Domestic And International Analysis.

Introduction

Apple County Cider Co Dabinett is one of the products sold by Apple County Cider Co. Apple County Cider Co Dabinett is an alcoholic drink that is made from apples. Currently, the drink is found only in UK. This is despite its high quality. The main reason why the drink is found in UK alone is due to lack of expansion of its company (Vysini et al., 2011). Apple County Cider Co, the company which makes Apple County Cider Co Dabinett is relatively young, having been established in 2014. As such, it is still trying to establish itself in the market. However, while the company is young, apple cider drinks are not new in the market. Cider, as a drink, dates back to 60 BC. When Romans invaded England in 55BC, they found cider being enjoyed by the local people. This implies that at this time, people had already learned how to make the drink (Grier et al., 2013).

The technique of fermenting and distilling was perfected in France, Southern England, and Spain. Over time, with fermentation and distillation techniques and technologies advanced, the quality of cider drinks has been improved. In addition, it has allowed for the development of a variety of the cider drink. This means that Apple County Cider Co Dabinett faces stiff competition domestically and internationally should Apple County Cider Co decide to expand its operations into foreign markets. It is thereby important for the company to understand the domestic market as well as the potential international market for its product (Halstead, 2013). In this paper, an analysis of the domestic market and the potential overseas market forApple County Cider Co Dabinett will be carried out. The potential overseas market in this case is the US. A business forecast will also be provided.

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Domestic market

The UK is the biggest apple cider market across Europe and globally. UK represents 39 percent of the global apple cider market. There are over 500 apple cider makers in the UK. This implies that the competition in the domestic market for Apple County Cider Co Dabinett is significantly higher (Halstead, 2013). In terms of volatility, the apple cider market in UK is considerably volatile in the sense that experiences changes particularly with respect to sales. However, generally, apple cider sales have been increasing over time. This implies that the consumption of apple cider drinks has increased significantly over time in UK (Kirkey and Braden, 2014). Apple County Cider Co Dabinett can thereby realize higher sales if it manages to deal with the existing competition in the market.

In terms of the market share when compared to other categories of alcoholic drinks, apple cider drinks have a 7.5% market share. This implies there is still a large market share that apple cider drinks can wrestle from other alcoholic drinks (Bieller and Douglas, 2014). In addition, there is still the non-alcoholic drinks market that remains unexplored by apple cider makers. Apple cider drinks have low alcohol content. In addition, soft cider brands are practically non-alcoholic. As such, they can be consumed by non-drinkers (Vysini et al., 2011). Apple cider drinks have a sweet taste, which appeals to most people. Thereby, Apple County Cider Co Dabinett can exploit a significant market share.

However, despite the positive aspects in the domestic market, there are also negative aspects. For example, apple cider drinks in the US face stiff competition from sweeter imports. There has an increased importation of sweeter alternatives in the UK, which has threatened apple cider drinks (Kirkey and Braden, 2014). As such, it is possible for Apple County Cider Co Dabinett to lose some of the market share it currently enjoys due to the high competition.

Overseas market: The US

The US is one of the fastest growing apple cider markets. Between 2011 and 2015, the sales of apple cider drinks in US grew from 89.9 million dollars to 326.9 million dollars. In this period, 432 new apple cider companies were established in the country. As a result of the growth, apple cider production also increased significantly. Between 2013 and 2015, cider production increased from 100,000 gallons to more than 600,000 gallons (Jordan, 2016). Research indicates that there is still room for growth in the apple cider industry in US. Another important factor to note is that many of companies in the US are focused on hard apple cider, that is, the alcoholic apple cider (Galinato, Gallardo and Miles, 2014). Thereby a significant gap needs to be filled by the non-alcoholic apple cider drinks. Since Apple County Cider Co Dabinett is only slightly alcoholic, non-drinkers can consume it. In addition, like in the UK, apple cider occupies only a fraction of the general drinks market, both alcoholic and non-alcoholic. Alcoholic drinks such as wine, beer, and spirits (Lea and Piggott, 2012) hold majority of the market share. There is thereby a huge market potential in the US if Apple County Cider Co Dabinett is able to wrestle some of the market share from the alcoholic drinks.

However, like in the UK, there is also a stiff competition in the US from other apple cider drinks as well as alcoholic drinks such as beer, wine and spirits and non-alcoholic drinks such as Coca-Cola (Becot, Bradshaw and Conner, 2016). This competition implies that Apple County Cider Co Dabinett might fail to succeed in the market. In addition, there are sweeter alternatives in the market from fruits such as mangoes that are preferred by non-drinkers (Farris, Peck and Groover, 2013). As such, Apple County Cider Co Dabinett might be unable to break into the non-alcoholic drinks market.

Environmental audit

A number of factors characterize the American apple cider market. These are political, economic, social, and technological factors. These factors determine the success or failure of apple cider companies in the US market.

Political factors

The main political factor in the US market is government regulation. Like any government, the US government imposes a number of regulations on the products in the country. These regulations concern the quality and safety of the products (Johnson, 2011). Apple County Cider Co Dabinett will thereby be subject to these regulations.

Another political factor is taxation. There is excise tax that the US government imposes on the products in the country (Heckman, Sherry and De Mejia, 2010). If the excise duty is increased, the price of Apple County Cider Co Dabinett will be affected. This will, in turn, affect its affordability.

With respect to political stability, the US is among the most politically stable countries. This is due to strong government institutions that ensure law and order. There is religious observance of democracy in the country (Mosher, 2012). As such, there are no cases of political conflicts in the country. Business organizations cannot thereby be affected by issues such as civil wars due to fight for power.

Economic factors

The US is one of the largest economies in the world. Employment rate in the country is also high. Majority of US citizens are income earners. As such, most of them have a considerably high spending ability (Tozer et al., 2015). This implies that they can afford to spend considerably on drinks. However, the economic ability of consumers in the country is under constant threat of an economic downturn (Makos, 2015). For example, the economic meltdown in US in 2008 resulted in massive loss of employment for the US citizens, which, in turn, negatively affected their spending ability.

Social factors

The social environment in the US promotes consumption of drinks. For example, majority of individuals in the country love holding social functions, which involve taking drinks. Drinking is one of the main aspects of the social life in the US (Dcosta and McDonough, 2015). This thereby makes it possible for Apple County Cider Co Dabinett to succeed in the US. Another social factor is the increased awareness among US citizens on the need to lead a healthier lifestyle. Since alcohol, consumption has been touted as having a negative effect on one’s health, many alcohol lovers are switching from strong alcoholic drinks to low-alcohol drinks (Makos, 2015). Since Apple County Cider Co Dabinett is a low-alcohol drink, it can take advantage of the social change to realize success in the US.

Technological factors

The US is one of the most technologically advanced countries. This technology has enabled companies in the country to increase the efficiency of their operations, which, in turn, has enhanced the quality of the products and services (Tozer et al., 2015). Apple County Cider Co can take advantage of the advanced technology in the country to improve the production process of Apple County Cider Co Dabinett as well as its distribution channels (Makos, 2015). This will ensure that it avails high quality products to consumers in the shortest time possible.

Competitor analysis

Apple County Cider Co Dabinett faces stiff competition from other apple cider drinks in the US. There are many apple cider drinks in the US market, which include George Hornsby Draft Cider, HardCore Crisp, Cider Jack Hard Cider, and K Cider (David, 2011). In addition, like in the UK, there are also a significant number of sweeter alternatives that are preferred by non-drinkers. However, the US market is dominated by hard apple cider drinks, which are alcoholic. However, as pointed before, many people are shifting to low-alcohol and non-alcohol drinks due to health issues (Dobbs, 2014). Since Apple County Cider Co Dabinett is only slightly alcoholic, it faces a slightly lower competition in the market. As such, it can realize considerable success in the US.

Analysis of key stakeholders

A number of key stakeholders that would determine the success of Apple County Cider Co Dabinett in the American market. One of the stakeholders is the customers. While Apple County Cider Co might establish its operations in the US and produce high quality Apple County Cider Co Dabinett, if the company does not manage to attract customers, then the drink will not be successful (Fabien-Ouellet, 2017). As such, apart from availing the product to the market, Apple County Cider Co needs to carry out promotional activities that will create awareness of the product in the market.

Another important stakeholder is the shareholders. The expansion into the US will require a huge capital outlay. This implies that Apple County Cider Co will require the help of shareholders David, 2011). However, for investors to buy its shares, it must provide proof of its ability to be profitable in the US. The product thereby needs to be successful in the domestic market.

Employees are another group of stakeholders that Apple County Cider Co should consider when expanding to the US. The success of any company relies on how well workers perform. Apple County Cider Co thereby needs to recruit the right employees and remunerate them well in order to make them perform well (Fabien-Ouellet, 2017). Good performance of employees will not only enable the company enhance the quality of its product but also its services. This, in turn, will enable the company to perform well in the foreign market.

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Between 2005 and 2010, there was a decline in the apple cider sales in the US market. This was due two main factors. They are: a change in lifestyle and financial downturn. In this period, there was a shift in the drinking habits, with many people preferring strong alcoholic drinks. This led to a decline in sales (Fabien-Ouellet, 2017). The second factor was the 2008 financial crisis. This reduced the spending power of American citizens, which, in turn, negatively affected apple cider sales. The forecast method that was applied in this case is the historical method. The forecast was based on the historical sales data of Apple cider in the US market between 2008 and 2018. The reliability of the forecast is significantly high because it is based on concrete data. Markets are constantly going through cycles of high and low sales (Blackwell, 2011). Data on apple cider sales in US proves that. It is thereby possible that such a cycle is likely to be repeated in future. One of the benefits of this forecast is that it is based on data rather than speculation. As such, it provides a considerably accurate prediction of what is likely to happen in the market. However, despite its high reliability, it has also its own flaws (Sri-Jayantha, 2013). The main limitation of this forecast is that future market trends may deviate significantly from the normal path. Such deviation may be caused by economic developments such as economic downturn or economic boom and development of better products in the market. In case of such an event, then the forecast would be wrong.

Market entry strategy

The market entry strategy that would be used in this case is exporting. The product will be exported directly to the US from UK. There are a number of reasons why exporting is the ideal market entry strategy for Apple County Cider Co Dabinett. One of them is the company will have greater control over the quality of the product and services provided to customers. The company will determine how to package its product and how to market it in the foreign market (Becot et al., 2016). Another reason is that the company will be able to get feedback from customers. Exporting will ensure that the company deals directly with its clients. As such, it is easy to inquire from the customers on what needs to be changed or done better. As a result, Apple County Cider Co will be able to adjust its product or services to make them better and thereby gain a competitive advantage. Lastly, exporting will not compel the company to put up facilities in the foreign market (Fabien-Ouellet, 2017). By exporting directly to the US, Apple County Cider Co will avoid the need to establish offices and other facilities in the US. This will make it less costly to enter the market. One downside of this strategy is that it will mean that the company is fully responsible. There is no buffer zone that can allow it to put blame on any other party.

The considerations that Apple County Cider Co need to take into account when marketing in the international market include cultural factors such as language, taste, regional values, consumer habits, and age, economic factors such as per capita income and supply and demand, and political and legal factors such as laws, licensing, and fees (Ozanne, Hunt and Ozanne, 2011). For example, the company has to market its product in a language that is understandable and culturally appealing. On the other hand, Apple County Cider Co has to consider the income level of the consumers in its pricing strategy.

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References

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