Question

This question is about the Lagunitas Brewing Company, Inc., 2013 case. Why did so many craft brewers go out of business starting in 1997, as Lagunitas steadily expanded? How do you explain the success of Lagunitas?

Answer 1

So many craft brewers went out of business starting in 1997 due to the financial cruch they faced in the craft beer industry. They closed permanently or temporaryily due to the slow sales and staggering growth rates of the industry.

Lagunitas Brewing company took this situation as an advantage to move towards success. TO increase their capacity they purchased additional equipment. The companies that were closing due to the financial unstability agreed to sell their equipments at low costs to Lagunitas. They also took up a larger facility given up by a brewery that was closed recently. These investments made by the company helped it to attain success for the next two years. By 1999, it doubled its sales revenues from $1,263,000 in 1997 to $2,278000 in 1999. The capacity of the company'sproduction made a boost of 80% which was about 8400 barrels in 1997, raised up to about 14000 barrels in 1999. Hence the 1997 financial challenge faced by brewing industry in 1997 resulted in a downfall for the other brewing companies whereas an advantage towards growth and success for Lagunitas Brewing Company.