Beer Economics - Supply and Demand Essay Example for Free

Beer Economics Supply and Demand Essay The laws of Supply and Demand may be a simple concept except when it comes to beer. Two large beer companies have formed an Oligopoly and have taken the power from the people. Income high, or income low, beer will be purchased even if the price is not always right. A social gathering is not social without the presence of beer. Beer has been a growing industry year after year. The craft, or microbrewery industry, has grown tremendously since the early 1980s, and the Brewers’ Association reckons that there are now over 1,500 brewing companies in the country, a level not seen since Prohibition was introduced in 1919 (Krafoff, 1). Pabst Blue Ribbon, in 1890 the most popular beer in the U. S. , has seen its market share drop to 2. 8%, but it has enjoyed a resurgence due to its cheap price, decent taste, and new-found cachet among urban hipsters (Krafoff, 1). The beer market is a completely open market. Anyone with a marketing idea and a recipe can get a contract brewery to make the product (Krafoff, 1). Almost every bar has a dozen taps with independent and local brews, but there are two definite brands you won’t ever have to look hard for: Coors and Budweiser. As recently as 2004, 64 percent of the global beer market ownership was fragmented among ten beer corporations (Anderson, 5). In 2008 the merger of Anheuser-Busch (A-B) and global giant InBev created the world’s largest brewer: Anheuser-Busch InBev (ABI), followed by SABMiller (second-largest) and Molson Coors Brewing Company (fifth-largest) (Anderson, 5). To better compete with ABI’s growing world beer market share, SABMiller and Molson Coors combined their U. S. and Puerto Rico operations to establish their joint venture, MillerCoors LCC (Anderson, 5). With these massive consolidations, the two beer giants (ABI and MillerCoors) now have combined control of more than 40 percent of the world beer market and 80 percent of the United States beer market (Anderson, 5). MolsonCoors operates in the United States, Canada and the United Kingdom. Their products include Coors Light, Coors, Keystone Light, Blue Moon, MGD 64 and many other recognizable beers. Their number one competitor is Anheuser-Busch. Their products include Budweiser, Bud Light, Michelob, Shock Top and many others. The beer market has formed into a classic oligopoly: a market with just a few firms dominating the industry. Both MolsonCoors and Anheuser-Busch have substantial market power and control over beer prices. They are mutually interdependent. MolsonCoors can’t raise the price of Coors Light unless Anheuser-Busch raises the price of Bud Light. Both companies are forced into the game theory. They have to play a guessing game of what the other company is going to do and lower or raise their prices based upon their assumptions. It may seem easy for them to just agree to the same price and share the market. Unfortunately, that is called a cartel, and is illegal in the United States. Their products have few substitutes and complements. A substitute of beer is wine as the cross-price elasticity is . 23. A complement to beer is hard liquor as the cross-price elasticity is -0. 11. Beer is an elastic product because it is not a necessity. Demand is highly affected by price. An example of this is highly popular discount brands such as Keystone Light. MolsonCoors products are equally as elastic as their competitor Anheuser-Busch. They offer discount beers as well as microbrew style beers. Beer is an inferior good. As income falls, quantity of beer demanded falls. Beer has a negative income elasticity of demand of -0. 09. This is because when society becomes richer (income rises); things such as fine wines and spirits are substituted for beer. Beer has a couple factors working in its favor. First, the United States is in a recession, thus income is low, and the quantity demanded of beer is high. Second the marginal utility of beer increases as more is consumed. The utility of one beer is high but increases with every added beer. This is a major advantage to the two beer giants and their profits. There is not an infinite supply of a given beer. This seems unimportant when no one wants said beer, but is important when it is in high demand. Ideally, the amount of beer will meet (or come close to meeting) the desire for it, meeting a market equilibrium. It may not taste like it, but our beer is actually in danger. The popularity of corn-based ethanol has already caused a tight market for malt, one of beers three critical ingredients, as farmers increasingly forgo the barley crops used to make it in favor of more profitable corn (Boyer, 1). This has caused a worldwide shortage in hops, thus a large increase in price. Barley has risen from $157. 6 USD per metric ton in March 2007 to $202. 53 USD per metric ton. The other key ingredient in beer (along with water), hops is a flower that gives beer flavor and aroma (Boyer, 1). The shortage comes after a decade-long surplus discouraged farmers from planting the crop, which grows on trestles and can take years to mature (Boyer, 1). Since 1994, the amount of farm acreage planted in hops worldwide has declined by about half (Boyer, 1). Together, the two mean the beer industry now faces a 10 to 15 percent shortage (Boyer, 1). On the upside, water, aluminum and yeast are widely available and have stable prices. According to MolsonCoors financials, their total revenue (p x q) is $3,254,000. We can assume that they sell every beer at about $3 which would make their quantity sold at approximately 1,084,667 cans. That’s billions! This business model seems to be working. Molson Coors is currently earning economic profits. Their current net income is 670 million dollars. The stockholders’ equity is currently 7,779. The current prime rate is 3. 5% so by multiplying that by the stockholders’ equity we can assume the owner’s implicit costs are approximately 272. 7 million dollars. MolsonCoors generates profits of about 397. 03 million dollars per year. Beer is a profitable product because it is widely sold in many markets and, despite rising costs, fairly inexpensive to produce. Since MolsonCoors has been a company for many years, they have low long run average total costs. Over the years they have been able to decrease their operating costs and increase production and in doing so, reaching a point of economies of scale. Below is a fictitious example of how as quantity rises, total costs only rise a little bit.

Kurt Vonnegut and Slaughter House Five :: Biography Biographies Essays

Kurt Vonnegut and Slaughter House Five Kurt Vonnegut is one of the favorite dark humorists of the past century. Combining humor and poignancy, he has become one of the most respected authors of his generation. For twenty years, Kurt Vonnegut worked on writing his most famous novel ever: Slaughter House Five. The novelist was called "A laughing prophet of doom" by the New York Times, and his novel "a cause for celebration" by the Chicago Sun-Times. However, Vonnegut himself thought it was a failure. He said that, just as Lot's wife turned into a pillar of salt when she looked back, so his book is nothing but a pillar of salt. Kurt Vonnegut tied in personal beliefs, characters, and settings from his life into the novel Slaughter House Five. Kurt Vonnegut grew up in Indianapolis, Indiana. He alluded to Indiana in his writings frequently and considered himself a Midwesterner. There were three traumatic experiences Vonnegut talked about in this novel that happened to him as he was growing up. One was when his father took him to the pool when he was young and taught him to swim by the "drown if you don't" method. Another time, he and his family went out to see the Grand Canyon. As he was looking over the edge his mother touched him and he wet his pants. The third experience he mentioned was when his family was touring a cave, he was very scared and then the tour guide asked everyone to turn off all their lights and it was pitch black except for two glowing red dots from his dad (Modern Critical Interpretations 4). These experiences showed through Vonnegut's novel as his alienation from others throughout the book (Novels For Students 464). Kurt Vonnegut's personal beliefs in life, we also in Slaughter House Five. Vonnegut believes that only heart believes in freewill but it is non-existent. In his novel he writes about a group of aliens called tralfamadorians who come and take Billy to their world and put him in a zoo (Kurt Vonnegut Jr. 75). While Billy is with them, they teach him this also, and they are obviously the far superior race. Another belief that Vonnegut has, is that war is horrible, he says "war is not an enterprise of glory and heroism, but an uncontrolled catastrophe for all involved" (Novels For Students 265).

Egamova transfigered night

The time of first World War, a young enthusiastic man enlists as a volunteer gunner in the artillery as he has reached an impasse and sees war as a remedy. In a bar he comes across his fellow soldier, a surgeon lieutenant for whom war is an impasse, as he is trying to avoid sober realization of detrimental consequences of his civic duty by getting drunk. A lot of problems can be observed in the passage, but the most evident and tricking one is the irretrievable effect the brutality and gore of the war produces on human psychic, which comes as a quite contradictory fact since the narrator presumes that the war saved his life.To provide a profound feeling of that horrible days routine life the author inflates his text with parallel constructions, simple sentences and abundant use of lexical units representing negative connotation; these are (morbid despair, impasse, ferocious concentration, detest, etc. ) so it becomes clear that a war is by no means a remedy which the narrator was so desperately trying to find.What is more, when analyzing George's discourse a reader realizes the ambiguous nature of a war as his character is quite dual – despite all the redundancy of negative description of his appearance (ill-looking, ugly, fairly drunk, hunched over) and the absolute hopelessness in his talk (l want to go somewhere cold and dark, God preserve me from sanity) George still possessed of sinners energy which indicates to the fact that he has something background to fight or and that gives him this very kind of energy to overcome all the harsher, brutality and intoxication of that odious war.In the light of all this, any reader must not be influenced only by the superficial sense of the text, but go deeper to reveal the genuine authors message, inasmuch as any war is not merely a succession of human dying but also a glorious ground of evoking patriotism and marvelous bases for tear-jerking love stories.

Lafayette vs. Napoleon True Revolutionary - 2498 Words

Lafayette vs. Napoleon: True Revolutionary Like many revolutionaries, Napoleon and Lafayette were both beloved by their followers and were forever praised for their accomplishments. There were different angles taken by each individual to reach their goal. As we find out in Lafayette in Two Worlds by Lloyd Kramer, Lafayette’s influence on America and how his legacy in both the American and French revolutions assisted one another to make him a important figure in both societies. In Felix Markham’s Napoleon, Napoleon is a revolutionary at heart, beginning in his childhood days. He wants the fame and power of a revolution and achieves it by climbing up the political ladder. It is important to understand that while both Lafayette and Napoleon†¦show more content†¦From the rich to the poor, from the governments to the protesters. This is because Lafayette would listen to the people and what it is they wanted. On Wednesday mornings, for example, the commander in chief would receive any citizen who visited headquarters. All of these interactions formed a direct bond between Lafayette and the crowd, a bond that deputies feared and the government respected. (Kramer 236) The people looked toward â€Å"Lafayette as their defender† (Kramer 236). And the government saw Lafayette as a mediator between the people and themselves. For the most part Lafayette loved this. He loved his country and he wanted to do anything he could to help the people of his country out. Because the people respected Lafayette in every manner, he was able to keep people calm. When there would be tension between the people and the government, it was Lafayette that would be able to calm the people to follow law and order. This love from the people is what allowed Lafayette to accomplish so many things. In 1791, Lafayette had lost his political and military power in France. With the French Revolution of 1830, this gave him the opportunity to regain the powers that he had lost and wants to regain. His role would be limited through, basically being â€Å"a symbolic status that constantly shaped and limited his action and influence† (Kramer 227). When Lafayette returned to Paris, he started to reinstate some of the ideas and precedents back from when he was in