Managing Small and Medium Sized Enterprises - A Case of The Five Points Brewing Company

This report analyzes the business environment of The Five Points Brewing Company, a small independent brewing company located in Hackney, London. It covers topics such as the growth and development of the business, current challenges faced, evaluation of environmental factors, and government support schemes available. Recommendations for business growth are also provided.

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Managing Small and Medium Sized Enterprises – A Case of The Five Points Brewing
Company
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Executive Summary
The report analyzes the business environment of The Five Points Brewing Company
which is a small independent brewing company located at Hackney, London. Since its start in
2013, The Five Points Brewing Company brews with a commitment to the community and
quality. Topics covered include, the growth and development of the business to date, the current
situation faced by the SME, an evaluation of the environmental factors, an assessment of current
growth and development strategy and appropriate government support schemes that may be
available to The Five Points Brewing Company. The research findings showed that The Five
Points Brewing Company faced the challenge of the recruitment of staff, lack of innovation in
the cider category and tough routes in the marketing of its products. An assessment of the current
growth and development strategy showed that with the rise of many microbreweries in the UK,
The Five Points Brewing Company has to step up its game in order to stay ahead of the
competition. In addition, the research showed that The UK government implemented a scheme
known as the Small Breweries’ Relief (SBR) for the support of small and medium brewers. The
research recommends that for business growth and to remain at the top of competition, The Five
Points Brewing Company managers should provide customers beer of consistent quality, plan
ahead, and effectively manage the brewery.

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Table of Content
Executive Summary.......................................................................................................................2
Introduction....................................................................................................................................4
Findings..........................................................................................................................................5
The Growth and Development of the Business to Date...............................................................5
The Current Challenges Faced By The Five Points Brewing Company......................................6
An Evaluation of the Environmental Factors...............................................................................7
SWOT Analysis........................................................................................................................7
PESTEL Analysis.....................................................................................................................8
An Assessment of Current Growth and Development Strategy................................................10
Appropriate Government Support Schemes That May Be Available To the Five Points
Brewing Company.....................................................................................................................11
Conclusion....................................................................................................................................11
Recommendations........................................................................................................................12
References.....................................................................................................................................14

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Introduction
Starting a Small and Medium Business Enterprise requires effective qualification
and experience (Storey and Greene, 2010 p.431). The brewing industry in United Kingdom (UK)
has continuously been affected by the rising inflation rate in the country, decreased resources and
other natural factors that have resulted to challenges in international markets. Since beer is
socially viewed as a luxury and wastage of workers’ hard earned money, people are foregoing its
consumption. Research conducted by Laboy-García, Cruz-Bermudez and Sosa-Arrufat (2016
p.148) on “Parents’ perceptions and perspectives about their sons’ drug addiction and
rehabilitation process” indicates that globally, anti-addiction agencies are working hard to make
beer consumers understand that the consumption of beer will result to a great loss for themselves,
their money, senses and health. To regulate the monetary crisis, the UK government has been
charging high taxes on the beer industry which has made the industry to currently face sheer fall.
The report focuses on The Five Points Brewing Company which is a small independent
brewing company located at Hackney, London. Since its start in 2013, The Five Points Brewing
Company brews with a commitment to the community and quality. The company champions
provenance, flavor, quality and consistency. Additionally, The Five Points Brewing Company
provides a wide range of award-winning beers that are unpasteurized and unfiltered for the best
aroma and flavor. The company’s beers are inspired by the passion of the founder for both the
best of the movement for international craft beer and the British real ale tradition. The flagship
beers are by small and limited batch releases. Furthermore, The Five Points Brewing Company is
committed to the wider and local community by being the first brewing company in the UK to be
accredited the title of Living Wage Employer. For sustainability, the company’s electricity is
derived from 100% renewable sources. Moreover, the company assisted in the apprenticeship

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scheme for the training of brewers. However, the company faces stiff competition from major
competitors which has resulted to the company formulating effective strategies for business
growth. Currently, The Five Points Brewing Company works for the support of local community,
arts and charitable projects.
The research will be primarily based on interviews which are the primary data sources.
The researcher will interview various personnel in the company’s top management to get an
insight on the company background, its vision and vision, the reason for the company’s existence
and development strategies. Therefore, the report aims at analyzing The Five Points Brewing
Company and its business environment. Topics to be covered include, the growth and
development of the business to date, the current situation faced by the SME, an evaluation of the
environmental factors, an assessment of current growth and development strategy and
appropriate government support schemes that may be available to The Five Points Brewing
Company.
Findings
The Growth and Development of the Business to Date
The Five Points Brewing Company started as a small company founded by Greg Hobbs,
although his first experiment with brewing at the age of 15 years did not quite go as planned.
After boiling a tin of stuff and fermenting it in a bin, Greg and his friend drank the stuff after
adding several tablespoons of sugar since it tasted awful. Later in 2013, Greg Hobbs and co-
founder Ed Mason founded The Five Points Brewing Company although there were 25 brewing
companies existing in the market within the M25. While Greg and Ed felt that the market would
be as competitive as they had started out late, the current market has over 100 breweries but
consumers still regard The Five Points Brewing Company as the “old guard” thus resulting to a

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higher competitive advantage. In November, the company launched its first core brand beer
which it hopes to release early this summer. Currently, he’s the Head Brewer of Hackney craft
breweries and runs the show with Ed Mason who is the co-owner. Greg has responsibilities of
developing the recipe and also for ensuring that all the beer coming out of the brewery is of high
quality.
Currently, The Five Points Brewing Company sells different types of beer including the
Five Points Pale which is the company’s top seller, accounting for 55% of the beer produced.
Other best sellers for the company include Railway Porter which is the company’s take on a
classic London porter, and Hook Island Red, a six percent red rye beer which is slightly a
marmite beer. In addition, The Five Points Brewing Company’s pale ale is 4.4% while its IPA is
7.1% which lacks the sweetness to attract consumers looking for flavorful beer while not getting
really drunk which inspired the company to produce its core brand beer.
The Current Challenges Faced By The Five Points Brewing Company
The major challenge facing The Five Points Brewing Company is the challenge of the
recruitment of staff with the right kind of expertise and experience in brewing since university
graduates have theoretical knowledge but lack the much needed technical skills. While The Five
Points Brewing Company runs an apprenticeship and training scheme and assists employees with
funds for their qualifications and diplomas, the company still finds it difficult to recruit
experienced staff. The company has worked hard to ensure that it becomes a top brewer in the
UK market but it has been hard to achieve that since skilled brewers who can give the company
consistency and quality are in shortage since most of the skilled brewers start their own
breweries.

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Research conducted by Qin, Petersen and Bredie (2018) on “Flavor profiling of apple
ciders from the UK and Scandinavian region” reveals that presently in the UK, there is only one
technical cider training provider. However, further research by Pratten and Carlier (2012 p.128)
indicates that “technical intensity” in the sector of cider has been enhanced by skilled staff who
come from wine-making backgrounds and by the easily availed new methods of gaining the
needed qualifications. Therefore, The Five Points Brewing Company suffers from a wide gap in
expertise that could be minimized by strongly focusing on recruiting qualified cider making
employees.
In addition, lack of increased innovation in the cider category has challenged the
company since cider lags behind beer in regards to education, language and the need of
presenting it in a modern way. According to research conducted by Miles, King, Alexander and
Scheenstra (2017 p.431) on “Evaluation of Flower, Fruit, and Juice Characteristics of a
Multinational Collection of Cider Apple Cultivars Grown in the US Pacific Northwest” cider
struggles due to its perception of low value and consumers’ traditional thinking as compared to
beer which has an explosion in more positive ways, innovation, marketing, creation and new
ways of doing things. Further research by Holmes (2017 p.514) explains that the licensing
regulations in the UK has prevented smaller organizations from capitalizing on tourism which is
highly associated with the consumption of beer.
The Five Points Brewing Company also faces the challenge of tough routes in the
marketing of its products. According to Danson, Galloway, Cabras and Beatty (2015 p.140)
small brewers in the UK have a tough route to market which has highly been squeezed by bigger
companies as they increase their share of beer taps in bars. The Five Points Brewing Company is
driving for local initiatives to involve consumers in its decision making process.

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An Evaluation of the Environmental Factors
SWOT Analysis
The Five Points Brewing Company has various strengths. In the current UK beverage
market, consumers still refer to the company as “the old guard” hence making it the most
preferred brewer. The aspect has increased the company’s competitive advantage. The company
has strong customer satisfaction through its dedication to enhance its relationship management
among existing and potential customers.
Analyzing the company’s weaknesses reveals that the company’s financial planning is
not efficient suggesting that cash can be used more efficiently to yield better outcomes. The
company should also consider investing more in new and innovative technologies by channeling
more cash towards technology. In addition, the company has faced various challenges in the
market which has resulted to the company having limited success outside core business.
Opportunities available to the company include increased consumer spending due to the
economic uptick in the UK hence the company could capture new customers. The company can
also invest in adjacent segments including product segments and new technologies. New
consumer trends will open opportunities for The Five Points Brewing Company to build new
streams of revenue and for the diversification into new products.
The Five Points Brewing Company faces the risk of lawsuits being filed against them due
to the constantly fluctuating product standards. The company lacks a regular supply of
innovative products and new technologies which makes the company to develop products so as
to respond to the development by other players. Failure to innovate technologies is a serious
threat to the organization. The company also faces intense competition since the high profits

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have attracted entrepreneurs to the beer market thus stagnating sales. Moreover, the rising costs
of raw materials has affected the company significantly.
PESTEL Analysis
The political environment in the UK has affected The Five Points Brewing Company.
The political factors include inflation by 2% and increased duty on beer to 9%, the increase of
budget due to the imposed duty on alcohol, EU legislation and influence regarding measurers of
drinks, and the increase of the national minimum wage which has affected wages and salaries
(Duarte, Alonso, Bressan & Sakellarios, 2016).
The economic factors affecting The Five Points Brewing Company include the increased
wages of employees brought about by the increase of the minimum wage and national insurance.
Other factors include steadily falling employment, increased cost of transport fueled by high cost
of fuel, less disposable income for socializing due to international and national economic
downturn, and the rising costs of employment, food tax and energy.
Social factors affecting the company include the demographically increased student
population, the culture of alcohol being used in celebrations, increased awareness of concerns
about health, increased mainstream media advertising, and the concern of the media in regards to
the negative aspects associated with ‘binge drinking’.
Technological factors affecting The Five Points Brewing Company include the
development of a wide range of alcoholic beverages that are flavored, the development in the
delivery of chilled ale and cold beer, multi media’s increasingly advertising alcohol brands, and
the advertisement on the awareness of alcohol and drinking responsibly on mainstream media.

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Legal factors affecting the company include the legislation of EU on measuring the
number of drinks served to a consumer, changes in the laws of drunk driving, strict
reinforcement on the regulations for underage drinking in both national and local levels, and the
ban on smoking since smoking is related to alcohol consumption.
Environmental factors affecting The Five Points Brewing Company are the costs of
transporting and delivering goods, refuse, litter and waste produced in the local area, and the
recycling of goods.
An Assessment of Current Growth and Development Strategy
With the rise of many microbreweries in the UK, The Five Points Brewing Company has
to step up its game in order to stay ahead of the competition. The company’s management plans
on continuously building its brand by offering consistent quality beer. Enhancing consistent
quality will ensure that customers are satisfied and thus increase the sales margins. Building a
strong brand name and message assists in the connection with the consumer which is important
in the sale of craft beer. Therefore, the company strives to ensure that they build a strong
connection with consumers which makes them stand out from the crowd.
In addition, The Five Points Brewing Company has focused on its distribution options to
ensure that beer gets to the stores and restaurants for sales. The company has ensured that it
works with an established distributor of beverages to enhance the growth of sales rather than the
creation of the required infrastructure for an in-house operation. Furthermore, The Five Points
Brewing Company has utilized the power of social media to advertise its products. While online
advertisement may not seem viable for most of the small brewers in the UK. However, The Five
Points Brewing Company believes that having a strong presence in the social media builds

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audience among consumers thus improving word of mouth marketing for connecting with the
loyal fan base resulting to the growth of the company.
The company also doesn’t sell only the beer but has other items like branded t-shirts,
mugs, beer steins and other items within the company logo which has improved its connection
with consumers. When branded products are circulating and being used by people around UK,
the company’s presence is felt and it gets known by a larger audience which promotes sales and
company growth. Moreover, the company plans on increasing their sales by selling abroad,
which will result to the growth of the company and become a lucrative income source.
Appropriate Government Support Schemes That May Be Available To the Five Points
Brewing Company
The UK government implemented a scheme known as the Small Breweries’ Relief (SBR)
for the support of small and medium brewers (Danson, Galloway, Cabras & Beatty, 2015). The
relief aims to improve the minimum profits of small brewers as compared to larger brewers
which enjoy better production economies of scale. In addition, the SBR was to solve the
challenges faced by the medium and small breweries in marketing their products and to compete
with larger UK breweries with the ability of offering larger discounts to wholesalers.
Furthermore, the scheme would assist in showing the importance of maintaining diversity within
the beer industry and for the preservation of consumer choice. The Small Breweries’ Relief was
introduced in 2002 which has resulted to the transformation of The Five Points Brewing
Company. However, the reason for the introduction of the Small Brewers’ Relief are still valid.
Due to the aspect, the UK leads in the world with an innovative, exciting and vibrant brewing

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scene (Cabras, 2018). The Small Brewers’ Relief will also defend small brewers to avoid losing
duty reliefs due to reforms.
Conclusion
Small and Medium Enterprises (SMEs) are important in the UK since they play a great
role in the reduction of poverty and in economic growth. In the UK, some companies face
problems with the disclosure of information at the right time, accountability and transparency.
However, the corporate governance concept has gained great importance. Therefore, the small
breweries in the UK continues to enjoy the corporate governance concept with government
scheme for support of the small and medium enterprises. The findings of the report shows that
the SMEs is a sector which is very important in the UK as it is parallel to the greater local drink
and food revival. However, micro brewing in the UK needs to be researched further. The sector
brings forth entrepreneurial, enterprise and economic motivational and behavioral questions
which are interesting. Partly, the questions are driven by the environment of business whereby
the small breweries operate.
Recommendations
The Five Points Brewing Company should have one primary goal of focusing on
providing its customers with the best quality beer as it is critical factor of success for all
breweries. Since many people are now liking craft beer and leaving the usual beer, the craft beer
is gaining quite a good consumer base. As consumers are continuously introduced to craft beer,
they will gain more knowledge on their craft choices, thus giving The Five Points Brewing
Company an opportunity for gaining customer loyalty.
In addition, The Five Points Brewing Company should focus on being consistent about
the quality of their beer. Consumers may find it risky to associate themselves with any product if

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the quality changes consistently. Therefore, the company should maintain the quality of beer to
prevent customers from shifting to other manufacturers who can offer a similar or better quality.
To stay at the top of competition, the company should plan ahead so as to keep up with
the demands of customers and to learn the anticipated level of competition in the market. The
process of gaining the loyalty of consumers could be long, thus the company should be able to
plan ahead to avoid running out of beer or being caught unawares by situations.
Moreover, The Five Points Brewing Company should effectively manage its brewery.
The inability to manage growth can be a major challenge for the organization, hence it is vital
that the company remains competitive by effectively managing growth.

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References
Cabras, I., 2018. Beer on! The Evolution of Micro-and Craft Brewing in the UK. In Economic
Perspectives on Craft Beer (pp. 373-396). Palgrave Macmillan, Cham.
Danson, M., Galloway, L., Cabras, I. and Beatty, T., 2015. Microbrewing and entrepreneurship:
the origins, development and integration of real ale breweries in the UK. The International
Journal of Entrepreneurship and Innovation, 16(2), pp.135-144.
Duarte Alonso, A., Bressan, A. and Sakellarios, N., 2016. A resource based approach in the
context of the emerging craft brewing industry. European Business Review, 28(5), pp.560-582.
Holmes, J., Guo, Y., Maheswaran, R., Nicholls, J., Meier, P.S. and Brennan, A., (2014). The
impact of spatial and temporal availability of alcohol on its consumption and related harms: a
critical review in the context of UK licensing policies. Drug and alcohol review, 33(5), pp.515-
525.
Laboy-García, G.M., Cruz-Bermudez, N.D. and Sosa-Arrufat, R., (2016). Parents’ perceptions
and perspectives about their sons’ drug addiction and rehabilitation process. Revista
Puertorriqueña de Psicología, 27(1), pp.148-164.
Miles, C.A., King, J., Alexander, T.R. and Scheenstra, E., (2017). Evaluation of Flower, Fruit,
and Juice Characteristics of a Multinational Collection of Cider Apple Cultivars Grown in the
US Pacific Northwest. HortTechnology, 27(3), pp.431-439.
Pratten, J.D. and Carlier, J.B., (2012). Women and Wine in the UK: A Business Opportunity for
Bars. Journal of food products marketing, 18(2), pp.126-138.

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Qin, Z., Petersen, M.A. and Bredie, W.L., (2018). Flavor profiling of apple ciders from the UK
and Scandinavian region. Food research international, 105, pp.713-723.