961 BEER CASE STUDY

961 Beer has a long and fascinating history, which illustrates not only the tenacity of an
entrepreneur but also the dedication and determination of investors to make a crazy business idea
succeed. In 2006, Mezan Hajjar, the chief executive of 961 Beer, embarked on one of the most
daring adventures to start a craft-beer company in the Middle East. This was in spite of the
economic and political adverse conditions in the region. The entrepreneur recognized the
opportunity in the Lebanon beer segment and opened a beer brewing facility in the region. To
accomplish his dream, Hajjar collaborated with international partners such as Henrik Haagen, a
Danish businessman, who not only aided in financing the business but also helped in marketing it
internationally. Nonetheless, 961 Beer has faced numerous hurdles, key among them inadequate
in supply chain management and socio-cultural oppositions, which makes for the company to
expand (Deuel, 2013).
PEST Analysis
Political
Conceptually, the political influence on the business is largely influenced by the public
laws and policies within a country. In Lebanon, the political crisis, as well as the overall situation
in recent years, has been quite disturbing. For this reason, local as well as international
companies have faced a difficult situation, which has curtailed their ability to flourish. It is worth
noting that Lebanon is a democratic republic, with a direct election that is held every four years.
Nevertheless, the recent Arab uprising, which was influenced by violence in Syria back in 2013
has affected the business environment in the country (Meier, 2013). It has been hard for 961 Beer
Company to do business in the country.

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Economic
Since the inception of the Arab uprising, the economy of Lebanon has negatively been
affected. For instance, the bombing of Beirut International Airport paralyzed the import and
export business within the country. At the same time, the beer market in Lebanon has had steady
growth since 2006, but this has been affected by the political climate within the region. The high
cost of doing business in Lebanon has also been a major issue, in which case 961 Beer has to
import most of the ingredients for German, Britain, and the United States (Deuel, 2013).
Nevertheless, 961 Beer has enjoyed economic growth in other regions, especially due to its focus
on dietary ingredients.
Socio-cultural
Lebanese culture plays a major role in determining the perception of any product
introduced in the market. To begin with, Lebanon is a predominantly Muslim country, with the
religion teaching people to abstain from alcohol (Commisceo Global Consulting, 2019). It was
hard for the company to gain a market share due to the anti-alcohol teachings, with numerous
religious groups opposing the idea. Nevertheless, the Lebanese people are quite good at
hospitality, a factor that allows them to enjoy drinks as well as serve drinks to their guests.
Taking this into consideration, 961 Beer was able to win the heart of the Lebanese people, which
facilitated its market penetration.
Technological
Lebanon is a developing country, which means the technological infrastructure in the
country is underdeveloped. This means that the country does not have an excellent technology
infrastructure to support aggressive global industries. Nevertheless, 961 Beer has invested
heavily in R&D, which has boosted the company’s ability to compete with international brands.

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Porter’s five forces
The threat of new entrants
In any consumer food market, there are always barriers to brand new entrants. For 961
Beer, the threat of new entrant in the Lebanese market is low, since the requirements for starting
a liquor company in the country is high. At the same time, the current rivals in the market such
as 961 Beer are aware of the market, not to mention that they have advanced in customer
commitment, which makes itis hard for new entrants to flourish in the market.
Threats of substitutes
With the huge market for the beer market in Lebanon, the threat of substitutes is
moderate. This is because new and international companies are verging into the market,
providing consumers with a wide range of products to choose from. While 961 may have an
already established market, international brands are gaining their market in the Lebanon beer
market. Equally, local brands are gaining their market share in the market, which means 961
Beer will not dominate the market for a long time.
Bargaining power of suppliers
The bargaining power of supplier for 961 Beer is moderate in the Lebanese beer market.
This is because the country has been facing political instability for a long time, which has
curtailed the supply of raw materials in the country. It is worth noting that the raw materials for
the production of 961 Beer come from German, Britain, and the United States. Such companies
may find it hard to supply their raw materials in times of war, which means the company is at
liberty from other suppliers.
Bargaining power of the buyer

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The buyer’s power for 961 Beer is high since the beer market in Lebanon consists of both
local and international producers. At the same time, the producers have different styles of beer-
making, ranging from ales through lagers to wines. The price sensitivity of beers in Lebanon
makes it easier for buyers to dictate the prices of beer product, which eventually increase their
power.
Industrial rivalry
The industrial rivalry for 961 Beer is high, with the company facing an immense threat
from international brands such as a Heineken and Carlsberg, not to mention local competitors in
the country. At the same time, the beer market in the country faces fierce competition from non-
alcoholic beers, taking into consideration the religious beliefs of the locals.
SWOT Analysis
Strengths
The main strength of 961 Beer is that it enjoys a relatively strong existence in Lebanon,
making it one of the most popular brands in the country. For this reason, the company not only
enjoys support from local customers but also has established a brand name in the market. At the
same time, the company has a wide range of products, which means customers have a choice to
make. Lastly, 961 Beer has an excellent pub-based approach, which ensures that the company
has a better distribution network (Hindy, 2015).
Weaknesses
One of the weaknesses of 961 Beer is having an outdated technology and capacity. This
makes it hard for the company to compete with international brands such as Heineken that has
the latest technology. A huge reliance on the Lebanon-based market is another weakness for the
company.

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Opportunities
The lucrativeness of the market places is a big opportunity for 961 Beer Company. This
is because there is an increasing demand for beers, not only in the Middle East but also all over
the world. With the increasing buying power of the people, 961 Beer may take this opportunity
to increase its market share across the globe.
Threats
The changing consumer needs for new beverages pose a great threat for 961 Beer. People
are becoming more conscious of the type of food and drinks they take. With people becoming
more health-conscious, they have come to realize that alcohol is a contributor to unhealthy
dieting. Government rules and regulations are other threats for 961 Beer (Hindy, 2015).
Hajjar’s decision
Hajjar made a wise decision to invest in beer products in Lebanon. The founders and
owners of 961 Beer are visionary entrepreneurs who saw a niche market in a relatively untapped
beer market in the country. Currently, Lebanon is undergoing a social transformation, with
individuals adopting European customs and cultures. While there may be religious restrictions
and correlated legalities, individuals in the Middle East are gradually accepting the brewing and
consumption of alcohol. Establishing a market share in such a growing market was the best
decision that Hajjar made while establishing the company.
Expanding the business
The best strategy for Hajjar to expand the business is to collaborate with international
entrepreneurs. This will allow the company to have an international feel, especially in the Middle
Easter sector. Forming a strategic distribution channel will allow the business to not only avail its

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products in the Middle East customers but also compete with international brands such as
Heineken.

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References

Commisceo Global Consulting, 2019. Lebanon – Language, Culture, Customs and Etiquette.
[Online]
Available at: https://www.commisceo-global.com/resources/country-guides/lebanon-
guide
[Accessed 05 October 2019].
Deuel, N., 2013. The Hipster Brewmeister of … Beirut. The New York Times, 03 August, p.
Web.
Hindy, S., 2015. The Past, Present, and Future of Middle Eastern Beer Brewing. [Online]
Available at: https://www.foreignaffairs.com/articles/middle-east/2015-08-27/ancient-
ales
[Accessed 05 October 2019].
Meier, D., 2013. The Effects of Arab Spring and Syrian Uprising on Lebanon. The Lebanese
Paper, pp. 1-17.