Threat of New Entrants
The gluten-free beer market offers lucrative opportunities to manufacturers due to the ever-increasing popularity of gluten-free products. There is a continuous demand for gluten-free beer due to increasing cases of celiac diseases and gluten-intolerance among people. All these factors offer rewarding prospects to the new entrants in the market.
The gluten-free beer business is competitive and expanding. Owing to the increasing cases of gluten-intolerance among the consumers in North America and Europe, the demand for gluten-free beer is high in these regions. Additionally, key players in the gluten-free beer market have their prominent presence in countries, including the US, Canada, Germany, and the UK. The initial investments in the gluten-free beer market are high, including the raw material costs, certification cost, and approval from regulating bodies. Production cost of gluten-free beer is identified to range from moderate to high because of high investments required in production equipment, skilled labour inputs, maintenance cost, and safety testing & certification.
Shifting consumer preferences have raised the demand for gluten-free beer for which the raw materials are present in abundance across the globe. Major players in the gluten-free beer market have a prominent presence across developed countries, which makes the market highly competitive.
Based on this, the threat of new entrants to the global gluten-free beer market is moderate-high.
Bargaining Power of Suppliers
Suppliers for gluten-free beer are the producers, distributors, importers, and independent suppliers. Due to the availability of large number of supplier option to the manufacturers, the suppliers have low bargaining power. In addition, the low switching cost tends to lower the supplier’s power.
Bargaining power of suppliers is a crucial factor in the gluten-free beer industry. Suppliers maintain a strong relationship with the buyers or the manufacturers of the end-product and focus on maintaining strong business relations to maintain the end-product quality. The suppliers tend to differentiate in terms of sourcing, supplier relationship, and product functionality, creating product differentiation and uniqueness of suppliers.
Many suppliers is present across all the major regions for which the manufacturers have the freedom to switch between suppliers. This tends to reduce the bargaining power of suppliers.
Therefore, the bargaining power of suppliers is low in the global gluten-free beer market.
Threat of Substitutes
There are no substitutes for gluten-free beer. However, gluten-free beer possesses an internal threat of substitution. This is backed up by the fact that with the rising population of gluten-intolerance, many breweries are introducing gluten-free beer with various modifications to improve the taste. Furthermore, gluten-free beer is expensive for which the consumers may tend to switch to different drink to avoid gluten.
Hence, the threat of substitute in the global gluten-free beer market is moderate.
Bargaining Power of Buyers
The bargaining power of buyers is directly proportional to the consumer’s ability and willingness to pay for products. It includes the pressure that consumers exert on manufacturers to procure higher quality products and better customer service at lower prices.
Gluten-free beer has a limited customer base owing to its specific characteristics. Growing consumer awareness, and high demand for superior quality products has raised the demand for the product globally. Increasing per capita disposable income and urbanization will ensure further escalation in demand for gluten-free beer.
The presence of small and medium scale regional manufacturers in the gluten-free beer market is tend to attract many consumers. Furthermore, the presence of a wide product range tends to decrease the switching cost. The consumers are well-educated about the product and they no longer have brand loyalty, which determines the bargaining power of buyers on these two major factors. However, absence of close substitute to the product limits the bargaining power of the consumers.
The bargaining power of buyers is moderate to high in the global gluten-free beer market.
Competitive Rivalry
The gluten-free beer market is marked by high intensity of rivalry. Established market players indulge in an aggressive rivalry where the market players are targeting their competitors in terms of quality and price, thus, making the industry competitive and reducing profit potential for the existing firms. The players in the market are competing based on new product launches, prices, product features, and marketing activities. The competition is getting intensified due to many regional small & medium sized breweries. Thus, product differentiation is highly needed to enter and capture the market share in such scenarios. Moreover, the key players tend to have very strong hold and control on their market. Their focus remains more on controlling exiting consumer base by providing quality products to the consumers.
Hence, the competitive rivalry in the global gluten-free beer market is moderate.
