Factors Affecting Industry Growth Trends

Factors affecting Industry Growth Trends

In attempting to determine future growth for sales, profit etc., there are many factors one could examine. However as brevity is of importance we have decided to use the following;

1.) Social Attitudes

2.) Legislation

3.) Distribution

4.) Competition:

1) Social Attitudes

Currently the business environment for distillers and vintners is strongly influenced by societal attitudes towards drinking and government policies reflect those attitudes. Government Policy objectives are aimed at reducing alcoholism and curbing the amount of under age alcohol consumption. A company such as Brown-Forman seeks to compete strongly in the marketplace and to protect the right of adult consumers to purchase these products.

Within the U.S. and other international markets Brown-Forman works with other distillers and vintners to gain a more favourable political and social environment for the sale of its products. Brown-Forman is a member of the Distilled Vintner's Council and the Wine Institute. Both of these organisations attempt to obtain fair treatment for the company and its consumers. Moreover Brown-Forman seeks to secure beneficial regulatory treatment in foreign markets, including open access to foreign markets for U.S. made spirits and wines.

2.) Legislation

The alcoholic beverage industry is highly sensitive to increases in tax rates. In the U.S., Brown-Forman's largest market, there is no imminent legislation to increase excise taxes, although a future increase cannot be ruled out!

Similarly, while there has been discussion (and legislation introduced) to ban advertising of spirits in the U.S. nothing has come of it. However, most TV networks currently decline to accept advertisements for spirits. Outside the U.S., the alcoholic beverage market is also affected by tax rates and advertising restrictions, but the impact of those policies in any one market is not significant to the company's overall business and advertising.

3).Distribution

At present Brown-Forman do not own any major distribution companies. Therefore it relies on its competitors to distribute its products in different markets. For instance, United Distillers and Vintners distribute 'Jack Daniel's' and 'Southern Comfort' in the U.K., while Bacardb Wedistributes Brown-Forman's spirits products in most of continental Europe. However, the current European economy is in a state of flux, with the recent creation of the European Union and the consequent elimination of trading barriers along with the adoption of the Single European Currency, which will be put in motion in the near future. These changes will greatly affect Brown-Forman's business in Europe and will revolutionise distribution of spirits and wine in Europe, which is presently constructed on a country by country basis, by encouraging cross-border sales. B-F is not an owner of a European distribution company; therefore if

reform is not undertaken