From the Case Study Example below:
(1) Carry out SWOT analysis using a SWOT matrix and generate potential Strategies that could reverse Clatterbridge’s fortunes?
(2) Make a choice of growth strategy, justify your choice and select the positioning and marketing mix for that choice?
(3) Briefly explain any other actions that you believe the organisation should take to make this viable?
Clatterbridge Brewery was established over 100 years ago by Clarence Clatterbridge in Northampton. The business has changed hands over its many years of existence but is currently owned by Charles and Freddy Meddler who bought the business 4 years ago. The brothers in their mid fifties have moved from jobs in education and car sales to explore their desire for a new life style and to exploit their hobby of home brewing. The company is private limited and the brothers own the major share of equity. Charles is operations manager and Freddy is Managing Director and responsible for sales.
Clatterbridge are brewers of traditional beers selling to a localised market in the North East of England. They have had mixed success over the years but more recently they are faced with increasing competition from the large breweries and an increasing number of imports in a market that too is declining. In the last three years sales in the business have declined to such an extent that a loss is predicted for the current year. This will be the first time that the company has made a loss. They have paid little attention to the market trends in lagers, beers and beverages and have carried out no market research as the brothers, strongly believe that ‘traditional ales’ are desired by customers and word of mouth the best means of communicating their product to their local market. “It’s a product that speaks for itself”, says Freddy. “Our market are our local pub goers. We have some staunchly loyal supporters for our own brand.” Their own label brew is successful but has been seeing declining sales. Their contract brewing however has become a large part of Clatterbridge’s activity, however they have experienced little success here.
One of their main problems that has affected their profitability has been poor productivity. Charles has become weary of trying to keep the production schedule on target and it is on this point that the brothers have been arguing. Freddy has brought in 70% increase in orders that have to be ready for the Christmas period. Charles knows that he is unable to fulfil these orders, given the quality of product that they can produce, the age of the bottling plant and poor condition of the machinery and that the brewing equipment is currently used at full capacity.
Waste is a problem at the brewery. Charles estimates this in the region of 10%. At the bottling plant, Charles has lost 5% of the product due to poor fill accuracy, labelling misalignment and poor packaging . A further 2% had been lost in handling and shipping.
Customer complaints have increased. In their hurry to fulfil orders, product has been wrongly labelled and wrong orders have been sent to customers. Returns from customers remain high with a 5% rejection rate. Clatterbridge have had to let down a number of major customers through their inability to keep to delivery dates in the past. Freddy blames Charles for not fulfilling orders. Charles has blamed personnel in purchasing for supplying inferior materials: poor yeast cultures, hops from Eastern Europe and ineffective cleaning reagents for cleaning the brewing vessels. Personnel in the purchasing department have in turn blamed Freddy for putting increased pressure on reducing material costs to maximise profit.
Staff turnover is high, training for staff is not seen as a priority, work conditions are uncomfortable as there is less money to invest in the upkeep of the building. Salaries are however, competitive within the industry. Some of the key members with good product knowledge of the brewing process had been made redundant when the Meddler brothers bought into the business. Many of those that stayed resented their colleagues from being forced to leave and have not agreed with Charles’ approach to brewing. Charles has not taken on board their advice and they have since given up trying to contribute and have not paid attention particularly to issues of cleanliness of bottles, clean down of the brewing equipment and yeast culture development. Charles is unaware of the resentment that has built up and feels that since staff are being adequately paid their should really be nothing to grumble about.
Organisation and Structure:
A) The Organisation
The organisation has a traditional management structure. The Company's management organisation is as follows:
• Freddy Meddler Managing Director and Sales & Marketing Director
• Charles Meddler Operations Director
• Gillian French Financial Controller
• Dave Martin Purchasing Manager
• Ann Davis Administration Manager
The Company employs 40 people in total.
B) The Manufacturing Process
The manufacturing process used at the brewery is traditional and uses the following processes:
Grist to the mill
Barley is used soaked and then roasted in kilns to make malt. Kilning browns the malt, which adds colour and flavour to the beer at a later stage. The roasted malt is then milled to a powder, or grist – hence "grist to the mill".
Making the mash
The grist is mixed with hot water to form a porridge-like slurry – called a mash. This is pumped into a mash tun (a large copper vessel) where it stays for about an hour at a constant temperature of 65°C. The result is a solution that brewers call sweet wort (pronounced "wert").
Bitter sweet
The sweet wort is now transferred to what is really a giant kettle, traditionally called a copper. Here, the sweet wort is boiled and the hops added. Boiling continues for about an hour, after which the filtered solution – now called just "wort" – is transferred to the fermenting vessel.
Pitching the yeast
The fermentation process is started by adding – or pitching – a carefully measured quantity of yeast to the wort. The yeast converts sugar into alcohol while at the same time producing large amounts of carbon dioxide, which gives beer its characteristic sparkle. Ale yeasts generally ferment for up to five days at around 18°C and rise to the top of the fermenting vessel.
Refining the beer:
The liquid produced in the fermenting vessel is beer. It is either bottled or if it's destined to be a 'real ale', it's put straight into casks. There is still a small amount of yeast in the beer at this stage and this will perform what is called a secondary fermentation. This gives the beer its final, desired taste. The last ingredient to be added to each cask is finings, which helps settle the yeast and clear the beer ready for drinking. There are several varieties of finings but the most traditional is isinglass, the dried swim bladder of the sturgeon fish!
Products:
Own brand – ‘Clatterbridge ale’. This is available in bottle and cask. This has a long mellow fruity taste.
Contract brews for customers – Clatterbridge also brew beers for contract customers such as supermarkets and hotel chains. Here customers branding and beer name applies.
Sales and Profitability:
The sales and profit figures for the past four years are as follows:
Year Model Sales (£,000) Profit (£,000)
Current (C) Own Label 200 40
Contract 410 40
C-1 Own label 220 50
Contract 300 45
C-2 Own label 230 70
Contract 100 25
C-3 Own label 310 80
Contract 70 30
Benchmarking Exercise
Clatterbridge have conducted a basic benchmarking exercise to compare themselves with six other similar manufacturers based in the UK. The results are shown below:
Benchmark factor Clatterbridge Competition Average
Profits (% of sales) 1.82% 6.5%
cost price/pint
Contract £0.90 £0.20
Own label £0.50 £0.25
Retail price/pint
Contract £1.20 £1.35
Own label £2.50 £2.50
Marketing support (pa)
Contract £3K £10K
Own label £5K £40K
Delivery times (weeks)
Contract 3 2
Own Label 6 2
Scrap rates 15% 5%