45270619-Global-Forces-and-the-European-Brewing-Industry.ppt

7/27/2019 45270619-Global-Forces-and-the-European-Brewing-Industry.ppt

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GLOBALFORCES AND

THEEUROPEAN

BREWINGINDUSTRY



Trend for Mergers & Acquisitions

• Trend for mergers and strategic alliances amongthe top breweries in Europe in order to maintaintheir position at the Top in the European Market

• Interbrew’s market trend survey 2002, shows

that the consolidated global share of the top 20brewers increased from 51% on 1990 to 65% inthe year 2002.

• In 2003, Anheuser Bush was one of the largestbrewer ranked by sales volume but with limited

overseas operations. In 2004 Brazilian Am Bev,and Belgian Giant Interbrew merged to createIm Bev, the largest brewer in the world.



Trend for Mergers & Acquisitions

• According to our research, in 2008, ImBev has merged with Anheuser Busch tocreate A-B Inbev, the leading beerproducer in the world.

• Cigarette and the Beer Industry - In 2002the five largest global brewers accountedfor only 30% of the market share whereas

when merged with the cigarette industry,the five leading players had a 60% marketshare.



Trend in Western European

market: Germany

• Even if the Western European market hasbecome mature: its demand is now decreasing,

partly because of the great number of substitute

products.

• It may be noted that numerous brewing

producers do not differentiate their products,

especially in Germany, where hundreds of firms

indulge in making traditional beer• German beer drinkers are used to the strict

German purity law.



Trend in Western European

market: U.K.• Ownership of breweries within the UK had rapidly

changed. Foreign multinationals such as Interbrew,Coors and Calsberg entered and controlled 53% of themarket.

• Consumption of lager has grown from over 50%of thetotal UK market in 1990 to 62%in 2002. The trend wastowards increasing sales through supermarkets resultingin a reduction of draught beer demand

• Also the market is moving more and more towards

increased sales in the off trade. According to research,the on trade market for beer accounts for 59% of the allalcoholic beverages sale by volume and in the takehome market, the % is 72



Trend for product development

• Varied consumer tastes require firms tocarry a more diversified portfolio ofproducts - there is an aspect of innovationthat needs to be taken into consideration

• Trend for product development such asflavored beers to attract Youth Market.Sales of flavoured beer mixed with either

lemon- lime soda or cola available indraught and bottles had an increasingmarket share up 30% in 2002.



PORTER’S FIVE FORCES

• COMPETITORS High Industry Concentration

Branding

Diversification

High Exit Barriers

Increased Cost Efficiency

HIGH




• POTENTIAL ENTRANTS

International Competition

High Entry Barriers Tighter Legislation

LOW




• BUYER POWER

Low Switching Costs

Change in Drinking Habits Increasing Brand Identity

Wholesalers/Retailers

FAIRLY HIGH




• SUPPLIER POWER

Volume supplied

Quality of Raw Materials

LOW




• SUBSTITUTES

Other Alcoholic Beverages

Non Alcoholic Beers and Soft Drinks Pubs & Bars

Changing Social Habits

HIGH



HEINEKEN

• HEINEKEN CLAIMS TO BE THE “MOSTINTERNATIONAL BREWERY GROUP IN THEWORLD”

• IN 2004, BIGGEST COMPANY OF THEEUROPEAN BREWING INDUSTRY

• EXPORT: 17.7 MILLION HL

• 11.7 %SHARE OF THE MARKET

• CURRENTLY OWNS 115 BREWERIES INMORE THAN 65 COUNTRIES

• MAJOR EXPORTER OF BEER IN EUROPE



IMPACT OF TRENDS

• Loss of Sales

• Shrinkage of Market

• May Result in Brand Dilution

• Need to review existing Strategies/ Portfolio



SWOT ANALYSIS

STRENGTH

Premium Brand

Presence in more than170 countries

Attractive package

Advertisement

WEAKNESS

Mostly Based in European Market

Relies on its Key Brands

Only small acquisitions apart from BBAG



SWOT ANALYSIS

OPPORTUNITIES

East Europe, Asian & Other Markets

Growing demand for Non Alcoholic & Flavored

Beverages

Growing Off Trade Markets

THREATS

Mature Western European Market

New Laws icw Alcohol Consumption

FAB’s and Non Alcoholic Drinks

Danger of becoming a tired Brand



CHANGE IN STRATEGY

1. PENETRATE NEW MARKETS• Eastern Europe & Asia Markets are in full

expansion

• Heineken has a strong brand.

• Presence in Many Markets

2. ACQUISITION OR JOINT VENTURE

• Acquire local companies with strong image

and readily available distribution systems• Joint Venture with Major Brewers to enhance

Image, and retain Competitive Advantage



CHANGE IN STRATEGY

3. EXPAND PRODUCT PORTFOLIO

• Develop Low Calorie/ Flavoured Drinks

• Propose New Products to enhance the off

trade consumption experience (Beer Tender)

• New Products to bring Variety & encourage

loyal customers to buy more, thus boosting

Brand Image

4. Vertical Forward &Backward Integration



CHANGE IN STRATEGY

5. ADVERTISING & SPONSORSHIP

• Continue to sponsor major sport events

• Continue Image Building – Association with

Hollywood “Premium Stars”

• Sponsorship of Musical Events

6. BRAND REINFORCEMENT

• Bring Out the positive aspects of the Heineken/ Amstel Brand

• Campaigns to drink Responsibly



CHANGE IN STRATEGY7. PRODUCT DEVELOPMENT/ ENHANCEMENT

STRATEGIES Emergent Markets

• Build Strong Portfolio to combine with local brands +

High Advertisement

Developing Markets• Promotion of the Premium product and its qualities in

developing markets

• Enter New Distribution Channels & Market Segments.

Propose New Products Mature Markets

• Investment to strengthen Brand Image

• Joint Ventures



IMPACT OF TRENDS

– Market stagnation. No further scope for

improvement.

– Sales will decline along with profits.

– With the trend of Mergers and acquisitionsother international beer brands can invade

the market.

– When other players enter the market,tendency to lose your resources



CHANGE IN STRATEGY – Already present in Northern America. Should

enter Southern America

– Look for strategic alliances, acquisitions in

booming economies in Eastern Europe and

China. – Develop new beers and adapt accordingly to

each country.

– Create brand awareness through extensive

advertising.

– Look for sponsorship in different fields of

sports, which are popular in the countries



CHANGE IN STRATEGY

– Develop new beers and adapt accordingly to

each country.

– Create brand awareness through extensive

advertising. – Look for sponsorship in different fields of

sports, which are popular in the countries

– E.g In America- Baseball – In Southern America - Football

– In India- Cricket

45270619-Global-Forces-and-the-European-Brewing-Industry.ppt

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