Corporate Governance and Internationalization in Japanese Brewing Companies

This study explores the relationship between Japanese corporate governance and internationalization strategy by looking at the cases of Suntory and Kirin Breweries. It examines the internationalization activities of the two companies from 1980 to 2015. We find that executing an international strategy can impact the corporate governance of Japanese brewers, especially where the brewer already had pre-existing diversity in its management system. We argue that absorptive capacity allows the brewing company to transform its corporate governance on the basis of its internationalization. Our analysis also suggests that rejuvenation of the firms’ corporate management system can be a motive for expanding abroad in the brewing sector, something that has not been identified in prior research.

Beer Brands from the Perspective of Young Consumers in Croatia, with an Emphasis on Gender Differences

New trends in beer markets across Europe bring new challenges to beer brand management. As brand equity is an outcome of consumers’ perceptions of a certain brand, it is necessary to investigate how consumers perceive brands in various industries. The chapter tackles this topic from the perspective of younger adults in Croatia in 2019, by putting into focus gender differences in attitudes toward beer brands in retail purchasing. The presented findings indicate that for both young males and females, quality, taste, and continuous availability are important aspects of beer brands. The packaging, label design, and social aspects of a brand are more influential on females than on males. The chapter contributes to better understanding of brand management issues when approaching younger consumers. In addition, observed gender differences enable beer brand managers to fit their approach to narrow niches within the population of young consumers.

Corporate Governance, the Craft Brew Alliance, and A-B

The Craft Brew Alliance (CBA) resulted from the merger of two well-known craft brewers: Redhook Ale Brewery Inc and Widmer Brothers Brewing Co. The CBA was listed on the NASDAQ and the largest shareholder was Anheuser-Busch (A-B). This shareholder relationship violated the Brewers Association equity policy. At the heart of the dispute was the vision of the craft beer movement and disagreement about how brewers should be owned and governed. This chapter examines the corporate governance of one “craft” beer company and analyzes how, over time, this firm’s governance put it at odds with the culture of the industry in which it operated. The ultimate goal of this chapter is to understand the corporate governance challenges of publicly traded firms operating in craft culture, as such firms operate at a crossroads of artisanal tradition and public market expectations.

Branding and Consolidation in the Global Beer Market

The liberalization of trade turned on a wave of cross-border M&A after the turn of the century that dramatically increased the concentration of ownership in the global beer market, where the four largest breweries now serve close to 60 percent of the market. The chapter looks at the motivation behind these changes in corporate ownership and the pay-off to the breweries and their owners. The breweries spend a large amount of money promoting some of their lager beer as premium beer, and as consumers perceive it as high-quality beer, they are willing to pay a high price premium for the branded beer. We estimate the price premium for branded beer and relate it to the rapid change in the ownership structure in the beer market.

The “largest beer bottler in the world”

In 1914, the London brewer Whitbread & Co. claimed it was the “largest beer bottler in the world.” Arguably it was, it having a network of more than forty bottling depots and stores in Britain and Belgium, with a dozen bottles available anywhere in Britain for 2/6. This chapter shows how Whitbread’s market-leading position in the bottled beer segment between 1869 and 1914 was dependent on various factors. The company’s message about the purity and quality of bottled beer remained steadfast throughout the period; it also invested in production and, as the business grew, a system of management. Most significantly, integration into distribution and the creation of the bottling network reduced the risk of adulteration by controlling the product from brewery to retailer, allowed it to be responsive to changes in demand, and reduced costs. Consequently, Whitbread’s beer was consistent in all respects: in purity, quality, availability, and price.

Brewing Industry Concentration and the Introduction of the Beer Excise in Australia and New Zealand in the Late Nineteenth Century

In the Australian colonies and in New Zealand, British colonization was followed by the development of a flourishing brewing industry. Brewery numbers peaked in each colony in the late nineteenth century. The industry contracted subsequently to a small number of dominant cities, achieving high levels of concentration by the early twentieth century. One significant factor promoting concentration was the beer excise, introduced in each colony in the late nineteenth century. When six colonies combined in 1901 to create the Commonwealth of Australia, the federal government took responsibility for taxation of beer production, adopting a uniform excise rate and applying harsher administrative requirements that affected smaller breweries disproportionately. The operation of the beer excise in each of the Australian colonies (New South Wales, Tasmania, Victoria, South Australia, Western Australia, and Queensland) and in New Zealand, and the later uniform federal tax in Australia, are considered as factors promoting industry concentration.

The Dynamics of the Hops Industry

Today the hops industry seems to be enjoying rising popularity. After decades of consolidation in the beer industry, the recent craft beer movement has resulted in a higher demand for hops. Historically used to increase the preservation and shelf life of beers, hops are nowadays essential for the more diverse tastes of certain craft beers. On the supply side, hop farmers have increased their production in recent years in response to the higher interest in their products. However, specialization of hop farmers in hops that are in demand by the craft beer sector can lead to higher price fluctuations in more segmented markets, where hop consumers and hop producers are tied to each other by longer future contracts and sunk costs of investment in cultivated areas. This might create problems were craft beers to lose their appeal to consumers.

Navigating the Regulatory Environment in American Urban Areas

The impressive growth in the number of craft breweries in the United States has created both opportunities and challenges for municipalities. On the one hand, it is evident that craft breweries can add to the diversity of the urban fabric and contribute in a meaningful way to neighborhood vitality and, in the case of distressed areas, to neighborhood revitalization. On the other hand, zoning regulations in many municipalities have not been particularly accommodating. Craft breweries pose a challenge to municipalities, as their businesses represent a hybrid of restaurant, manufacturer, and entertainment. To capitalize on the growing popularity of craft breweries, municipalities have been changing their zoning ordinances. In this chapter, we examine the relationship between craft breweries and zoning in three American cities. We seek to highlight the differences and similarities that craft breweries face in seeking optimal locations, in the face of zoning challenges.

The Internationalization of Craft Beer

Historically, little beer has crossed national borders, and the notion of small, locally oriented breweries exploring international operations seems unlikely. Yet, the market for craft beer has changed tremendously since the 1970s, and international linkages have played an important role in these changes. While the most immediate cross-border manifestation of these connections is exports, this chapter argues for a broader conceptualization of this development. The very fact that the terms “craft beer” and “craft brewery” are commonplace throughout the beer world can be taken as examples of an internationalization process which also includes fundamental steps such as the global diffusion of beer styles and brewing techniques. To help illustrate this process, the chapter develops a case study examining the evolution of craft beer in the United States.

Contract Brewing and Its Implications for the Beer Industry

After years of consolidation in the industry, the beer industry has recently witnessed a wave of entries by small and medium-sized “craft” brewers. As brewing beer requires a significant investment in operational facilities, many small start-up breweries have resorted to contract brewing in their start-up phase. By collaborating with a contract brewer, who typically has already made the investment in larger brewing facilities, craft brewers can benefit from the economies of scale and scope realized at the contract brewer, and slowly assess whether the market demand for their beer would require the establishment of their own facilities. As such, contract brewers have greatly accommodated the recent rise of craft breweries. However, if the demand for craft beer saturates, the impact on contract brewers will be significant.