Presentation in Economics

Oligopoly : The Beer Industry in the Philippines.

Introduction
An estimate of 5 million Filipinos drink on a regular basis and roughly 39.9% of population drinks on an irregular basis. Filipinos have been reported to consumed about 1.25 billions liters of beer (equivalent of 3.9 billions beer bottles). Filipinos has second highest consumption rate of beer while first in wine consumption. Gin are popular over youths because they are inexpensive while middle and upper class Filipinos spend more money on well known expensive brands of alcohol. The two firms of the brewery industry of the Philippines are San Miguel Corporation and Asia Brewery of the which SMC is the largest.

Statement of the Problem

What are the demand and the supply factors that contributed to the fewness of the beer industry? That is, why do other companies cannot manage to enter the brewery industry? What are the Market Strategies SMB and AB use in the brewery industry? How does the government intervention on the prices of beers such as taxes imposed affect the consumers and producers?

Scope and Delimitation

The study covers the beer industry in the Philippines showing supply and demand factors resulting to the oligopolistic nature of the brewery industry. It will also cover applied researches on market strategies SMB and AB uses in its operations. The study will not cover health issues relating to the consumption of alcohol, process of producing liquors and other environmental and social issues.

Significance of the Study

Being the second highest consuming country in Southeast Asia, the study intends to be helpful to those Filipino consumers and producers specifically to those alcohol consumers since they play a vital role in the behavior of competency between the two main companies.

San Miguel vs. Asia Brewery

Advertising : Image is Everything. The firms under oligopolistic market employ aggressive and defensive weapons to gain a greater share in the market and maximize sales. Beer companies spend more than $12 million dollars on advertising. For every beer Filipinos buy, 80% of the amount we pay is spent on advertising. Alcohol advertisements present a direct link between alcohol and happiness, sexual conquest, success and excitement and appear media as part of the day-to-day lives of Filipinos.

Analysis and Conclusion

Consumers taste in the mass market has generally shifted from the stronger-flavored liquors to lightflavored liquors. Technological advances have profound effects on the supply of the market. Since most liquors products of SMC and AB are alike, the two breweries greatly emphasize on advertising. Although the Philippine government gets revenues from excise tax on liquors, it doesnt affect the volume of production and sales of alcoholic beverage since the demand is inelastic.