Impact of External Business Environment on Microbrewery Industry: A PEST Analysis of Gloucester Brewery Organisation, UK

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Introduction
Micro brewery, also called the craft brewery, refers to the brewery that produces lower
than 15000 US beer barrels a year and sells 75% or more of its beer production off site. The
microbreweries sell their production to the public using one or more of the following methods,
such as, the conventional three-tier system (brewer – wholesaler - retailer – consumer), two tier
system (brewer as the wholesaler – retailer – consumer) and directly to the customers through the
carry outs and/or restaurants or on site tap room sales (Brewers Association 2019). Such
breweries are known for their brewing techniques, quality and flavour. This is a popular industry
in the UK since the 1970s (Danson et al. 2015). However, like all other industries, the
microbrewery industry is also affected by external business environment. This paper will
illustrate the impact of external business environment on the microbrewery through the PEST
analysis method in the context of Gloucester Brewery organisation, UK. The purpose of the
paper is to find out and evaluate the trends that could affect the microbrewery industry in the
next 5 – 10 years. The background of the Gloucester Brewery organisation and analysis of the
trends are presented below.
About Gloucester Brewery Organisation, UK
Gloucester Brewery organisation is an award winning craft brewery based in the heart of
Gloucester's historic Docks. The brewery was founded in 2011 and within the few years, it has
become one of the most prestigious award winning microbreweries in the UK
(Gloucesterbrewery.co.uk 2019). Apart from crafted beer production of different varieties, the
microbrewery is also engaged in organising tours and other events to increase its popularity in

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the market. It produces 15 types of different flavoured beer and along with that, also offers
various specialities at the Tank to the guests (Gloucesterbrewery.co.uk 2019).
PEST analysis of the microbrewery/brewery industry
PEST analysis refers to the analysis of the political, economic, social and technological
environment analysis. The business environment contains of external and internal environment
that affect the business operations for any industry or organisation. External environment
includes factors that are beyond the control of the management of the organisation, such as, the
political, economic, social, technological scenario of the country (Rastogi and Trivedi 2016). On
the other hand, internal environment includes internal business factors that are controlled by the
organisation (Kew and Stredwick 2017). To analyse the external environment of the brewery
industry and its trends in the UK market, PEST analysis has been performed.
 Political: UK has a liberal political scenario for the brewing industry. There are various
changes and reforms of the licensing laws in line with the government policies and
relaxation in the opening hours and in the late night opening of the pubs, bars and
restaurant (Ellis and Bosworth 2015). There are taxes on the brewing industry, which
contributes a significant amount every year. However, there is some political instability
after the Brexit referendum and uncertainty as Britain will lose the access to the single
market of EU. Yet, it is expected that the revenue of the microbrewery industry will not
be affected much due to Brexit as consumption of craft beer is quite popular in the UK
(Bayani and Dakila 2017). Gloucester Brewery has been able to utilize the politically
favourable situation and by abiding to the rules and regulations properly, within a few
years of its establishment, it has been able to capture a large market share.