Do SWOT analysis , decision maker, main problem and key issues Case Study Malus Cider House A trip to your local Liquor Control Board of Ontario (LCBO) store will highlight the changing landscape when it comes to alcoholic beverages. While beer, wine and spirits still command prime retail real estate, more space has been made for categories like craft beer, ready-to-drink coolers, pre-mixed cocktails and most recently, ciders. Like wine, cider is a fermented fruit juice but is often positioned as an alternative to beer - a sweeter, more refreshing, gluten-free alcoholic beverage option. Similar to the craft beer movement, the cider industry includes primarily small batch producers that combine traditional brewing formats with innovative ingredients, attracting consumers seeking alternatives to mainstream offerings. With its unique qualities, cider has been embraced by a wide audience including millennials, a growing number of female consumers and middle-aged men. Cider only represents about 1% of total alcohol sales, but is one of the fastest growing categories in the alcohol industry. There are now over 70 businesses that produce cider in Ontario, generating over $11 million in sales, an increase of 42% from the previous year. Background Kiersten Gates and Kent Crompton are the founders of Malus Cider House, a small craft cider company in the Niagara Region of Ontario. As craft beer lovers, they developed an interest in cider and decided to try their hand at making some, purchasing a home brewing kit and experimenting with different recipes. Through research conducted for a small business course Kiersten was taking, she learned that the LCBO was accepting applications for small batch cider producers and the more research she did on the cider industry, the more excited she became about the prospect of entering this market. With the financial help of a family member, the pair developed a plan to bring their business concept to life, finalizing their recipe, securing a contract brewer, and developing a brand strategy. Malus Cider House The name "Malus" refers to an apple tree variety, but the Latin origin of the name is more interesting as it has an evil connotation (think Snow White and the poison apple), which was integrated into the label design to add some interest. Malus is a hopped cider, which means the hops provide the taste essence of beer, but without the gluten associated with beer. The LCBO buyers were impressed with Kiersten and Kent's efforts and packaging, approving their application and providing Malus Cider House with the all- 2 important first purchase order. Currently, Malus cider is sold in 150 (of 660) LCBO retail locations, 2 grocery stores and 10 local Niagara restaurants. With a production cost of $1.20 per unit (for a 473 ml can), Malus sells to the LCBO for $45 for a case of 24 or $1.88 a can. The retail price at the LCBO is $3.20 per can, similar pricing to other ciders which range from $3.10 to $3.50 per can. Radlers and coolers are two other growing categories in the alcohol industry. A radler is a cider infused with grapefruit juice or some kind of citrus. Some of Malus' competitors have moved into the radler and cooler categories. Having a presence in LCBO stores is critical to success, however, there are challenges associated with this relationship. The LCBO is often slow to restock stores when they run out of product. For example, after the first long weekend in the summer, 22 stores ran out of Malus products, and even though inventory was on hand in the LCBO warehouse, it took several weeks before those stores were re-stocked. The LCBO continually delists products that are not moving fast enough so the pressure is on to ensure that Malus continues to sell through at the retail level. Malus recently subcontracted a sales rep to focus on LCBO stores within the Niagara Region and the GTA, and to expand their distribution with licensed establishments. As a new business start-up, Malus is focused on minimizing costs and expenditures, particularly when it comes to production and marketing. Instead of investing in a manufacturing facility, Malus has an arrangement with a local Niagara winery that produces and packages their product for them. This arrangement has been working so far, however, the owners wonder if it is time to investigate the possibility of taking over their own production because controlling production would allow Malus to reduce their per unit costs. The Region of Niagara The Niagara Region is known as a 'location of wonder' with breathtaking natural views, nature trails, lush vineyards, events and festivities. Located at the southern part of Ontario, the region is home to the world famous Niagara Falls, which has been recognized as one of the 'must see' tourist destinations in the world, the man-made wonder Welland Canal, wine regions, its proximity to the United States all that made the Region of Niagara a destination for travelers for hundreds of years. The Region of Niagara is surrounded by three lakes - Lake Ontario, the River Niagara and Lake Erie - and consists of 12 municipalities. The region is known for its charm and character, and is has become a gathering spot for artisans, brewers, distillers, farmers, and wine makers. 3 Some of the most popular attractions are winery retail locations and brewery retail locations which are combination tasting venues, retail storefronts, and restaurants. Tourists love to spend an afternoon touring production facilities and enjoying locallysourced food and drink. These businesses have also expanded their product lines to include take-home food items infused with wine/beer. Winery and brewery tour packages are very popular in the summer months according to local tour operators. COVID-19 Up until the COVID-19 pandemic crisis hit, Niagara's tourist attractions, festivals and special events attracted more than 13 million tourists from around the globe each year and they arrived ready to spend. Tourism spending in the region was over $2 billion annually and had a significant impact on the local economy. It is estimated that every $100 million increase in direct revenue in tourism produces an indirect output of $69 million. COVID-19 is changing tourism in Niagara. Festivals and events have been canceled, restaurant and pub seating capacities are reduced and gathering limits have been imposed to reduce the risk of super-spreading events that could lead to a resurgence of COVID-19. Many businesses are wondering what this summer will hold and what will be allowed and are eagerly awaiting communication from the Ontario Government and local health units. At present, Malus has not spent much money on promotion other than the time spent making sales calls to potential customer accounts. The company is using some social media (Instagram has 70 followers and Facebook has 155 followers) and is working on launching a website. Kiersten and Kent are hesitant to spend marketing dollars unless they can be assured it will generate sales. They've also looked into the cost of opening a cidery and retail location but this would require investment of upwards of $350,000 depending on the size and scope of the facility. Kiersten and Kent are happy with what they have been able to achieve so far, but they are wondering where to go next in terms of growing their business? They are hoping you can provide them with some direction on what to do next