Harvard Case - LaTrappe Brewery: A Values-Based Business Model
"LaTrappe Brewery: A Values-Based Business Model" Harvard business case study is written by Freek Vermeulen. It deals with the challenges in the field of Strategy. The case study is 14 page(s) long and it was first published on : Nov 1, 2018
At Fern Fort University, we recommend LaTrappe Brewery adopt a multi-pronged growth strategy focused on sustainable expansion while upholding its core values. This strategy involves leveraging its strong brand identity and unique value proposition to enter new markets, explore innovative product offerings, and strengthen its commitment to environmental sustainability.
2. Background
LaTrappe Brewery, a Trappist monastery brewery in the Netherlands, faces a significant challenge: balancing its commitment to traditional brewing practices and monastic values with the need for growth and expansion. The brewery enjoys a strong reputation for high-quality, artisanal beers and its commitment to social responsibility. However, it faces increasing competition from larger breweries and struggles to maintain profitability while adhering to its strict production standards.
The case study highlights the key protagonists: Brother Prior ' the leader of the monastery and responsible for the brewery's overall direction, and Father Bernardus ' the head brewer who champions innovation and expansion. Their differing perspectives on the brewery's future create a tension between tradition and progress.
3. Analysis of the Case Study
Using a combination of frameworks, we can analyze LaTrappe's situation:
- Porter's Five Forces: The brewing industry is characterized by moderate competition from large multinational breweries, high bargaining power of suppliers due to limited raw material availability, moderate bargaining power of buyers with limited brand loyalty, high threat of new entrants due to relatively low barriers to entry, and moderate threat of substitutes from other alcoholic beverages.
- SWOT Analysis:
- Strengths: Strong brand reputation, high-quality products, commitment to sustainability, unique value proposition, strong brand loyalty, experienced brewing team.
- Weaknesses: Limited production capacity, high production costs, reliance on traditional methods, limited marketing resources, dependence on a single location.
- Opportunities: Expanding into new markets, developing new product lines, leveraging digital marketing, forging strategic alliances, exploring vertical integration.
- Threats: Increasing competition, rising raw material costs, changing consumer preferences, economic downturn, regulatory changes.
- Value Chain Analysis: LaTrappe's value chain is characterized by a strong focus on quality control and sustainability throughout the process, from raw material sourcing to distribution. However, its limited production capacity and reliance on traditional methods create bottlenecks and limit its ability to scale up production.
- Business Model Innovation: LaTrappe needs to explore innovative business models to address its growth challenges. This could involve leveraging its brand equity to create new product lines, exploring strategic partnerships with other businesses, or adopting a more efficient production model while maintaining its commitment to quality.
4. Recommendations
LaTrappe should implement a multi-pronged growth strategy focused on:
- Market Expansion:
- Internationalization: Target new markets with a strong appreciation for artisanal beers and a growing demand for sustainable products. This can be achieved through strategic alliances with local distributors, building brand awareness through targeted marketing campaigns, and adapting product offerings to local preferences.
- Market Segmentation: Identify specific market segments with high growth potential and tailor marketing efforts accordingly. This could include focusing on craft beer enthusiasts, eco-conscious consumers, or health-conscious individuals seeking lower-alcohol options.
- Product Development:
- Innovation: Introduce new product lines, such as seasonal beers, limited-edition releases, or non-alcoholic beverages, to cater to evolving consumer tastes and expand its product portfolio.
- Product Differentiation: Further differentiate its products through unique packaging, storytelling, and experiential marketing.
- Operational Efficiency:
- Vertical Integration: Explore opportunities for vertical integration by acquiring or partnering with suppliers to control raw material costs and ensure consistent quality.
- Technology Adoption: Implement technology and analytics to optimize production processes, improve efficiency, and enhance supply chain management.
- Outsourcing: Consider outsourcing non-core functions like marketing and distribution to reduce costs and free up resources for innovation and growth.
- Strengthening Brand Identity:
- Digital Transformation: Leverage digital marketing channels to reach a wider audience, build brand awareness, and engage with consumers.
- Social Media: Utilize social media platforms to connect with consumers, share stories about the brewery's history and values, and build a loyal following.
- Brand Storytelling: Develop a compelling brand narrative that highlights the brewery's unique heritage, commitment to quality, and social responsibility.
5. Basis of Recommendations
These recommendations align with LaTrappe's core competencies and mission by:
- Leveraging its core competencies: Building on its expertise in brewing high-quality, artisanal beers and its strong brand identity.
- Focusing on external customers: Responding to evolving consumer preferences and meeting the growing demand for sustainable and artisanal products.
- Addressing competitive pressures: Differing itself from larger breweries by emphasizing its unique value proposition, commitment to sustainability, and strong brand identity.
- Quantitative measures: These recommendations are expected to drive revenue growth, improve profitability, and increase market share.
6. Conclusion
LaTrappe Brewery has a strong foundation for future growth. By embracing a multi-pronged growth strategy that balances its commitment to tradition with a focus on innovation and market expansion, LaTrappe can continue to thrive while upholding its core values.
7. Discussion
Alternative options:
- Mergers and Acquisitions: While this could provide access to new markets and resources, it carries risks of cultural clashes and potential dilution of the brand identity.
- Licensing: Licensing its brand to other brewers could generate revenue, but it could compromise control over product quality and brand image.
Risks and key assumptions:
- Consumer preferences: The success of these recommendations hinges on the assumption that consumers will continue to demand artisanal beers and value sustainability.
- Competition: The brewing industry is highly competitive, and LaTrappe's success depends on its ability to differentiate itself and maintain its competitive edge.
- Financial resources: Implementing these recommendations requires significant financial investment, which may require LaTrappe to secure external funding or explore alternative financing options.
8. Next Steps
- Develop a comprehensive strategic plan: Outline specific goals, timelines, and resource allocation for each recommendation.
- Conduct market research: Gain a deeper understanding of target markets and consumer preferences.
- Explore potential partnerships: Identify potential strategic alliances for market expansion, product development, or distribution.
- Develop a digital marketing strategy: Establish a presence on social media and other digital platforms.
- Monitor progress and adjust strategies: Continuously evaluate the effectiveness of implemented strategies and make necessary adjustments based on market conditions and performance metrics.
By taking these steps, LaTrappe Brewery can navigate the competitive landscape, achieve sustainable growth, and solidify its position as a leading producer of high-quality, artisanal beers while staying true to its values.
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Case Description
The case describes the scenario that faced Thijs Thijssen and Brother Isaac, co-CEOs of the Netherlands-based La Trappe Brewery, in 2015 as they considered how to consolidate the success they had had with the business since Thijssen had joined the organisation in 2005 and build on this success for the future. Sales had risen throughout 2013 and 2014 and La Trappe had been exporting its beer to markets outside the Netherlands for a few years, with exports now making up 40% of the company's revenue. This rise in revenue had allowed the brewery to expand capacity and facilities again, and in 2014 they had stopped producing beer under licence for Bavaria, another Netherlands-based brewing company, from whom they received a share of royalties on sales. Thijssen now calculated that the brewery could potentially double the production of La Trappe beers within the existing buildings and facilities. To prepare for the future, Thijssen and Brother Isaac wanted to map out the company's strategy, in a way that could be understood by all employees. One pertinent issue was their use of foreign agents to secure exports. These were sometimes difficult to vet in terms of whether they were using channels and methods consistent with La Trappe's brand and vision; in New Zealand, for example, Thijssen had discovered that the agent had no contacts in bars and restaurants, but instead went directly to retail, a model La Trappe had eschewed in the Netherlands in order to protect brand identity. To sort out these issues and establish a clear path to sustainable growth, Thijssen and Brother Isaac began the process of mapping out a future strategy, with the help of executives from Bavaria. One question in particular vexed Thijssen: he could not figure out why the brewery had grown so rapidly over the last six years, given the challenging economic climate. It seemed very counter-intuitive.
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