finance, Legal support, Quality Management, ETC Compensation Plan, Recruitment, Training & Development ETC Batch production

Supporting Activities

Inventory Keeping system

Racking & Packing system The function of purchasing the raw materials and other inputs used in the valuecreating activities. Brewing Ingredients • Molt • Corn • Rice • Hops Packaging Material • Bottles • Cans

Inbound logistics

Traditional Method • Batch size Production Fermentation Process (soaking a starch source in the water and fermenting it with yeast) • Racking and Packing • Bottling and Canning Operations

Distribution • •

• •

Taking an order Filling it from the supplies that has been placed on the truck the day before. Collecting Cash For Order Picking Up the Empty Returnable Bottels Outbound Logistics

• Pricing • Promotions • Advertising

Marketing and sales

Primary Activities

U.S. Brewing Industry 

Growing market increasingly supplied by fewer brewers.



Concentration of the industry

- due to economies of scale in the

production, distribution, and marketing of beer. 

By 1978, top 10 American brewers accounted for 94% of beer sales



Winners (1969 & 1979) - Anheuser-Busch, Miller, and Heileman

Market share of top 10 brewing companies

Industry Economics 

Raw materials purchasing - major brewing ingredients, were

subject to wide fluctuations in price 

Production - reluctant to change its methods of brewing,

expensive installation 

Labor – Higher wages, Labor productivity improved

Labor Cost as a Percentage of the Cost of Goods Sold

1971 Anheuser-Busch

1955

0.28%

0.42%

0.37

0.385

Regional company

(Falstaff)



Packaging - canning line speeds increased 123% and labor

requirements dropped 42%



General and administrative expenses - Increase in the average plant’s

scale, 1 million barrels (1969) to 2.5 million barrels (1979) - decrease the unit costs

Brewing Industry’s Cost per Barrel in Constant 1977 Dollars 1977 (in $)

1972 (in $)

• Brewing materials

9.00

$4.49

• Package materials

16.91

18.90

• Production labor

3.75

4.53

• Nonproduction

1.71

2.70

1.25

1.36

$32.62

$31.98

labor • Selling, general and administrative expense

Distribution Difference between Hudepohl and industry’s distribution channel

• As per case, Hudepohl’s share in regional deliveries out of the total beer they produced amounted to 60%. • Because of large number of regional deliveries, there was a lot of money being spent on labour force which in turn hiked the per unit labour cost. • Considering Industry practices, national companies spent very less to distribute in local and regional areas as they relied on independent distributors.

• For distribution of beer in different areas, Hudepohl too relied on Independent distributors but their per unit cost did not change a lot.

Steps for future



48% of total beer market segment constituted of consumption of premium beer, due to increased advertizing by the top players. Houdepohl should therefore leverage its German Heritage by extending its brand through upward stretch and introducing a premium beer product.

Cont. 

Marketing expenses need to be remodel to change the image of the company and promote its new premium beer through TVC and Hofbrau in Cincinnati.



The profits from these products should be invested in bringing as much automation as possible in the production process to achieve economies of scale.