Redhook Ale Brewery Essay

Words: 4490
Pages: 18

Stephen E. Barndt

aul Shipman, Chief Executive Officer of Redhook Ale Brewery, knew that he needed to reevaluate his strategy and its execution. Redhook's rapid growth had ended shortly after it invested in a major increase in production capacity. Operating at about 50% of production capacity, the company suffered a net loss in 1997 that continued into 1998. Redhook brewed only specialty beer, referred to as craft beer. Craft beer is a more flavorful, fuller bodied premium beer. follows traditional old world brewing methods. and uses high-quality materials. The company started as a microbrewery but grew continually and reached national status by the end of 1996. Shipman, one of Redhook's founders, had guided the company from a small
…show more content…
Redhook consummated a long-term distribution agreement with Anheuser-Busch, the largest brewery in the United States, late in \994. Opening the way for nationwide sales, the agreement enabled Redhook to market its products via Anheuser-Busch distributors seeking increased volume through a broader product line. As a result, Redhook was selling its beer in 48 states in 1998. Redhook constructed a new brewery near Portsmouth, New Hampshire, to better serve the eastern United States and lower transportation costs. The Portsmouth brewery came on line in late 1996 with an initial capacity of 100,000 barrels per year. To finance its rapid growth, Redhook sold a 25% equity interest to Anheuser- Busch and, in 1995, sold 2, J 93,492 shares of stock in an initial public offering to end the year with 7,683,492 shares outstanding.

I Tile Brewing

The U.S. brewing industry was both highly competitive and highly regulated. Several large and many small brewers competed for the $29 billion wholesale market using brand name, distribution channel, or taste to attract consumers. The market consisted of three distinct imported, and craft beer-each characterized by its own predominant segments-national, marketing strategy. Brewers participating in each of the segments were subject to various government requirements in such areas as taxation; product safety, quality. and disclosure; and environmental protection.

The national beer