CCU ? The Pisco Opportunity
CCU is a diversified South American corporation operating in Chile & Argentina. Apart from being present in the Alcoholic beverages (Beer & Wine) industry, it is also a big player in bottling of Non-Alcoholic beverages *(Gaseous Drinks & Mineral Water). Beer is the largest product category in terms of production and revenue. CCU is leader in domestic as well as international markets with its several brands. Its stocks are traded on Chilean Stock Market. CCU is vying a potential opportunity to enter the Pisco Liquor (brandy like beverage distilled from muscatel grapes) market.
1. Apply the five forces model to CCU’s major industry.
Threat of Entry ? Low
ÿ Huge capital investment is required, but for big players comparable to CCU, it will not be a major issue.
ÿ Distribution channels are vital for the industry and with CCU’s spread it wouldn’t be hard to find adequate strength of Distributors/Retailers.
ÿ Though the product lines are monotonous and CCU exist in both Alcoholic & Non-alcoholic beverage market, but they all fall under the same broad category and it will be hard to differentiate between two same scale competitors.
ÿ High economies of scale.
Power of Suppliers - Low
ÿ Since CCU is largest producer in most of its product categories, the suppliers whether concentrated or fanned, don’t have any significant control over anything and volumes to the suppliers would be adequate.
ÿ Backward integration is pretty much possible for a corporation like CCU.
Power of Buyers - High
ÿ There are no switching costs as there are several other brands available in the same price range.
ÿ The buyers are large in numbers and can switch products/brands to suit their changing tastes.
ÿ Fe ...