Redhook Brewery

Introduction

The distribution alliance Redhook formed with Anheuser-Bush in 1994 was to run for 20 years, but could be terminated after 10 years under certain conditions. Under the alliance, A.B. invested in Redhook and gained a 25% stake in the company’s equity, and made its nationwide networks of 700 wholesale distributors. Redhook retained full control over production and marketing. Distributors who participated in the alliance were to be given exclusive distributing rights in their territories. Redhook believed they could gain acceptance and much greater exposure with this alliance with Anheuser-Bush, but the alliance was viewed controversial be many.

Strengths and Weaknesses

Regarding strengths and weakness, we found that one of Redhook’s weaknesses was that management wanted to make it too big in the craft beer industry too fast. For instance, once Redhook started making a profit they replaced the first brewery with a larger capacity with state of the art equipment. Redhook also has a problem regarding the structure of the industry and the quality of the company’s management team. Another weakness for Redhook was the age group that was buying their craft beer. One of Redhook’s strengths was that they had an agreement with one of the biggest beer distributor Anheuser-Busch to distribute their product. However, one could probably turn that into a weakness for Redhook as Anheuser-Busch may not promote Redhook’s product as well as their own. The table below shows the strengths and weaknesses of Redhook.

Strengths

Major source of revenue and profit Craft Beer

Market share of the company 4.7%

Strong company brands Blonde ale

Marketing and advertising effective Yes. Articulate plans in place

Major focus of the company Production to produce high quality beer

Skilled workers Trained, educated and prepared

Stock price track record Varies. Down now

Technology efficient Company has embraced technology

Company proactive about change Yes. Company proven change can work

International trade Company goal is to compete in the international market

Weaknesses

Competitiveness Intensified competition

Major Brand Unknown brand name

High cost structure Price cutting for craft and specialty beers, wine and imports

Beer industry offensive attack to reach dominant position

Industry Saturation Market saturation

Merger Opportunity and Weakness Merged with Busch

Maturity of beer market induced lower prices

Opportunities

Some of the opportunities for Redhook, was their involvement