Competitive Position of the Heineken

Threat of Substitute products (high)

Heineken threat of substitute products is high because customers have many other substitute beverages, such as Liquor, wine, cider, flavoured alcoholic drinks, and non alcoholic beers. The mostly competition come to the industry from the Wine, Liquor and other malt flavoured alcoholic drinks, because they also target the same demographic group. Present market popular substitute product against beer is “Smirnoff Ice” which is an alternative beer that brewed using a malt base, www.smirnoff.com.

Threat of new Entrants (high)

Heineken is a large beer company therefore new entrants is low. Also there are many microbreweries throughout Heineken brand distribution countries. But it is difficult to microbreweries to compete with larger companies such as Heineken because advantage of economies of scale, Advertising expenditures and start up capital in beer industry is high. This makes the industry is not attractive for new entrants.

Bargaining power of suppliers (low)

Bargaining power of suppliers is low. Heineken operates some of own local sourcing projects and Agriculture projects to get raw materials such as Sierra Leone Sorghum Project which is local sourcing project in Sierra Leone is part of the company’s Africa-wide strategy to procure at least 60% of its raw materials locally, Heineken International (2011). Due to the size of Heineken, suppliers would not want to lose business with Heineken. In addition Heineken manage supply chain code, both in terms of ethics and the environment therefore Heineken has control possibilities over many of its product inputs, Heineken International (2011).

Bargaining power of customers (medium)

The bargaining power of customers is a medium threat for the beer industry. Such as taste of the beer, calories, price, and alcohol percentage

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