Impact of Change on UK Brewing Industry and British Pubs Analysis

This report examines the decline of British pubs and its impact on the UK brewing industry. It identifies key drivers of change, including legal frameworks, taxation, smoking bans, technological advancements, changing consumer preferences, and health consciousness. The report utilizes Porter's Five Forces framework to analyze the competitive landscape, assessing the threats of new entrants, substitutes, and the bargaining power of customers and suppliers, as well as competitive rivalry. The analysis reveals how these factors affect the industry's future strategies. The report concludes that the decline of British pubs is significantly impacting the UK brewing industries, highlighting the need for strategic adaptations to address changing consumer behaviors, regulatory frameworks, and increasing competition. The report also emphasizes the importance of understanding customer needs and wants to determine growth rates.

“The ‘pub ‘ : decline of a British institution-how the brewers faugh back”

TABLE OF CONTENTS
(a) Key drivers of change and their impact on the UK brewing industry...................................1
(b) Porter's Five Forces Framework............................................................................................2
(c) Implication of factors.............................................................................................................4
REFERENCES................................................................................................................................6

(a) Key drivers of change and their impact on the UK brewing industry
UK brewing industries are facing a lot of issues as compared to the previous era.
From the start of 1998 to 2014 adverse impact of certain factors have been clearly
visible to the growth of the British pubs. Declining rate of Pubs are impacting the UK
brewing industries, as it is highly affecting the growth of these companies as well. There
are number of changes that are being undergoing within Pubs and UK brewing
industries that can be highly dependent on certain factors that are directly related to the
legal bodies and their actions. Number of British pubs have fallen down with a rate of
17% from year 2000 (Ball and MacBryde, 2018). British pubs are declining continuously
with a considerable pace which can be a result of number of statutory legal frameworks
that had been revised in the context of alcohol consumption in the country.
Increasing tax rate on alcohol may be an elementary driver in declination of
British Pubs. People are having more comfortable options of having beer at
comparatively affordable prices at their home (Kaewpramkusol and et.al., 2019).
Another considerable driver of change for British pubs can be the ban on indoor
smoking and at other households which has reduces the profit margins of pubs. People
mostly prefer to smoke during drinks in a pub which has also proven a major driver of
change in the industry.
There has been high rate of closure of pubs during late night due to government
orders, this has also resulted in the decline of customers in pubs (Bhattacharya and
et.al., 2018). Also government has set limits on drinking and can not drive after drinking
excess alcohol and people get fined and penalised which has also hampered the profits
in an industry. Most of the people prefer to leave at late night to have a drink but the
possibility of closure of pubs have decline the profits with in the industry.
Increasing technology can also be one of an important driver of change within
British Pubs. It has been noticed that with the development of food delivery options,
people are getting highly involved in ordering or food, beverages delivery to their home
itself (Quirmbach and et.al., 2018). This has reduces the crowd in pubs and delivering
loss to it. Also the innovations within the designs of pubs has also been outdated or lack
of proper innovative facilities in the pubs has also declined the customers rate in the
pubs.
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Changing in taste and preferences of people has highly affected the growth rate
of pubs. Emerging trends in the lifestyle of customers also have declined the growth of
industry. People are getting more health conscious and do not tend to consume alcohol
frequently. As there has been rise in awareness programs related to alcoholism which
has forced people to shift their behaviours of people and people are trying to stop
drinking alcohol due to pressure from family, friends, relatives etc. this is mainly due to
rise in general awareness program related to alcoholism. This has significantly shatters
development and interest of public towards pubs which has provided significant issues
to pubs and bars in the country.
All these issues related to British pubs has greatly affected UK brewing industries
as British pubs are the most feasible channel of distribution for brewing business that
tends to generate considerably high amount of revenue for it (Sandiford and Divers,
2018). Moreover, due to health consciousness and various health programs related to
alcohol consumption, people are not likely to buy alcohol from Pubs as well as from
shops. Similarly, the supply chain has also been disrupted at a wide level and thus,
declining British Pubs are affecting UK brewing industries as well.
Based on the above discussion, it may be summarized that UK brewing
industries and pubs have established a direct relation within past years and now this
declining interests of pubs among public have adversely affected its growth. Increasing
taxes and health consciousness are two significant factors for both the industries.
Similarly, the effect of increasing tax on food and drinks in establishments like pubs are
reducing public's' interest for heading towards pubs and bars. Smoking bans and
different cessation programs are also termed as the most influential factor in declining
numbers of pubs in UK.
(b) Porter's Five Forces Framework
This is a framework which is useful for assessing the factors that impact the
prevalent competition in brewing and pub industry of United Kingdom. It is the driving
force to understand the intensity of the marketplaces in terms of productivity, profitability
and existing threats (Porter’s Five Forces of Competitive Position Analysis, 2019). The
following are the five forces as follows:
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Threat of new entrants: It is common concept that with new entrants, the profitability
gets decreased. New entrants also provides various options for the customers as
customers get variety of options that they can choose from. Moreover, due to
governmental interventions in the form of posing cigarette ban and increased taxation
policies, the brewery and pub industry has low value. This factor has strong influence
since the chosen industry is in struggling phase. The already established names might
have a loyal customer base and few would have gained popularity and credibility. So
this force will prove weak for British Pub as new entrants has to go through various
challenges if any company decides to enter in the industry.
Threat of substitutes: It is one of the factors that emphasis on the extent of the price
and the overall performance in order to switch the customers from one brand to another
on the basis of willingness and loyalty. Threat of substitutes is the major force within the
industry which have an impact on various companies in the industry. In context to the
case study, low value is seen due to challenging situation and the switching abilities of
the buyers who are becoming health conscious (Brennanand Tennant, 2018).
Alongside, this is based on product differentiation levels which also has adverse effects
on the profits and the opportunity gaps is low as well. This force is proving strong for
British pub as there are variety of substitutes available for the customers.
Bargaining power of customers: There are several factors such as degree of
dependency, switching costs of buyers, customer value analysis etc. which has
improved the bargaining power of customers. In regard to the case study, this factor has
low value due to government taxation policies and establishment of some health related
programs. This made the population to get distracted from this industry and to adopt
healthy lifestyles, they discarded to visit pubs and such places. It affected the already
struggling UK brewery industry and pub employers. So, this force is also strong within
the industry.
Bargaining power of suppliers: This factor is in context to the raw materials, labour
and services in the form of expertise or guidance and plays essential role in deciding
the new establishment before entering the marketplaces. The case study reflected that
suppliers were stressed due to low usage of beer and imposition of tax policies on the
pubs. It made the investors to move towards other sectorial ventures and impacted the
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growth and revenues management. This force is low within the industry as suppliers are
facing problems in the industry.
Competitive rivalry: This is the determinant that is proportional to the industry's
complete competitiveness. It is vital and is high due to orientation of youth and the
younger people who prefer this industry to relax and rejuvenate themselves (Kay,
2019). However, innovation is the driving force which gives an upper hand to gain the
attention of the customers and clients like retailers, distributors for starting the business.
This force is also strong within the industry as industry is facing huge competition.
It has been summarised that Porter's Framework assisted in gaining insights for
the organizations and individuals working in the UK brewery and pub industry. These
five factors highlighted the need to understand the customers' needs and wants and in
accordance to it, the growth rate and the life cycle of product gets outlined.
(c) Implication of factors
As UK brewing industries is facing a lot of issues, there has been an adverse
impact of certain factors which have impacted the growth of British Pubs such as legal
bodies and their actions have resulted in the decline the growth of British pubs
continuously. The growth of British pubs have declined due to number of statutory legal
frame works which has been revised in context alcohol consumption within the country.
Also, Porter's five forces have helped British Pub in identifying various forces which
have an impact on competition in brewing and pub industry in UK.
There are various factors which have an impact on industry's future strategies
like tax rates on alcohol products have increased which have declined on the margins of
profits on alcohol products this regulatory framework has led decline of growth of
industry. Also people in UK have also got another substitute of alcohol which is beer
which has also resulted in the decline of sale of alcohol, this factor also has an impact
on future strategies of the pub (Cowlishaw and Thomas, 2018). Also increase in
innovations and improvement in technologies in this industry have also impacted the
future strategies like people demand many options in this sector such as food delivery
options as people wants to get involved in ordering of food and beverages at home, this
factor can also result in the growth of British pub. Delivering food and beverages to
customers at home will prove beneficial for pub. Also people want innovations in the
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design of pub which have a significant impact on the mood of a customer who enter in
to the pub (Seferidi, Millett and Laverty, 2018). Majority of people also prefer to smoke
in a pub while having drinks but ban of smoking in pub will also impact the future
strategies, ban on smoking will result in decline of customer who prefer smoking while
drinking in a pub. Also, another factor which have an impact on the future strategies of a
pub is change in customer preferences and tastes which have declined the growth rate
of pubs in UK. As now people have turned health conscious and now prefer alcohol
occasionally like parties, discos, etc which will decline the rate of customers in the pub.
This factor also have an impact on developing a future strategies in order to attract the
customers towards pub. The strategy is also impacted by threat of substitutes that are
available for the customers this factor plays an significant role for a pub in developing a
strategy for the future (O'sullivan, M., 2016). There is also huge competition within the
industry as people has got majority of options available within the industry which have
an impact on developing a strategy of British Pub in the future.
It can be summarised that there are various factors which have an impact on
developing the strategies for British Pub as there has been a change in the preferences
of customer, change in regulatory framework of UK, improvement in innovations and
technologies, substitutes available and high competition within the industry which can
have an effect on developing future strategies for growth in the industry.
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REFERENCES
Books and Journals
Ball, P. and Mac Bryde, J., 2018, June. Environmental Practice Adoption in UK Brewing
Sector. In International Conference on Sustainable Design and Manufacturing.
(pp. 105-115). Springer, Cham.
Bhattacharya, A and et.al., 2018. How dependent is the alcohol industry on heavy
drinking in England?. Addiction. 113(12). pp.2225-2232.
Brennan, G. and Tennant, M., 2018. Sustainable value and trade‐offs: Exploring
situational logics and power relations in a UK brewery's malt supply network
business model. Business Strategy and the Environment. 27(5).pp.621-630.
Cowlishaw, S. and Thomas, S. L., 2018. Industry interests in gambling research:
Lessons learned from other forms of hazardous consumption. Addictive
behaviors. 78. pp.101-106.
Kaewpramkusol, R. and et.al., 2019. Brand advertising and brand sharing of alcoholic
and non‐alcoholic products, and the effects on young Thai people's attitudes
towards alcohol use: A qualitative focus group study. Drug and alcohol review.
Kay, J., 2019. The concept of the corporation. Business History, pp.1-17.
O'sullivan, M., 2016. A handbook for sensory and consumer-driven new product
development: Innovative technologies for the food and beverage industry.
Woodhead Publishing.
Quirmbach, D and et.al., 2018. Effect of increasing the price of sugar-sweetened
beverages on alcoholic beverage purchases: an economic analysis of sales
data. J Epidemiol Community Health. 72(4). pp.324-330.
Sandiford, P. J. and Divers, P., 2018. The pub as a habitual hub: Place attachment and
the Regular customer. International Journal of Hospitality Management.
Seferidi, P., Millett, C. and Laverty, A. A., 2018. Sweetened beverage intake in
association to energy and sugar consumption and cardiometabolic markers in
children. Pediatric obesity. 13(4). pp.195-203.
Online
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British pubs are disappearing. Here's why. 2018. [Online]. Available through:
<https://www.cnbc.com/2018/04/18/british-pubs-are-disappearing—heres-
why.html>.
Porter’s Five Forces of Competitive Position Analysis. 2019. [Online]. Available
through:<https://www.cgma.org/resources/tools/essential-tools/porters-five-
forces.html>.
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