File - Nancy C. O'Connell

Seven strategists at the University of Missouri met for fifteen weeks during the spring of 2013 to
analyze the past, present, and future of Boston Beer. They examined the internal strengths and
weaknesses and the external opportunities and threats for this firm. The S.W.O.T. analyses
included these: strategic position, Porter’s Five Forces, strategic history, business level strategy,
super ordinate goals, degree of fit, macro-environmental analysis, organizational culture,
organizational structure, value rare inimitable organizational framework (VRIO), and the
strategic group. After considering the strengths and weaknesses in the S.W.O.T. matrix derived
from these analyses, the authors then crafted a number of strategic recommendations for Boston
The group selected four strategic recommendations that best took advantage of Boston Beer’s
strengths, neutralized threats against it, minimized its weaknesses, and seized upon its
opportunities. They suggested a presidential-themed line of patriotic beers. This idea employs a
strengths and opportunities strategy from the S.W.O.T. matrix that capitalizes on Boston Beer’s
strengths in order to seize upon its opportunities. Next the team suggested a renewed focus on
Boston Beer’s status as a “real American beer.” This recommendation includes a strengths and
threats strategy that uses a company’s strengths to neutralize threats. Thirdly, the group crafted a
strategic recommendation of backward integration, a weaknesses and threats strategy that
recognizes weaknesses in the firm and attempts to turn those weaknesses into a strengths that can
help the company neutralize and avoid threats. Finally, the strategists recommended creating a
less-expensive beer line under a different brand name. This beer would be sold in cans. This
weakness and opportunity strategy focuses on turning one of Boston Beer’s weaknesses into a
strength, thereby allowing the company to seize new opportunities.
Strategic Recommendation #1
The first strategic recommendation for Boston Beer is the creation of a presidential-themed line
of beers. This champion recommendation was crafted after strategically capitalizing on three
particular strengths in order to best take advantage of three specific opportunities. The first
strength was Boston Beer’s excellent brand recognition. This strength was distilled through the
superordinate goals and value, rarity, inimitability and opportunity framework. Brand
recognition is the extent to which the general public is able to identify a brand by its attributes.
Boston Beer’s wide range of brands is widely recognized across the United States, and its
flagship brand, Samuel Adams, is recognized internationally for quality, “local” feel, and
traditional brewing processes. The new premium line of ciders, Angry Orchard, has already
become the most recognized line of ciders in the United States for some of these same reasons.
Pairing this strength with one of the strategic history opportunities - the recent all-American
trend -could help Boston Beer to leverage its strong positioning status.
Boston Beer’s second strength is its broad product offering which was derived from assessing the
company based on super ordinate goals. Their second opportunity, to reach more consumers
with a broader range of appeal for new products, was derived from the company’s strategic
history. The strength and weakness were then combined to create this champion
recommendation. Boston Beer has experience in product differentiation and is able to adapt to
changing consumer preferences. Because Boston Beer is already accustomed to adding new
beers into its large range of beverages, the company is prepared to handle the challenges that
come with positioning and promoting a new brand. Adding another brand to the product line
would help the brewer take advantage of the opportunity to appeal to more consumers. Just as
the company appealed to a new group of customers with the ciders and extreme beers, the
presidential line would feature unique tastes that appeal to different consumers every year.
Boston Beer’s culture, which is steeped in tradition and quality, is the last strength derived from
Boston Beer’s strategic position. Boston Beer’s culture intertwined with the opportunity for
broader product differentiation, as well as the large demand for new product lines, which is an
opportunity derived from the Five Forces, creates the third building block for the
recommendation of a presidential-themed line of beers.
The presidential-themed specialty beer line would be released every year around July 4, tying the
patriotic roots of Boston Beer to the theme of the beer line. The president featured on the beer
would change every year. For example, 2013’s beer could prominently feature President Abe
Lincoln, and 2014’s beer could highlight President Barack Obama. Each year’s marketing and
packaging components would be structured around the specific president and the political and
patriotic times in which he lived. Bottle caps and bottle shapes could be changed in a creative
fashion to further emphasize the patriotic ties of the specific president and beer.
Finally, promotional merchandise could be released in conjunction with the beer line. A few
weeks before the new presidential beer is introduced, Boston Beer could sell items that both
promote the beer line and make additional profit. Red, white, and blue T-Shirts, baseball caps,
bandanas, coolers, and barbeque accessories could be produced with designs centered around the
specialty line’s president of the year. This merchandise would be perfect for taking advantage of
the peak summer sales that are centered around Independence Day. This merchandise would also
take advantage of the collectors who like having products that are only offered for a limited time.
Boston Beer would be able to plan out restricted time slots for each president’s merchandise to
be available to the public, thus allowing the company to better forecast demand for the product.
Strategic Recommendation #2
The second strategic recommendation that the University of Missouri team suggests is to refocus
the company image so that it is perceived as the only “ real American beer.” After reviewing
Boston Beer’s biggest strengths, they believe that this recommendation champions the rest. This
recommendation can utilize the strengths they distilled from the S.W.O.T. matrix to help Boston
Beer neutralize some of the firm’s more imminent threats. The strengths that the company has
and would be best suited to capitalize on include the following: brand recognition (distilled from
a super ordinate goals analysis and VRIO framework), customer loyalty (distilled from a super
ordinate goals analysis), and its perception as a local craft beer (distilled from a strategic position
analysis). They found that these strengths would enhance our recommendation to neutralize the
following threats: major brewers’ abilities to create similar products and steal market share
(distilled from the Five Forces analysis), increased competition (distilled in the Five Forces
analysis) and competing with brewers who have much greater bargaining power (distilled from a
strategic group analysis).
Based on this list of strengths and threats, the proposal to refocus the company image appeared
to be an ideal option. The most important effect that this move would have would be that it
would position the company as an aggressor. Now is the perfect time for Boston Beer to make a
play at improving its market share by attacking previously American and newly foreign-owned
firms such as Anheuser-Busch Inbev and SAB Miller Coors. AB-Inbev and SAB Miller are two
major players in the U.S. beer industry whose profits are being funneled out of America and into
the pockets of foreign business owners. The general public may resonate with Sam Adams, one
of the founding fathers. Buying Sam Adams beer could be seen as a patriotic act.
To further support this idea, Boston Beer has the advantage of being locally founded and owned
by Americans. Many American consumers support the American economy by buying only
American made products; thus, being the only large all-American beer gives Boston Beer
significant advantages. Being perceived as a quality product that is made by one’s neighbors
instead of foreigners may not seem important, but it is something that AB-Inbev and SAB Miller
can no longer imitate; this may give Boston Beer a sustainable competitive advantage. Boston
Beer would need to run a positive public relations campaign which emphasized its products
being American made and its profits going back into the American economy. Through this
proposed strategic recommendation, the company would capitalize on its aforementioned
strengths and lessen -or even neutralize - the major threats from competitors.
Strategic Recommendation #3
The third strategic recommendation distilled from the internal weaknesses and external threats of
Boston Beer is backward integration. Backward integration involves a company purchasing its
suppliers to lower production costs. In this case, Boston beer would become its own supplier of
barley, wheat, and hops. Boston Beer would be able to recognize weaknesses and avoid threats
or turn those weaknesses into strengths by capitalizing on this strategic recommendation. The
newfound strengths can now be used to neutralize the current threats in Boston Beer’s external
Strategists for Boston Beer paired three weaknesses with three threats to distill their strategic
recommendation that Boston Beer backward integrate into the suppliers of barley, wheat, and
hops. Out of all the recommendations that the strategists distilled by combining weaknesses and
threats, they believed that backward integration would be most beneficial to Boston Beer.
After doing an analysis of business level strategy for Boston Beer, they saw that different laws
across states may restrict or hinder contracts with distributors. By pairing that weakness with the
threat that they found from the Porter’s Five Forces analysis that better farming techniques
improve the input quality of products and give the suppliers increased leverage, the strategists
believed that backward integration would help Boston Beer. Boston Beer’s restricted contracts
with distributors create the need for Boston Beer to be more vertically flexible. By backward
integrating and being its own supplier, Boston Beer’s restricted contracts with distributors would
not hurt its business as much. Boston Beer would be able to compensate for the restrictions from
state to state with cost savings that the company would gain from improved farming techniques.
Secondly, after analyzing Boston Beer’s super ordinate goals, the strategists found that Boston
Beer does not produce a line of low-priced beverages. The company is missing a large segment
of the consumer market for which price is the main factor.
Not having a low-cost product and
the increasing prices of hops, barley, and other ingredients are problems for Boston Beer. By
analyzing the macro-environment, strategists believe that backward integration would allow
Boston Beer to offer a product in the lower price segment. The brewer would be in control of the
limited natural resources and would be able to better forecast the cost of ingredients. This
ability would allow them to offer a line of products at a lower cost. Boston Beer is known for
offering seasonal beers. If Boston Beer were its own supplier, it would be able to forecast
climate patterns, as well as examine the price of inputs to better predict a time that would allow
the company to offer a product in the low-cost segment.
Lastly, strategists at the University of Missouri examined Boston Beer’s super ordinate goals and
found that one of Boston Beer’s main weaknesses is that it is hard to predict demand for seasonal
beers. That weakness coupled with the problems that there are limited natural resources and an
increased frequency of natural disasters that affects the prices of those natural resources, make
backward integration a strong recommendation. Boston Beer would be in control of ingredients
and would be able to adapt more quickly to the changing demands for seasonal beers. The
company would not have to worry about its vendors supplying other brewers first in case of a
natural disaster. Boston Beer would also benefit by not having to hold extra money on reserve
for price increases by suppliers.
Overall, by backward integration, whereby Boston Beer would be its own supplier of the barley,
wheat, and hops, would allow the company to improve the quality of its ingredients, increase
inventory turnover rate, and improve customer satisfaction. Increased inventory turnover rate
would allow Boston Beer to provide a fresher product to customers, which should lead to
improved customer satisfaction. Backward integration would require Boston Beer to purchase
farmlands and farm equipment and to hire agricultural experts and workers. However, in the
long run, the price of these investments should be outweighed by the benefits of increased cost
Strategic Recommendation #4
The fourth strategic recommendation that the strategy group developed and championed is a less
expensive and canned beer line under a separate name from the Sam Adams flagship brand. This
recommendation would help Boston Beer seize on opportunities by countering some of the
brewer’s weaknesses.
Strategists found that Boston Beer’s first weakness is the fact that they are lacking a low-cost
segment in the beer industry. Not having products in the low -cost segment has prevented Boston
Beer from seizing the opportunity to expand their overall production. Strategists feel that if
Boston Beer moves forward with a cheaper beer line, they will be able to enter the low -cost
segment and seize the opportunity of expanding their sales and production. One key to entering
this low-cost segment is for Boston Beer to sell this new beer line in cans. By canning instead of
bottling, Boston Beer would have cheaper production costs. Under the rule of economies of scale
which state that the average cost of producing a product decreases as the scale of production
increases, Boston Beer would, theoretically, be able to produce more of this cheaper product at a
lower cost per unit and, therefore, be able to seize the opportunity to expand overall production
while not drastically increasing expenses. Having a lower cost per unit for production would
allow Boston Beer to more effectively enter this low-cost segment by giving them the
opportunity to charge less for the new beer line.
In addition, strategists found that producing a cheaper beer line would help solve Boston Beer’s
weakness of not appealing to the young, price-conscious consumers. A large majority of sales in
the beer industry come from that market segment, and, in the past, Boston Beer has only
appealed to the high-quality craft beer drinkers. This, in turn, has limited their ability to reach
these price-conscious customers. By offering a product appealing to the price-conscious
consumer, Boston Beer will be able to increase its overall market. Reaching consumers at a
young age would also help the company to create stronger brand loyalty that would help them to
more easily introduce new consumers to their other brands.
Boston Beer should create a new brand name for the lower-cost beer so as to keep it separate
from the flagship brand, Sam Adams. The strategists propose that Boston Beer develop a new
product name and line to accompany the new, cheaper brand image. This brand image would be
significantly different from the traditional high-quality, higher priced, beer connoisseur-favoring
brand image that the Sam Adams brand name represents. In order to not pollute Sam Adams’
reputation and brand image, the new beer should be promoted separately from Sam Adams and
should utilize a completely separate marketing campaign. As stated above, the new product line
would be offered in a can in order to further differentiate it from the higher-priced flagship
brand. This would allow Boston Beer to differentiate its product offering without devaluing the
perception of Sam Adams as a high-quality craft beer. Producing both a low-cost beer line and a
high-quality beer line would allow Boston Beer to attract a more diverse range of consumers,
which will help them develop long-term profit growth.
During the spring semester of 2013 at the University of Missouri, seven strategists met over
fifteen weeks to analyze the past, present, and the future of Boston Beer. Over this time the
strategist group examined the internal strengths and weaknesses and the external opportunities
and threats that Boston Beer was facing. The strategist group used the S.W.O.T analysis from
twelve different analyses. The group distilled many recommendations that would help make
Boston Beer more successful in the future; however, they narrowed down and championed four
main recommendations that they believe will make the company most successful.
The strategists closely examined and reviewed their S.W.O.T. matrix to ensure that they had
considered all of the important strengths, weaknesses, threats, and opportunities for Boston Beer
before combining them to distill thoughtful strategic recommendations. The matrix allowed the
strategists to generate the four champion recommendations that are actionable strategies that
Boston Beer can pursue.
The four main recommendations are the presidential- themed line of patriotic beers, a renewed
focus on Boston Beer’s status as a “real American beer,” backward integration into the areas of
wheat, hops, and barley production, and the creation of a less-expensive beer line packaged in
cans. The strategists believe these recommendations would help make Boston Beer more
successful and profitable. The recommendations were carefully distilled from the beer industry
and from Boston Beer internally. By following these recommendations, the University of
Missouri strategists foresee a gain in market share, a stronger brand image, and an overall
increase in profits. The strategists believe their four champion recommendations to be costefficient, and they strongly encourage Boston Beer to pursue them.