Fins Case - Coopers Brewery

Case Questions: Coopers Brewery                Xiyu Zhang (z5121837)               [pic 1]

1. Analyze the competitive dynamics of the Australian brewing industry using the Porter 5 force model (Or any other appropriate strategic management tool). Does your analysis support a case for further industry consolidation through M&As

Competition in the industry (medium): Cooper brewery used to dominate the market and made a contract with the hotels who only accept beer provided by Cooper. To the great extent, it limits the competitor. But due to the 1974 trade Practice Act, there are some outside beer companies joint into the competition, it greatly reduced the local loyalty.  Since 1990, there are some micro-breweries; in 2007, Foster’s Brewery Group and Lion Nathan took the second place; Cooper ranked in No.3 in the same industry.  

Potential of new entrants (strong): Since the brewing firms all focus on the economies of scale and national branding, the taste of beer is same. If a new beer company, especially for some small size and family-ownership, they have advantages to produce new taste, it is easy to attract customers and take place the market capitalization. The transportation improvement, refrigeration improvement also can save fix cost. So for the new brewery firm who have this skills can get more profit by lower cost and attract more customers.

Power of supplier (medium) ：Cooper Brewery, a family-run brewery business, has long history of run beer business and its strong branding image always dominate the market. Cooper brewery was formed an alliance with SA Brewing which lead the south Australian brewing industry.

Power of customers (strong): the demand growth is slow. Customers like canned and bottle beer. Customers still prefer regional brand.

Threat of substitute products (Low):  other drinks might substitute, but beer drinks wouldn’t decrease demand by choosing other drinks such as soft drinks. Therefore, threat of substitute is quite low.

2. What are Coopers’s strategic capabilities and do they complement Lion Nathan’s existing operations? How well is Coopers performing?

      Cooper Brewery is still small size and family owned business and use a share exchange as takeover defense strategy for organizations. Cooper cooperated with a variety of agents to distribute beers outside of South Australia and the Northern Territory. Coopers also expected its products to the United States, produced home brewing kits, started entertainment activities such as pub. Coopers fast expended in other Australia states. Coopers also advertised their unique beer brewery and targeted to university bars and outlets. 1998, Coopers achieved high local demand and have great profit. Therefore, Coopers started to form joint venture with American brewery distribution as a national distribution. Coopers took up 80% equity. Cooper Brewery’s beer performance pretty well. Cooper insist its core competencies including natural condition without adding any chemicals or preservatives, low temperature evaporation and cereal extraction. Besides, in order to increasing brand images and social impact, Coopers also established the Cooper Club and Cooper Brewery Foundation.