Strategic Marketing

Assignment
Kingfisher Beer

By:

Kedar Prabhudesai 2009A58

Akash Gourinath 2009A61

Sharthak Shankar Bhagat 2009B

 PRODUCT - Kingfisher Beer
MARKET SIZE -
 Alcoholic beverages market, especially beer market in India is growing with leaps and bounds. The
beer market in India is estimated to be over Rupees 3000 corers. Annual consumption of beer is over
hundred 10 million cases. CAGR of beer industry is 14.3%, much higher than most of the countries.
Rising income the Indian consumer, change in age profile and lifestyle as well as a reduction in beer
prices are major factors pushing this growth. Traditional beer markets like Europe and USA are
either flat or in a state of decline In India, beer sales grew at nearly 90% compared to, less than 60%
growth for other alcoholic drinks and according to industry sources Indian beer market is expected
to nearly double itself to 23.3 million hL by 2012 from 12.5 million hL at present

SCOPE OF COMPETITIVE RIVALRY -

Indian beer market is highly saturated and difficult to 14% break into. More than 80% of the market
is 48% controlled by the two players, UB and SAB Miller. While UB with brands like Kingfisher,
Zingaro and 4 38% Page Kalyani Black has a 48% market share, SAB’s bouquet. Three big
international brands Budweiser, Carlsberg and Heineken entered India  Anheuser-Busch, makers of
the legendary Budweiser, that calls itself the king of beers, announced its India entry through a
50:50 joint venture with the Hyderabad-based Crown Beers. Carlsberg, the beer brand for soccer
fans, announced operations in India through its venture, South Asian Breweries. The Singapore-
based Asia Pacific Breweries picked up a 76 per cent stake in Aurangabad Breweries, paving the way
for the launch of Heineken into India. Even the big three brands have siblings. Apart from Heineken,
Asia Pacific Breweries (APB) sells Canon, Baron's and Market Share Tiger; Crown Beers India
unveiled Armstrong; while UB Gr. SABMiller Others South Asia Breweries has introduced Pallone.
Haywards, Royal challenge, Knock Out and Foster's deliver a combined market share of 37%.
According to market analysts international brands excepting Foster's have made little impression in
India till date but according to these new entrants Indian beer market just started to evolve and has
a huge growth potential. Till now the new entrants are looking at en-cashing equity with a premium
pricing strategy and they cater to only 30% of the market- the mild beer segment. For remaining
70% market this players launched multiple new brands that are competitively priced. 

MARKET / INDUSTRY GROWTH RATE-

 India is 28 countries in the context of one. (There are 31 states but some are very small).
There are at least 23 quite different markets of importance. In practice, these are largely self-
contained markets, with limited cross-border sales, except by smuggling.
 Each state levies taxation on alcohol at its own determined rates and excise duties, and
controls distribution channels in its own way. It is a state-by-state not a national market.
Taxes are levied, often at relatively high rates in relation to Indian prices, on all alcoholic
products crossing the state borders. The result is that it is essential to have centers of
production spread over the major states.
 The intention to reduce alcohol consumption is written into the Constitution.
 The population is evidently huge (945 million in 1996 and over 1.1 Billion during 2004). It is
still growing by 20 million plus every year, though this may have eased in 2003. However,
600 million at least are still outside the market for anything except very cheap Country
Liquor. Advertising has always been officially illegal. In practice, all major brands spent
heavily on Surrogate brands under the same brand name (on glasses, mineral waters, bottle
openers, fashion articles for men etc.).

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  The Distribution system is still the same for Beer as for Spirits and Wine. All outlets must be
licensed; Wholesalers, Retailers, Bars and Restaurants, and Bonded Warehouse operators.
They pay the, varying, States license fees. These can, at present, only sell Indian-made Liquor
over most States. It continues to be expected that Beer and Wine may shortly be permitted to
sell in more outlets.
 South India is the largest consumer of IMFL and Beer. It is more important than North and
West together. Tax-paid Country Liquor is most important in North and West.
 The West is declining due to high taxes, and the North increasing in Country Liquor and Beer
particularly.
 Businesses poised for spectacular growth
 Compelling demographics
 Rapid rise in disposable income
 Changing lifestyle & spending pattern
 Slow but sure dismantling of regulatory controls
 Historically low profitability, but now changing as a consequence of de-regulation and
industry consolidation.
Taxes imposed on alcoholic beverages are very high which make the competition tougher for new
entrants. Currently spirit manufacturers trying to push forward a policy change which will exempt
beer (especially mild variety) from high alcoholic tax regime and accept it as normal refreshment
beverage but in Indian socio-cultural and political scenario this proposal has only a few takers

LEVEL OF DIFFRENTIATION BETWEEN FIRMS PRODUCTS-

o UB Group with its premium brands, large volume base and product range has
better bargaining power with the distribution network
o Market Category and Consumption :
o Whisky constitutes 54%, followed by Rum at 27%
o Youngsters seeking western life styles typically begin by drinking beer and
move up to spirits. The brand positioning of UB Spirit Brands are designed to attract these
upwardly mobile and aspirational consumers.

Classifications
 Lager: It is stored for a specified period before being bottled or canned.
 Pilsner: A type of lager beer, it is light with 3.0 - 3.8% alcohol and has a medium hp flavor.
 Ale: Top fermented, this kind of beer has distinct hop aroma. The alcohol content is
around 4-5%.
 Stout: Dark with burnt flavor and strong malt aroma; it is heavily hopped and contains 5 -
6.5% alcohol.
 Porter: This is less dark than stout, even less hopped and is somewhat sweet. Alcohol
content is around 5%.
 Creamy Ale: A highly carbonated beer that is produced by a combination of Ale and lager.
 Malt: A strong flavored, high alcohol content beer that ranges in flavor and colors.

OPPORTUNITIES FOR ECONOMIES OF SCALE –

Competitive advantage
 Strongest brands
 Significant upgradation
 Least vulnerable to policy volatility due to large spread

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 Optimal, as almost completely locally sourced
 Largest manufacturing base
 Maximum capacity utilization
 Initiatives planned for integration into retailing

Management Team
 Professionally managed
 Seasoned professionals with significant industry experience

OPPORTUNITIES FOR ENTRY & EXIT-

Previously:
 Monopoly suppliers of key inputs (glass etc.)
 Multiple suppliers fighting for market share.
 Monopoly customers (State Govts. / State sponsored monopolies)
 Value chain skewed to retail due to oligopoly structure.
 Strict licensing meant few new outlets.

Now:
 Industry consolidation leading to redefining of relative
 Strength vis-à-vis Supplier & Customers.
 Mindless trade spends being curtailed as a consequence of consolidation.
 UB leading the dialogue with Govt to increase the retail universe.
 New packaging initiatives to reduce costs and curtail counterfeiting.
 Demographics, Higher disposable income & change in spending patterns favour growth of
more profitable products.

Re-distribution structure –
 Government market (65%) –State government is the sole distributor
 Auction market (16%) – State government auctions geographical territories which has led
to monopolies / cartels
 Free market (19%) – Through trade licenses
 Bargaining power in the distribution network is commanded by players with premium
brands, large volume base and product range

Regulatory environment:
 The Indian market is highly regulated,
 Highly restricted and highly taxed.
 Licensing requirement exists for Raw material procurement, Stocking of raw material,
Production, Inter-state movement, Retailing and Distribution.
 Controls also exist on Brand entry, Advertising, Distribution & Pricing.
 Regulatory hurdles constitute an entry barrier to the industry
 The alcohol distribution structure is 65% State government controlled

Porters 5 force model-

 Threat o f New Entrants
o Threat of new entrants is towards lower side.
o Economies of scale in manufacturing, distributing, and marketing create high
barriers to the national and global markets.

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 o T he capital needed to build beer manufacturing facilities and the costs associated
with operating business on a national scale are extensive.
o T he costs associated with this highly controversial industry seek high levels of
sales, thus making the industry more and more prohibitive for newcomers.
o Government regulations are largest factor in this force.
 Bargaining power of buyers
o Bargaining power of buyers is high.
o T he quantity of alcoholic beverages that a nation consumes tends to be unaffected
through recession and prosperity while the quality of the products purchased is
directly related to the disposable income.
o A decline in disposable income shifts consumer preferences away from premium-
priced brand-name products in favor of lower-priced brands i.e. switching cost is
low.
 Threat o f substitutes
o Threat of substitutes is low.
o Customer loyalty through brand awareness.
o T he advertising restrictions placed on alcoholic beverage industry in recent years
make it harder to achieve brand loyalty.

 Bargaining power o f suppliers

o Supplier Power is low
o Products used to brew beer are inexpensive and suppliers are numerous.
o Moderate.
o Rise in legal and regulatory burdens, leads many manufacturers to merge in order
to lower competition. Acting as oligopolies, they ensure high profit margins, cash
flows, and investment returns.
o Though the competition is tough, The Kingfisher brand is the one of the largest
supplier of beer, & the third largest producer of distilled spirits

STP f or Kingfishers Beer

Segmentation
o Geographic segmentation: It is available through out India and is dominant in
particularly in south and west India.
o Demographic Segmentation- Age basis
o Youth: 16 to 25yrs. (kingfisher mild)
o Adults: 25yrs & above (kingfisher strong)
o Segmentation based on Situation:
o Birthdays, Anniversary, New year parties etc.

Targeting
Kingfisher has 2 different products for different market segments. . Kingfisher Mild
(Alcohol<4%) Kingfisher Strong (Alcohol>4%) • Youth who drink for fun ,Those who want to
light beer to • First-time drinkers who drink for something stronger experience , Regular
drinkers who prefer stronger

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Positioning
 Kingfisher positioned itself as a brand for successful & professional individuals who are
always ready to take a break, party or just chill out. It has positioned itself as “The King of
good times”.

4 P’s O f Marketing
 Product
o No.1 selling product in its segment.
o Good quality raw material is used to maintain the quality standards.
o Consistency of product quality is high.
o Always tastes fresh due to good quality and well developed distribution network.
 P rice
o In both mild and strong beer segments kingfisher uses competitive pricing
strategy.
 650ml 330ml
 Rs.65
 Rs.35
 Place
o It is available throughout India, and is dominant particularly in south and west
India.
o UB has 16 company owned breweries apart from 9 contract breweries in 20
different locations across the country.
o Kingfisher also has a presence in 60 countries.
o It has some sixteen hundred shops apart from pubs and bars. Better retailing
outlets are also to be opened under the Kingfisher Brand.
 Promotion
o Tying up with large department stores for retailing its Beers.
o In association with number of Very Classy, up market & Stylish bars & lounges.
o Aggressive Advertising at Outlets & Pubs.
o Better Retailing outlets to be opened under Kingfisher Brand.
o Venturing into other Business with same Brand name, hence increasing Brand
Name & Publicity

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Threats
High Taxes & Regulations
Prohibition on Advertising
Indian Culture is a Major Hindrance
Many International Player Entering In India
SWOT
High Concentration on Strong Beer Market
Different Brands under Same Company
Weakness
Brand Extension Benefits
Reduction in Taxes
Beer consumption is increasing
Opportunities
Strength
Worldwide known Brand
Oldest & Largest Player In India
Huge Finances backing from UB Group
Strongest Worldwide Distribution System
Kingfishers SWOT Analysis
Strategic direction - focus on significantly increasing profitability
 Increase profitability to bring UB in line with other FMCG companies in India.
 Focus on increasing market share in premium segments and on managing market share
for profitability in other segments.
 Enhance focus on brand building, formalizing innovation processes.
 To Increase exports
 Align performance metrics with the strategic plan

New Marketing Initiatives - To pursue the launch of existing products in innovative packaging
variants (tetra packs, pre-formed sachets, etc) and there by reduce the packaging cost as well as the
price point to consumers in addition to the convenience of the pack itself. 180 ml Tetra Pack Pre-
formed Sachets

Category extension:
Energy drinks: Kingfisher always maintained itself as a lifestyle brand and associated the brand
image with the youth. With the increasing per-capita income and westernization of the Indian
society, people are getting ready to spend more and more. On the other hand they are more
conscious about health issues. Energy drinks are very popular in Western countries and some of
them also entered into the Indian market but they failed to make an impact. If a company like
Kingfisher with huge brand popularity and strong self and distribution network introduce energy
drinks it could be a success. It will also go hand in hand with the current image of the brand.

Film production and distribution: Every year Indian film industry release a lot of movies and it
is the largest film industry in the world considering the number of release per year. Still in India
same production and distribution has not reached professional level. Only a few companies at
present do things in a methodical way. But international production majors are entering in the
Indian cinema space and Indian multinationals are also taking interest in this field. Kingfisher as a
lifestyle brand always maintained a close relationship with the film fraternity and also has a
presence in the television space in a joint venture with NDTV. So it would be a natural extension
for the brand to start a movie and television production house. With this move Kingfisher would
bring in its corporate expertise and financial muscle. This will also help the brand to increase the
brand visibility. And just like Adlabs Kingfisher will have the opportunity to create its own
multiplex chain and it will also help the current lifestyle apparels and accessories business a lot.

Apparels and accessories retailing: Even though Kingfisher is already present in the apparel
and accessories 12 space but its presence is very limited. According to industry estimates
organized retailing is the next big thing. Page In this scenario Kingfisher could easily use its huge
brand presence and popularity by investing more into apparel and accessories retailing

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