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 1980
after the sudden death of the companys president.
The company experienced a disappointing stint during the late
seventies 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 about
the 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 of
the company right after he was appointed as the general
manager.
Hudepohls Marketing
Strategy
Hudepohl marketed aggressively in Cincinnati using both push and pull-marketing
techniques.
A large budget of $700,000 was allocated for promotion in Cincinnati. This was
more 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 an
emphasis on competitively priced products dedicated towards urban, blue collar
workers.
According to a local market research firm, Hudepohl customers could be
essentially described as white, lower-income, blue collar, middle-aged male city
residents 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 produced
amounted to 60%.
Because of large number of regional deliveries, there was a lot of money being spent on
labour force which in turn hiked the per unit labour cost.
Considering Industry practices, national companies spent very less to distribute in local
and regional areas as they relied on independent distributors.
For distribution of beer in different areas, Hudepohl too relied on Independent distributors
but 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 and
Hofbrau 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.