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ANHEUSER-BUSCH & HEINEKEN BREWERIES.   Term Paper ID:26151 Click to get this paper

Essay Subject: Industry overview, profiles of 2 firms, statistics, how they use technology.... More...

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Paper Abstract: Industry overview, profiles of 2 firms, statistics, how they use technology. Paper Introduction: ANHEUSERBUSCH AND HEINEKEN BREWERIES: A COMPARISON Introduction The beer industry is one of the most competitive in the world, and the competition is seen best in America. It is estimated that some 700 companies that once manufactured beer have gone out of business in the last 50 year. Those companies that are surviving are doing so by a combination of innovation, cost control, marketing, developing new strategies and utilizing technological advancements in every step of the manufacturing process from ingredient purchasing through brewing, bottling, and distribution. The industry statistics for the American beer industry include: Number of Brewers 170 Number of Brands 800 Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. 8 less advertising allowance (2 percent)=.88 lessTaxes, G & A (3 percent)=.64 cents. Louis headquarters, where the great grandson of the founder, AugustA. With big-brand images in trouble beer manufacturing andsales executives are cutting prices to lure consumers even as they scrambledesperately to develop or buy the types of beer that American drinkers willpay more for -- imports and microbrews. Typically, the value margins are: Brewer to distributor 5 percent Distributor to premise 5 percent Premise to customer 5 percent Using the six-dollar retail price for Heineken's mentioned above, thenumbers work like this. Anheuser-Busch haslicensing agreements with breweries in six foreign countries. Both brewers have fully automated brewing plants where the hops, malts,barleys and alcohol are carefully controlled through automation.Nevertheless, the real savings (and increased profits) from the use oftechnology comes from the distribution process in which the beer travelsfrom brewery to user. With thisvalue-added structure, the price and profit margins are particularlyimportant in this industry. In 1997, the company saw $11 billion in sales, and a sales growth of1.7 percent. Worldwide, the average price of a six-packof Budweiser 12-ounce cans is $5 while a six-pack of Heineken averages $6.As mentioned above, the beer industry has three primary tiers in thedistribution channel, and each of these is a value-added step. Inturn, the distributor has bought the six pack from the brewer for $1.5 .At the brewer's end, the following costs are typically deducted from that$1.5 . "The importer's new PC-based supply-chain planningsoftware gives its distributors real-time replenishment data using only aWeb browser as the front end. This is probably because ABC and TQM are easier, or moreconvenient to measure. He sees a positive future for Heineken's products in theU.S. $1.5 less Manufacturing and labor(1 percent) =$1.35 less cost ofgoods (2 percent)=$1. As large as the American market for beer is, it is just a part of theworldwide thirst for this liquid that is one of the oldest in history. In addition, thereis a sub-sector known as "brewpubs" (restaurants and taverns that havesmall brewing systems to brew beer usually sold on the premises). Results are more quantifiable. Beverage World. is different than some of the traditional European marketswith the diversity of its population. Structurally, the beer-brewing industry is multi-layered, although three distinct tiers can beidentified: brewers, distributors and on-premises (taverns, restaurants,etc.) retail businesses that stock and sell beer to consumers. In fact, thefamily-controlled company sold 1.31 billion gallons in 1997, making itEurope's largest brewer and the second largest in the world. This paper will nowlook at how the world's largest brewer (Anheuser) and the world's second-largest (Heineken's) are using technology to remain competitive.Profile of Anheuser-Busch Anheuser-Busch is one of the world's largest brewers with operationsin some 6 countries and has the largest market share in America, currentlysome 45 percent. The remaining 1 percent is draft beer sold in various sized-kegs. S18. Supply chain planning lets us leverage oursize effectively and not be held back against other large companies'" saidone executive (Asbrand, 1997, 62). Smith, M. Hoover's Online Corporate Capsules atwww.hoovers.com. TheEuropean, 28. (1995, March 1). A case of balance. As part of arestructuring, the company sold its ball team, The St. Anheuser-Busch began using the Budweiser brand name in 1876, some 19 years beforethe Budvar brewery was established (Lovitt, 1997, 28). Heineken's order processing system was terribly outdated and couldtake up to three months. This is just one example of how technology is improving the beerindustry. References Asbrand, D. Datamation. Market leader: Heineken president Michael Foley. A recent article in Datamation points out just oneexample of how Heineken's turns technology into sales. Those companies that are surviving are doing so by a combinationof innovation, cost control, marketing, developing new strategies andutilizing technological advancements in every step of the manufacturingprocess from ingredient purchasing through brewing, bottling, anddistribution. low-cal import. "The U.S. 114. (1998). Approximately 25 percent of its sales revenue comes fromoperations of its theme parks including Busch Gardens. The company has a solid distribution salesforce around the world, and most of the major strategic decisions come fromits St. alcohol beverage consumption is beer.Americans drink approximately 23 gallons of beer per year. The UnitedStates Department of Commerce estimates there are approximately two dozenregional brewers and 1 microbreweries operated in the U.S. Bottleneck management: Time factor inproduction. Squeeze out excess costs with supply-chain solutions. For a retailer or a bar to sell a six pack to acustomer for $6 it has bought that six pack from a distributor for $3. The beer industry provides the most popular alcoholic beverage inAmerica, involving more than 8 million Americans, and it is estimated thatabout 87 percent of total U.S. Budweiser, which accounts for more than half Anheuser-Busch's $11 billion-a-year in revenues, has seen its share of the marketdrop to some 45 percent, still substantial enough to make it the number 1brand in America. Busch III serves as president and chief executive officer. "These processes, running at speeds of 1,225 bottles aminute, can accumulate 7,4 cases of bottles" (McBride, 1998, 114). Some ten-percent of Heineken's 1997 sales revenues of $7 billion came from itsAmerican sales, all performed through Heineken USA which is headed byMichael Foley. Asa matter of fact, competition in the worldwide beer market is fierce, andone of the strongest areas of contention in brand name protection. You'll find consumers interested intrying beers from where their parents and grandparents are from" (Marketleader..., 1997, S 19).How the Firms Are Using Technology Both brewers must use high degrees of technology because of the veryslim margins of their products. It is estimated that some 7 companies that once manufactured beer have gone out of business in the last5 year. A Bud by any name would taste bitter. (1998, May 15). Called an Automatic Carton BalancingSystem designed to balance cartons on the production line. (1997, March 1). Worldwide Anheuser-Busch beer brand sales have increasedsubstantially since 1976, when it instituted a strategy of joint venturingwith various smaller brewers in various countries. Nationalbreweries are defined as those that operate more than one brewery whileregional brewers are single-brewery companies. Microbreweries bydefinition produce less than 15, barrels per year. ANHEUSER-BUSCH AND HEINEKEN BREWERIES: A COMPARISONIntroduction The beer industry is one of the most competitive in the world, and thecompetition is seen best in America. Anheuser-Busch has recently adopted a sophisticated production linetechnology in its Houston brewery. In 1997, Americans downed 61 milliongallons of Heineken last year, making it their favorite imported beer. Beerindustry sales show that some 9 percent of the retail beer sold in Americais packaged beer (7 percent cans, 3 percent bottles). 62. Both Heineken and Anheuser-Busch are remaining competitive byutilizing a combination of technological expenditures and activity-basedmanagement (ABM), a critical requirement for brewing beer, which usuallyinvolves four management areas: Cost control, Quality control, Time controland Inventory control. McBride, S. (1997, July 31). Analyzing Time andInventory are harder since those two terms dip into areas like "mind,""motivation," and other terms that are hard to chart and analyze. Louis Cardinals, andalso divested its interest in snack foods and baked products, focusinginstead on beer development. The industry statistics for the American beer industryinclude:Number of Brewers 17 Number of Brands 8 Number of On-Premise Outlets 258.526Number of Off-Premise Outlets 2 1,477Channels of Distribution 3 Number of Distributors 1,5 Total US Barrels 186.8 millionTotal Sales $51.6 millionSource: Statistical Abstract of the United States The American beer market today is typified by a combination of heavydiscounting of famous-name beers and the introduction into variousdistribution channels of high-priced specialty beers. millionbarrels, or 7.5 percent, to 28.8 million barrels for the second quarter1998, giving a positive confirmation to the company's strategy of focusingon its core markets and products.Profile of Heineken To most Americans, the impression of Heinken Beer (and its popularAmstel brand) in the familiar green-bottles, is that it is a product of abrewery staffed by rosy-cheeked workers in wooden shoes. Forinstance, Anheuser Busch is in the midst of a "name" battle in Europe tostop a Czech brewer from marketing its Budejovicky Budvar beer, which isalso called "Budweiser" at bars in England and throughout Europe. However,Heineken has the biggest international presence. The bottom line of this example is that every penny squeezed out ofthis value added chain shows up on the balance sheets as increased profits. (1997, July 14).Modern Brewery Age. Lovitt, J. Anheuser-Busch's share of foreign equity partners' barrelage, increased 2. Budvarhas the exclusive rights to use the name Budweiser in 42 countries, inaddition to the UK, while Anheuser-Busch sells under the Budweiser name in11 European countries, and under the name Bud in a further nine. Heinekenbrews its beer in 5 , including Burundi and Papua New Guinea and in majormarkets like France and Canada. The technologywas installed in 1996, and was designed to improve efficiency byautomatically removing bottles from the cases, conveying them through therinser, filler, crowner, pasteurizer and labeler before they arrive at thecase packer. Andthe company's Amstel Light is the leading U.S. However,a growing amount of research is beginning to study the "Bottleneck" factor,that combination of "throughput, interdependent events, product mix and job-scheduling in the identification and elimination of production bottlenecks(Smith, 1995, 28). This suggests thatthe big brands such as those produced by Anheuser-Busch (Budweiser, BudLight, Busch and Michelob) are having to fight harder to maintain theircompetitive lead. Most of the emphasis in the current businessliterature focuses on activity-based costs (ABC) and TQM (total qualitymanagement). The installing of a sophisticated supply chainsoftware was a help. Anheuser Busch. British Management Accounting, 73: 26-29. 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