354 Perceived Market Risks and Strategic Risk Management of Food Manufactures: Empirical Results from...
whereas larger breweries have to a much lesser extent found shelter against competitive pressu-
res to a much lesser extent.
Breweries perceive the bargaining power of various buyers very differently. The bargaining po-
wer of restaurants and pubs is considered comparatively low by most breweries. Restaurants
and pubs are considered strongest by small breweries with an annual output between 5,000 and
10,000 hl p.a. This is not surprising since small breweries sell a large portion of their output
through these traditional marketing channels. For large breweries this marketing channel is less
important since as they rely more heavily on national retailers. Furthermore, only 33 % percent
of the small breweries’ sales to restaurants and pubs are distributed on the basedis onf long-term
marketing contracts hindering that keep buyers to from changinge their supplier. This percen-
tage is the higher,increases with the size of the larger the breweryies are. On average, 64 per-
cent% of sales of by large breweries (more than 250,000 hl p.a.) to restaurants and pubs are
delivered on the basis of long-term contracts. Therefore, in general restaurants and pubs haveare
in on average their strongest position vis-à-viswhen dealing with small breweries.
The German retailing sector is characterized by high concentration ratios. Currently, the top ten
retailers have a combined market share of more than 85 percent%; the top 30 companies repre-
sent about 98 percent% of the market (Trade Dimensions/M+M Eurodata, 2005). Therefore,
most retailers have a hugeimmense bargaining power; 36 percent% of all respondents consider
it high or very high. Since large breweries are more dependent on retailers, it is not surprising
that 73 percent% of all breweries producing more than 250,000 hl p.a. share this view.
The Aaverage size and bargaining power of beverage wholesalers are also increasing due to gro-
wing concentration ratios in this sector. Only 18 percent% of the companies under surveyed
consider wholesalers’ bargaining power low or very low, whereas 48 percent% perceive it as
high or very high. Since large breweries are more dependent on this marketing channel than
small breweries, it is again no surprise that we can observe considerable size-dependent diffe-
rences in the sample.
The risk of entry of new competitors entering into the breweries’ core market is perceived very
differently. Only 30 percent% consider this threat high or very high; contrariwise in fact, about
34 percent% observe perceive a low or even very low threat of market entry. Again, clear dif-
ferences between companies of different sizes are worth mentioning. The larger a brewery and
its core market are, the higher it perceives rates the risk of facing new competitors.
When preparing the survey, we expected the bargaining power of suppliers was expected to be
perceived as low since a shrinking domestic production in the brewing industry contributes to
overcapacities on the supply side. Furthermore, suppliers face intensive competition by foreign
competitors (Hofnagel & Kortmann, 1999). Contrary to our expectation, however, about 23 per-
cent% of all respondents claimed supplier bargaining power to be high or even very high. In-
terestingly, 32 percent% of all breweries with an annual output of more than 250,000 hl but only
about 14 percent% in the size group between 100,000 and 250,000 hl p.a. share this view. This
difference in perception of the bargaining power of suppliers may reflect the strong participati-
on of the smaller breweries in purchasing cooperatives.
Consumers’ changing consumption behavior strongly influences the threat of substitute pro-
ducts, such as mineral water, soft drinks or wine. Furthermore, the intensified competition with
substitutes requires more elaborated marketing concepts and more product innovations in the
brewing industry. The risks stemming from the market success of substitute products is percei-