CASE

CASE

Beau's BreweryPAT MCGRATH/THE OTTAWA CITIZEN

Beau's Brewing Co. is retooling its Vankleek Hill operation to deal with a market that is growing increasingly more competitive.

Once a standout in beer aisles everywhere during the early days of the emergence of craft beer, Beau's is now up against more and more newcomers. According to the LCBO, at the end of its latest fiscal year there were 637 Ontario craft beers available on LCBO store shelves. Once you factor in craft beer from other parts of Canada, or from international sources, the LCBO said, there are more than 919 craft beer products available in its stores. The number marks a major increase over the 647 craft beers it stocked in 2016.

The increased competition is pushing Beau's to rethink its business strategy. The company, which employs 125 people, is about to undergo some belt tightening which will see it reduce its product offerings, rethink its marketing strategy and cut four or five positions. "We're pretty confident we're still growing. But, we've got to be smarter about the way we do things. The old days where you made a beer and it was guaranteed that it would do well, that's gone," said Steve Beauchesne, chief executive and co-founder of Beau's. "We're doing some restructuring ... we've learned a few lessons. We're not talking anything for granted."

One of the things that Beau's has learned is that it can't be pushing out dozens of different beers that are often only available for a limited time. Beauchesne said the firm has reviewed its sales and marketing efforts and that has helped it sharpen its focus. It is also bringing in a new chief financial officer and a new sales director, who is coming to Beau's from French beverage giant Pernod Ricaud, which has more than $13.5 billion in annual sales. Beauchesne said the company took a hard look at its business after sales for summer 2018 didn't go as well as planned. Even the company's flagship brand, Lug Tread, didn't meet expectations despite a big marketing campaign that included redesigned packaging and a catchy tag line dubbing the season the Summer of Lug.

"Last year in particular, we took a hit on our Summer of Lug campaign. The repackaging didn't do what we hoped it would. After the fact, the feedback we got was that people would go into the store and walk past it," he said. "Then they'd say, 'I can't find Lug Tread' and they'd buy something else."

Despite the realignment, Beauchesne underscores that the company isn't in financial jeopardy, nor is he looking to sell the business. "I'd love to have more cash in the bank that's for sure. I don't think I'd ever say that I didn't want more cash in the bank. But, we don't have any dire concerns. Are we trying to free up some working capital? Absolutely," he said.

As competition on store shelves has increased in recent years, several craft breweries have sold to large-scale breweries. In 2015 craft beer darling Mill Street Brewery agreed to be acquired by Labatt Breweries. Similarly, Quebec microbrew powerhouse Le Trou du diable Microbrewery agreed to be acquired by Molson Coors in 2017. Beaus has been a darling in the Nation's Capital since it was founded by Beauchesne and his father in 2006. Lug Tread is second-most popular brand of craft beer in the country. The company is the largest producer of certified organic beer in Canada and has won more than 80 awards. It sponsors numerous charitable initiatives, including the Beaus5K for Ovarian Cancer Canada and the United Way Charity Bike Ride to Beau's Oktoberfest.The annual Beau's Oktoberfest has raised more than $700,000 for charitable causes including The Hawkesbury and District General Hospital Foundation. Beauchesne is also one of the founding members of Ontario Craft Brewers lobby group that has become key in petitioning various levels of government on behalf of craft brewers.

QUESTIONS

The company featured in your case is faced with the following marketing problems.

They are going to conduct market research to provide them with direction in solving these marketing problems. For each marketing problem described below state whether the company should use primary research or secondary research and explain your thinking.

To generate new product ideas for the company:

State if Primary or Secondary?_____________________(1 mark)

Explain your thinking:(1 mark)

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To estimate the size of their consumer target market in Canada:

State if Primary or Secondary?_____________________(1 mark)

Explain your thinking:(1 mark)

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

To understand consumer trends affecting their industry:

State if Primary or Secondary?_____________________(1 mark)

Explain your thinking:(1 mark)

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

To obtain customer satisfaction feedback on their product or service:

State if Primary or Secondary?_____________________(1 mark)

Explain your thinking:(1 mark)

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