Presented by:

Shridhar Kayan (2013277)

Tapas Shivpuri (2013302)

Udit Mehrotra (2013308)

Utsav Dubey (2013311)

Vainav Shah (2013314)

Vineet Agarwal (2013323)

INTRODUCTION

Hudepohl Brewing Co. was founded by Louis Hudepohl in 1885.Thereafter, his descendants looked after the company through

various generations.

Bob Pohl was appointed as the new general Manager in 1980after the sudden death of the companys president.

The company experienced a disappointing stint during the lateseventies as it was operating at less than 40% of its capacity and

bore a loss of $538,000 in 1978.

Even after the disappointing results, Pohl was optimistic aboutthe future and predicted growth in the earnings and this was

confirmed by a 7% growth in sales during first four months of 1980.

Pohl majorly focused on changing the organizational structure ofthe company right after he was appointed as the general

manager.

Hudepohls Marketing Strategy

Hudepohl marketed aggressively in Cincinnati using both push and pull-marketingtechniques.

A large budget of $700,000 was allocated for promotion in Cincinnati. This wasmore than half of the total marketing budget of the company.

Hudepohls promotions were mostly focused on sports-related advertising.

The advertising was randomly distributed among its product range with anemphasis on competitively priced products dedicated towards urban, blue collar

workers.

According to a local market research firm, Hudepohl customers could beessentially described as white, lower-income, blue collar, middle-aged male cityresidents who have a union affiliation and are outdoor sportsman type.

Cost

Willingnes

s to Pay

Value Chain for Hudepohl Brewing

Company

Brewing Ingredients

Molt Corn Rice Hops

Packaging Material

Bottles Cans

Traditional Method

Batch size Production

Fermentation Process

(soaking a starch source

in the water and

fermenting it with yeast)

Racking and Packing

Bottling and Canning

Distribution Taking an order Filling it from the

supplies that has

been placed on the

truck the day

before.

Collecting Cash For Order

Picking Up the Empty Returnable

Bottels

The function of purchasing the raw materials and other inputs used in the value-

creating activities.

Finance, Legal support, Quality Management, ETC

Compensation Plan, Recruitment, Training & Development ETC

Batch

production

Inventory

Keeping system

Inbound logistics Operations Outbound Logistics Marketing and

sales

Firm Infrastructure

Human Resource

Technology Development

Procurement

Racking &

Packing system

Pricing

Promotions

Advertising

Supporting

Activities

Primary

Activities

U.S. Brewing Industry

Growing market increasingly supplied by fewer brewers.

Concentration of the industry - due to economies of scale in the

production, distribution, and marketing of beer.

By 1978, top 10 American brewers accounted for 94% of beer sales

Winners (1969 & 1979) - Anheuser-Busch, Miller, and Heileman

Market share of top 10 brewing

companies

Industry Economics

Raw materials purchasing - major brewing ingredients, were

subject to wide fluctuations in price

Production - reluctant to change its methods of brewing,

expensive installation

Labor Higher wages, Labor productivity improved

Labor Cost as a Percentage of the Cost of Goods

Sold

1971 1955

Anheuser-Busch

Regional company

(Falstaff)

0.28%

0.37

0.42%

0.385

Packaging - canning line speeds increased 123% and labor

requirements dropped 42%

General and administrative expenses - Increase in the average plants

scale, 1 million barrels (1969) to 2.5 million barrels (1979) - decrease

the unit costs

Brewing Industrys Cost per Barrel in Constant 1977 Dollars

1977 (in $) 1972 (in $)

Brewing materials

Package materials

Production labor

Nonproduction

labor

Selling, general

and administrative

expense

9.00

16.91

3.75

1.71

1.25

$32.62

$4.49

18.90

4.53

2.70

1.36

$31.98

Distribution

Difference between Hudepohl and industrys distribution channel

As per case, Hudepohls share in regional deliveries out of the total beer they producedamounted to 60%.

Because of large number of regional deliveries, there was a lot of money being spent onlabour force which in turn hiked the per unit labour cost.

Considering Industry practices, national companies spent very less to distribute in localand regional areas as they relied on independent distributors.

For distribution of beer in different areas, Hudepohl too relied on Independent distributorsbut their per unit cost did not change a lot.

Steps for future

48% of total beer market segment constituted of consumption of

premium beer, due to increased advertizing by the top players.

Houdepohl should therefore leverage its German Heritage by

extending its brand through upward stretch and introducing a

premium beer product.

Cont.

Marketing expenses need to be remodel to change the image of

the company and promote its new premium beer through TVC andHofbrau in Cincinnati.

The profits from these products should be invested in bringing as

much automation as possible in the production process to achieve

economies of scale.