Submitted by: Deepa Chirayath 10KJM109 II MBA µB¶

Industry Profile History of Beer Industry in India
Beer began to be exported to India in days of the early 1700s- during the British Empire. The demand for beer in the hot climate of many parts of India by the British administrators and the troops was so great that it led to creation of a new style of beer by George Hodgson in his London brewery ² ³India Pale Ale´ also known as IPA. As of today no brewer in India makes India Pale Ale. All Indian Beers are either: Lagers (4.3% alcohol) Strong lagers (15 % alcohol) Market Overview Indian beer market is valued at INR 35 bn with volume sales of 172 mn cases for FY 2008-09 and at the current trend the market is expected to grow at an annual rate of 17.2% till 2011. Foreign brewers are eyeing the Indian beer market which is largely untapped and has huge growth potential. International beer companies have a good enough reason to tap markets like India. That their main markets, North America and Europe, are either flat or in a state of decline is no secret. Carlsberg, for instance, said it could look at closing select European breweries due to a slump in demand. In contrast, beer is flying off the shelves in India. A recent report by global beverage consultants Canadean states that consumption of beer in BRIC countries (Brazil Russia, India and China) increased by almost 50 per cent during 2002-2007. In India, beer sales grew at nearly 90 per cent, compared to a less than 60 per cent growth for other alcoholic drinks. Industry sources estimate that the Indian beer market is expected to nearly double to 23.3 million hectolitres by 2012 from 12.5 million hectolitres at present. But the market is difficult to break into. More than 80 per cent of the market is controlled by the two players, UB and SAB Miller. While UB with brands like Kingfisher, Zingaro and Kalyani Black has a 48 per cent market share, SAB's bouquet of acquired brands-- Haywards, Royal Challenge, Knock Out and Foster's deliver a combined market share of 37 per cent.(See exhibit 6 for Market share) In the last 9 years beer consumption has been growing rapidly at a CAGR of 7% .Looking from the industry perspective,the Indian beer industry has been witnessing steady growth of 10% per year over the last ten years. With the average age of the population on the decrease and income levels on the increase, the popularity of beer in the country continues to rise. Drivers & Challenges Drivers Young population Nearly 28% of Indian population live in urban areas which comes close to the population of USA. Urbanization is happening at a very fast pace and about 40% of the total population is expected to live in urban areas by 2020. Also people in India are relatively younger when compared with global average. About 50% of the Indian population would be under 30 years even in 2015. Low per capita consumption Indian per capita beer consumption is very low compared to global average. In the total alcohol market in

managing Director of SWBL admitted that bottle prices had seriously affected the company¶s profitability.50 to Rs 7. UB disclosed that the spiraling bottle costs shaved off Rs.´ They apologetically tell the customers that they are not getting sufficient . urban consumers who are more exposed to the western culture socialize with beer. Thanks to breakages and diversion to other unorganized players. Many bars across the State of Kerela now display the sign µNo beer' and several others tell their patrons: ³Only one bottle per person. The rising income levels has a direct positive impact on beer sales in India.30 crore . beer contributes only 4% of revenue. Dynamism in Beer market Many foreign beer manufacturers have entered or plan to enter the Indian beer market with their product line. SABMiller. Indian brewers have injected about 250 million new returnable glass bottles into the beer market during the last nine months to beat down prices of recycled bottles. UB too talks of an ³unprecedented cost push´ caused by the shortage in its annual report. bottles were being returned to companies at an average of Rs 3.50 per bottle. Rising income levels India is one of the most attractive consumer markets in the world with about one-sixth of the global population. told Business Line in an interview that he feared industry would not be able to adequately service the demand in the summer months on the back of "an inefficient bottle pool management" in a market that is heavily dependent on recycled bottles. says liquor industry consultant. 2003-04. The 650 ml beer bottle is common to all companies and only the 250-300 ml bottle has proprietary designs and logos on it. UB Bhat.India. The growing income levels particularly in the urban earning class is a potential market for beer manufacturers in India. the peak consumption season. especially considering that regulations in a number of states prevent companies from passing on cost increases to. The shortage in bottles took their toll on profitability of the companies. Bottling shortage What often happens is people have more bottles at home than they drink on a weekly basis because they tend to buy regularly and bring them back irregularly. only around 60-65% of bottles are actually returned to the company. Till about a year and half ago. sir.00 to Rs 3.00 to Rs 3. Richard Rushton.40 crore in its operations during the last financial year. Taking advantage of the shortage.00. second hand bottle traders hiked prices from the normal Rs 3. which manages Shaw Wallace Breweries Ltd. Managing Director of SABMiller India Ltd. almost equal to the price of a new bottle! Not to be left out of the party. glass manufacturers sharply increased prices too. Also. With the global markets experiencing low or stagnating growth and focus shifting to India. The low penetration in beer consumption provides a substantial and sustainable growth in demand for beer in future. The market is set to flourish with 15 new breweries and 10 international brands in the next 3 years. In fact. has warned that the country could face a beer shortage in the approaching summer.Richard Rushton. the Indian industry is expected to witness fast growth in the coming years. Mr.

The Government decides the End Consumer Price (ECP). In India. beer taxes are levied by individual states and taxes are also paid between states. For instance. including the general public. As the advertisement of liquor is banned in India. Government Tax and regulation Advertisements barrier Building brands. anything goes down well". the new entrants will have to rely only on surrogate advertising. The inconsistency in the state policies leads to fostering an environment of mismanagement & lack of focused strategy to manage state finances. In the mid1990s. In fact no two states or UTs have a same or even a similar policy. The policies are generally short term in their outlook. leaving the manufactures with no say in determining the price of the beer. Foster's and Haywards had already built their brand without any surrogate branding efforts. for instance the figure is 300. Carlsberg has cashed its international image to boost its sales in the domestic market. One of the reasons for the low preference for beer is high taxes imposed on beer consumption. There are about 26 different alcohol specific taxes that constitute 50% of the consumer price which is among the highest in the world. Kingfisher employs the style of surrogate advertisment.etc. alcohol. is easier said than done. They have targeted the public houses and discotheques for their promotion which is very apt. with little or no thought to long-term interests of all stakeholders. particularly for alcoholic beverages. States usually do not adopt policies based on scientific management or by considering the social aspects of managing this trade. where it try to gain cutomer attention by advertising about its mineral water. beer is taxed higher than spirits in most of the states in India. the brand building is going to be a great challenge. By then. the Indian government banned advertising of alcoholic beverages. Cobra is now advertised on television as sparkling water with the tag line "so smooth. In contrast. existing brands such as Kingfisher. Price Restrictions Price restrictions in many large markets remain a biggest challenge for the industry.supplies from the Kerala State Beverages Corporation (Bevco). the government-owned monopoly distributor of liquor. In a free market economy this has no rationale. unlike most developed countries where beer and wine are not regulated in grocery/ . But with government banning even indirect advertisements of wine. For every 21000 persons there is one outlet hampering the availability of beer. The highly regulated market hampers beer sales. liquor and any tobacco products forthwith in the interest of public health.The Indian beer industry is plagued with myriad taxes & levies that vary from state to state. Beer Highly Taxed Minority preference for beer in India and high tax structure are the major challenges for Indian beer industry. In China. On absolute alcohol basis. Inadequate Market Infrastructure The market infrastructure for beer in India is inadequate.

Increase in domestic consumption and export demand has pushed the barley prices up by 20% from Jan 08 . Characteristics and trends Growing demand for barley and evolving contract farming Barley accounts for one-sixth of the cost of making beer. Lifestyle changes and increasing western culture in India are some of the factors driving the .retail stores. It takes time for a new beer brand to gain acceptance and shift loyal customer tastes. Few states like Tamilnadu have strict rules of selling only beer manufactured within the state. It is considered to be common man¶s drink and in many countries is even priced in parity with soft drinks. In some states only beer manufactured in that state can be sold. Regulations are stiff with respect to selling beer through modern retail chains where as in most developed nations beer and wine is available in grocery or retail stores. The protein content in barley crop in India is 13-15% compared to 7-10% in developed nations and this high protein content in Indian barley is not suitable for making beer. Moreover.World over it has been identified that policy focus should not as much be on controlling consumption but more importantly on reducing harm. beer and wine dominate the alcohol market in most countries. So the companies prefer to grow inorganically by acquisitons and mergers. an export license and an import license is required. Export fee is imposed in the state where beer is manufactured and import fees on the State where it is sold. Restriction of Movement of Beer For the movement of beer from one state to another. The retail distribution channels are not completely open for selling beer in India. Consumer choice and preferences: India is predominantly a hard spirits market and beer is a minority preference for those who consume Beverage Alcohol. Therefore. SAB Miller India is encouraging farmers in Rajasthan to cultivate a type of malt barley required by the industry. The company launched a programme called Saanji Unnati for educating farmers to sow the right type of certified seeds and practices Rise of premium beer sector Premium beer segment is outpacing the mainstream beer market touching a growth rate of between 40-50%. The Indian beer industry is moving towards premium category of beer. But in India things are different in India. Increase in barley prices has let to 10% increase in cost of beer. It would be pertinent to mention that while per capita consumption of spirits in India is 65% of global average. Rajasthan is an ideal place where barley can be grown under suitable climatic conditions for having lower protein content required by the beer industry. The per capita consumption of beer in India is just 1 liter per person per year as compared to the world average of 22 liters. in the case of beer it is a mere 3% of global average. Capital Barrier The capital required to set up and maintain a brewery is very high. Branding is another issue. Beer makes only 4% by revenue of the total alcoholic market.June 08. This is one of the lowest in the world.

many multi-national firms are introducing alcohol-free and flavoured beers in the market. With Indian consumers open to experimentation. Blue. Its total volume of sales increased by 20% while the revenues increased by 18%. Craft beers are expected to attract women consumers and these new sub-categories are estimated to cut 25-30% of market share of regular lagers. Many domestic and foreign premium brands are finding the interests of young urban working class. London strong. Beer sales will increase along with increasing number of brands and sub-categories in India. Guru Strong. Draught. Marco Polo. Sweet Lime and Fresh Ginger flavours) The UB group also sees an opportunity for new beer sub-categories and segments in India. Carlsberg are bringing their internationally renowned brands to India Top Player¶s United Breweries United Breweries crossed milestone of 100 million cases.[15] Business Strategy: UBL has a manufacturing network of 22 breweries across India. It enjoys a 57 per cent share in the estimated 200 million cases domestic beer market. Kalyani Black Label strong.premium segment. Craft beers. while Kingfisher Premium continued to outperform in its category.by 51%. is expected to penetrate the lager dominated Indian beer industry. For FY 2008-09-The Company reported a net turnover of INR 17475. The company also saw huge rise in its net profits.9 mn Brands: Kingfisher (Premium.New players like ABInBev. With InBev acquiring AnheuserBusch. Cobra beer is bullish on alcohol-free beer and flavored beer in India. Bohemia). Blood Orange. The future of beer market in India looks positive with the entry of many international players. Kingfisher Strong is the single largest selling beer brand in India.UBL plans to set-up two new green field breweries at Mallepally in Andhra Pradesh and Nanjangud in Karnataka in order to support the revenue . which sold over 100 million cases of beer in 2009-10. Strong. The company. The company plans to cater to different consumer segments in the industry and will launch three new varieties of beer including fruit flavored and low alcohol brands. Red. It has rolled out: Cobra LightLow calories and low carbohydrates Cobra Zero %: Alcohol-free Cobra Bite: Flavored beer (Includes Lemongrass. Strong fresh. Zingaro. UB Export. Existing players like UBL and SABMiller are planning to expand their range of products. which are available in unique flavours. Ultra. it has potential to emerge as the third major player in the Indian beer market. Londer Pilsner Premium strong. expects a sales growth of 3035 per cent in the current fiscal. UB Group today controls 60% of the total manufacturing capacity for Beer in India. The company enjoys a market share of 48% in the industry and plans to expand its share further. Bullet.Strong beer is predicted to grow faster as it is perceived to offer value for money alternative to spirits.7 mn and profit after tax of INR 624. Consumers open to Experimentation New sub-categories of beer are emerging as consumers in India are now open to experimentation.[13] Competition Currently more than 80% of the market is controlled by two major players United Breweries Limited (48%) and SABMiller India (35%). Premium beers are priced about 30% higher than regular brands.

the purest water. AB started operations in India through a 50:50 joint venture with Crown Beers International initially but later AB purchased the remaining ownership from Crown Beer India Ltd.9 mn cases in sales of Budweiser beer by December 2009. The company expects to cross 2. Leffe Anheuser-Busch (AB) was acquired by InBev in 2008 and formed ABInBev India. Knock Out Note on Foster¶s: Foster's Lager is a uniquely international beer. more than one hundred years later. With the launch of its flagship brand. Carlsberg It entered Indian market in 2006 & operates here through a joint venture named South Asia Breweries and positioned itself as a premium mild beer. Today. Business Strategy: SABMiller has 10 breweries located strategically across India to serve the beer markets efficiently.Also it plans to bring the iconic Dutch premium beer Grolsch to India. Peroni. it is still recognized as one of the world's best beers. occasion and product gaps which were improved based on consumer insights. InBev plans to introduce Tennents brand in North India either by finding a contract brewer or by setting up a brewery. It has received a good response in the Southern states and Maharashtra. clean flavour won it immediate international acclaim when it was first brewed in Melbourne in 1888. UB Group firm United Breweries Ltd today said it is planning to locally produce Dutch beer brand ''Heineken'' by next fiscal besides launching a refurbished ''Tiger'' brand in India this year. currently operates using trading name InBev India.9 mn cases a year through two contract brewering arrangements in Regent Breweries in Madhya Pradesh & Dasappa and Sons Bangalore. SABMiller SABMiller India is a subsidiary of SABMiller PLC registered in India as SKOL Breweries Limited. The company has invested about INR 1250 mn in the past two years for upgrading the breweries to global standards. the company is trying to create a premium. Indus Pride. Its products are sold in more than 150 markets. Beck¶s. Haywards 2000. Hoegaarden. it is still recognized as one of the world's best beers. Its crisp. and Foster's own specially bred 'Pride of Ringwood' hops imported directly from Australia to give the beer an authentic flavour. Stella Artois. Today. pricing. clean flavour won it immediate international acclaim when it was first brewed in Melbourne in 1888. brewed with the finest sun-dried malted barley. In 2008 the Group sold more than 120 million hectoliters of beer. In 2009 Carlsberg was the 4th largest brewery group in the world. The company has a market share of 35% and stands in the second position. Royal Challenge. SABMiller has leveraged its global expertise in packaging. Foster's Lager is a uniquely international beer. Haywards Black. InBev operates in India through a 49:51 joint venture with soft drink bottler RKJ Group. Brands: Haywards 5000. more than one hundred years later. nearly 100 million bottles of . SABMiller Plc has acquired the brand for USD 1.growth. ABInBev India launches Budweiser beer in North India in August 2009. For FY 2007-08 the company reported a net turnover of INR 10860 mn and profit after tax of INR 344 mn. Foster¶s. and Foster's own specially bred 'Pride of Ringwood' hops imported directly from Australia to give the beer an authentic flavour. Business Strategy: InBev India has a production capacity of 1. brewed with the finest sun-dried malted barley. the purest water. Other players InBev India Brands: Tennents Super. all-malt beer category.2 bn in 2007. Its crisp.

Although 2009 volume growth was higher than that in 2008. 2009 total volume growth was two percentage points lower than the total volume CAGR recorded over the review period. 6. sales growth in the key southern . 4. Molson Coors. Howsoever. Asia Pacific Breweries (APB). Demographic changes in many parts of the world made a strong impact on US beer industry. which owns the ''Tiger'' beer brand. ''Heineken''. which were launched in late 2008. ''Heineken'' had also agreed to transfer the Indian operations of its Singaporebased subsidiary. Moreover. 2. Anheuser Busch firm had the largest market share in the US in terms of sales. There are currently five big dominating companies in the US market. 3. it is only catering to the urban cities of India. Latest Developments 1. it consciously chose the north. which in 2002 ranked 8th in the world. Comparison between Indian and US Beer Industry US Beer Industry. VB ± The Beer Australia¶s favourite beer. VB ±victoria bitter was launched at a function on 20 January 2010 in a lead-up to the Australia Day celebrations in New Delhi. Consumption and Major Players Annual Beer consumption by Americans is about 85 liters per capita. with United Breweries Ltd and Carlsberg India Pvt Ltd expanding their domestic premium lager portfolios by launching Kingfisher Ultra and Tuborg. became available in outlets nationwide in early 2009. Brands such as Tennent¶s. east and west regions of the country to set up its breweries Strategy adopted by Carlsberg is to concentrate on to the untapped market of north and west India in the initial stage of the production. and Carlsberg. This is mainly because population growth rate in markets like China. A deal struck in December last year between UB Group and Heineken.beer a day. Russia and India incur opportunities for large sales growth for foreign beer companies. The company said it will launch the new brand in phases and expects to make a pan-India presence by next fiscal.500 breweries which range in size from industry giants to brew pubs that sell their beer only on premises. growth rates did not bounce back to the highs seen in 2006 and 2007. These include Anheuser Busch. since it has positioned itself as a premium product. 5. Heineken. Year 2009 was highly dynamic in terms of new brand launches. Kingfisher Blue and Indus Pride. Moreover. to UBL. with the launch of ales from the Little Devil¶s and Coopers portfolios in 2009. While the long summer in 2009 buoyed the beer market in North and West India. The United States produces about 230 million hectoliters (about 6 billion gallons) of beer annually and leads the world in beer production with regards to volume. such as dark beer. manufactured by more than 1. only through UBL. respectively. Niche products. the Dutch brewer had agreed to produce and market its world-renowned beer. mainly due to the increasing consumption of wine and spirits. Home Brewing is very popular in the US. also saw greater availability.A snapshot Production Beer is the most popular alcoholic beverage in the United States. The number of breweries in the United States ranks first in the world. SABMiller. European and Asian markets present a great opportunity for American beer companies. Future Prospects In the global stage beer companies face a slower growth. Their major consumers are in Southern India.

beer is priced on a par with spirits in on-trade outlets. Imported premium lager growth was adversely affected by the dual effect of a rise in import taxes in key markets. such as Kingfisher. 10. Moreover. Imported premium lager grew by 12% in 2009. domestic brands also have the benefit of higher brand recall. thus growth in imported premium lager sales slowed down. where it is sold at significantly higher prices than domestically-produced beer. with the aim of supplying 65% of its one billion can annual output to the beer industry. which were available as imports in several cities in 2008. [32] 14. Imported beer accounted for less than 1% of beer volume sales in 2009. The average unit price of beer rose only marginally in 2009. Apparent consumption levels grew by 24% in 2007 over the previous year. 9. Companies . In October 2009. Glass bottles of 330ml and 650ml are the dominant type of beer packaging available in India. Can-Pack India Pvt Ltd started its operations in India. was adversely affected due to taxation-related price rises in Karnataka and the withdrawal of United Breweries Ltd¶s and SABMiller India Ltd¶s brands from Andhra Pradesh in first half of 2009. and gained contracts with most of the major beer players.states. to reach 390 million litres. including Karnataka and Delhi-NCR.193 million litres in the year. being priced on a par with domestic brands. In May 2009. due to high-profile marketing activities. 81% of volume sales of beer are derived from off-trade sales. which was significantly lower growth than the review period CAGR of 18%. such as Maharashtra and Karnataka. Both domestic and multinational players were very aggressive with brand launches and promotional activities in 2009. This discrepancy between the calculated apparent consumption and total market size is chiefly due to problems associated with data collection by government bodies. due to high import duties. Andhra Pradesh and Tamil Nadu. Imported beer is only available in niche premium on-trade outlets. which is in line with the 12% growth in volume sales of domestic lager in 2008. such as Karnataka. with official statistics reporting an 11% increase in domestic beer production in 2008. However. Nonetheless. The domestic production of beer is on the rise. 11. consumers had access to several aspirational international brands within domestic premium lager. while imports rose by 39% in volume terms. and the category benefited from consumers trading down from imported premium lagers to domestic premium lagers. which resulted in depressed on-trade sales. Canned beer volume sales grew by more than 20% in India in 2009. canned beer continued to see strong volume growth in 2009. With major international brands. Overall prices remained stable in most of the states in India. such as Carlsberg and Budweiser. This reflected the robust growth in sales of imported premium lager in India. Carlsberg India Pvt Ltd started work on its new greenfield brewery in Medak (Andhra Pradesh). and many consumers prefer consuming spirits with mixers.[34] 16. by about 1%. 8. fluctuations in taxation policy did drive up prices in some states. Moreover. [33] 15. as beer consumption is most common during social and family gatherings at home. brands such as Tiger. 12. and the economic uncertainty in the first half of 2009. which provide a quicker ³high´. Exports of beer out of India declined marginally in 2007. Carlsberg and Budweiser. 7. which is expected to have a production capacity of 4 million litres per month and start operations in late 2010. saw a sharp rise in availability and accessibility as domestically produced SKUs of these brands were rolled out nationwide in 2009. This is less than one third of the reported market size of 1. 13. In addition to more widespread distribution and lower price points.

[35] 17. many units will be sold via both official and unofficial channels.´ observed a pub owner. Effect of Soccer World cup 2010. we expect that to double now.The IPL 2010 held in April provided a major boost to the sales of beer. approximately 1. [36] 18.3 lakhs beer bottles were consumed. ³We saw an average consumption of 500 litres of beer every day during the IPL. could mean a sale of upto 700 litres of beer for some pubs every day. According to South African Breweries (SAB) 100. Soccer brings a lot of expats and corporates. which amounted to 270 hours of partying. UBL signed a contract with IPL that all the beers used in IPL parties would be supplied by UB groups.often underreport actual production figures. and for them the game is incomplete without beer. till the end of the world cup. such as with the illegal imports of beer into prohibition states. Effect of IPL. coupled with the soaring heat.As per the Pub owners the traditional combination of beer and soccer. In addition.000 hectolitres (1 hectolitre = 100 litre) of beer will be sold during the five-week World Cup. . In a total of 54 IPL parties.

In 2009. Louis.9 percent share of U. with an American Depository Receipt secondary listing on the New York Stock Exchange (NYSE: BUD). Mexico's leading brewer and owner of the global Corona brand. and Jupiler. Chernigivske. Based in St.000 employees based in operations in 23 countries across the world. AnheuserBusch InBev¶s dedication to heritage and quality is rooted in brewing traditions that originate from the Den Hoorn brewery in Leuven. dating back to 1366 and the pioneering spirit of the Anheuser-Busch brewery. Harbin. A true consumer-centric. holding a 48. In addition. and strong ³local champions´ such as Bud Light. Anheuser-Busch InBev ranked No. USA. Brahma. beer sales to retailers. sales driven organization. the company owns a 50 percent equity interest in the operating subsidiary of Grupo Modelo. fast growing multi-country brands like Leffe and Hoegaarden. 1 among beer companies in FORTUNE Magazine's ³World¶s Most Admired Companies´ list in 2010. About Anheuser-Busch InBev Anheuser-Busch InBev is a publicly traded company (Euronext: ABI) based in Leuven. Michelob.S. Louis. among others. . Belgium. the leading global brewer. which traces its origins back to 1852 in St. Skol.Company Profile Welcome to Anheuser-Busch.8 billion USD. Belgium. 2 among beverage companies and No. Anheuser-Busch operates 12 breweries in the United States. Sibirskaya Korona. Stella Artois and Beck¶s. Budweiser and Bud Light. Klinskoye. Anheuser-Busch is the leading American brewer. The company strives to be the Best Beer Company in a Better World. Quilmes. Geographically diversified with a balanced exposure to developed and developing markets. The company brews the world¶s largestselling beers. The company is a wholly owned subsidiary of Anheuser-Busch InBev. and continues to operate under the Anheuser-Busch name and logo. Anheuser-Busch's operations and resources are focused on adding to life's enjoyment through the responsible consumption of beer by adults. Sedrin. the company realized revenue of 36. Anheuser-Busch is a major manufacturer of aluminum cans and has been a leading aluminum recycler for more than 30 years. Anheuser-Busch InBev leverages the collective strengths of its approximately 116. AnheuserBusch InBev manages a portfolio of well over 200 beer brands that includes global flagship brands Budweiser. where making friends is our business. It is the leading global brewer and one of the world's top-five consumer products companies.

Bare Knuckle Stout Classic.O'Doul's.Bud Ice. Busch NA. non-alcohol .Budweiser Select light lager . caffeinated malt beverage .Michelob ULTRA. organic pale ale . light lager .Bud Light.Hurricane.Natural Light. malt liquor .Bud Dry.Michelob Light low-carb. ice lager . energy drink . ice lager .King Cobra.Hurricane Ice.180 Blue. non-alcohol . honey lager. flavored malt beverage . sports drink .Stone Mill Pale Ale.Anheuser World Lager.TILT. lager . premium extra pale lager .Bud Extra.Tequiza.Product profile The following are the products from Budweiser: Budweiser premium lager . flavored Malt Beverage . Busch Beer lager Busch Ice ice lager .Michelob Honey Lager Specialty.Michelob Golden Draft Light. light lager .Harbin Lager International. light amber lager.Rolling Rock.O'Doul's Amber.PEELS. fruit beer . dark lager .bacardi silver. Irish-style dry stout .180 Sport. non-alcohol.Natural Ice.Michelob Golden Draft. light lager .Bud Ice Light.Busch Light light lager . ice lager .Michelob AmberBock. dry lager .Wild Hop Lager Organic.Michelob ULTRA Amber. light lager .SPYKES. lager . energy drink . malt liquor . specialty beer . premium lager .Michelob premium lager . low-carb light lager . premium lager . flavored malt beverage . light lager .180 Energy.

Marketing .

³snappy´ finish. aluminum cans. They are definitely adding new product integrations by changing with the times adding more beers. These pricing inconsistencies may cause inconsistency in consumer purchases due to environmental factors. water. Budweiser creates a smoother taste by having its beer lagered with beechwood chips in the aging vessel . Aluminum prices have increased 50% in the last two years.. barley malt. craft and specialty beers in 2008. In smaller consumption volumes. While the company brews the world's two bestselling beers (Budweiser and Bud Light) and generates two-thirds of beer sales in the U. their promotion of a 30 pack at Foodland goes for $18. bottles.Anheuser-Busches Budweiser belongs to a family that is under an umbrella of 60 plus brands. and gourmet sauces to their product line. behind Belgium-based InBev NV. the range of different volumes packaged differs from kegs. Budweiser's odd even prices. Bud Ice Light. and beer ball. hops and yeast.88 in most grocery stores on Oahu.1/2 keg.0 billion in 2006. cocktail drinks. primarily in Latin America and China . With their delicate malt sweetness and balanced bitterness for a clean.Budweiser is distributed in three large container volumes -. plastic bottles and new-form aluminum bottles in . leaving varied prices from one retailer to the next to sell to the consumer. 22-. For example.Anheuser-Busches pricing mix. 12-. the company's recent growth has come from international expansion. 16-.95. Commodity prices also affect the price of their beer brew creating some inconsistencies. their beers consist of Budweiser Select.99. and their latest Chelada . soy and other commodities feeding the burgeoning biofuels industry. In addition. variety of ounces. Bud Silver.99 showing how pricing can be differential while using price discounting. 1/4 keg. $ . distributions are in 8-. Under the Budweiser brand family. Currently at local grocery stores on Oahu. barley is 8% of beer costs. 32and 40-ounce containers. Bud Dry. 24-. Budweiser is a mediumbodied. Bud Extra. crisp and pure beer with blended layers of premium American and European hop arom . PLACE . Bud Ice. influences the consumer's perception with ending prices with $ . Budweiser Brew Masters Private Reserve. due to increases in worldwide demand for this versatile commodity . With their reference price range of a 12pk canned Budweiser are competitively head-to-head with Coors Brand at $12.S. psychologically. 10-. being one of the top choices of beer and being very consistent for its refreshing taste that targets segment areas such as sports fans and leisure drinkers will boast their brand title of the Great American Lager as needed for a distinct clear position between the import. They managed to generate $18. or $ .Budweiser's four P's: PRODUCT . energy drinks.88. selling their beers through an elastic market roughly has 50 percent of the nation's beer market and ranks as the largest alcohol brewer in the United States and second largest in the world. Smaller consumption containers vary in materials with Budweiser offering glass bottles. flavorful. Budweiser. including happy hour in bars to regular bar hours to nightclub prices. Anheuser-Busch sells approximately 70% of its products to beer distribution wholesalers. What makes their beer unique is that its brewed using rice. PRICE . In the U. Barley has increased 85% in recent years as farmers are planting corn.S.88 compared to Safeway who sells the same 30 pack for $24.

Their consistent sponsorships in sports such as the NFL. World Soccer Cup. and the Olympics etc. plans are to spend $30 million on new ad campaigns and invest more in television advertisements while spending another $70 million more on ads for Bud Light and Budweiser.com and all over the internet which has the capability to be talked about for the next 20 years. What they rather do is watch the ad commercials just as much as the game . Operating out of 12 breweries in the United States and 16 internationally. NASCAR. Video Games.000 people visited the site. coolers. For example. making it convenient and consistent for all its consumers. bars. In addition. Budweiser raffling through its maturity lifecycle stage wants to bring back its former customers. In 2007. It will generate positive publicity for the industry and encourage consumers to choose beer for more occasions much like food is with wine (Belanger. Budweiser has been a sponsor for the super bowl for over 20 years and has been the ad leader for the past 9 years making their promotions very consistent. and anywhere it can. This center would feature its famous Clydesdale horses and provide transportation to its headquarters in Soulard for their free breweries tour. Budweiser adding another visitor center to their already five which would cost $387 million at Ballpark Village north of their Busch Stadium downtown. its best-selling beers in 2008. 30 million visited . Anheuser-Busch Inc. Motor Sports. vending machines. MLB. they made a commercial related to Janet Jackson wardrobe malfunction in 1994 and ran it on the internet and 700. . ads been redistributed on websites such as YouTude.which gets distributed throughout the world. PROMOTION ± Continuing to have 90% of their loyal customer's purchases. convenient stores. gas stations. nightclubs. They normally spend a lot of money from one pot for one event such as the super bowl ads because theirs almost a 100 million people watching it. restaurants. (A-B) Budweiser has produced and distributed 162 million barrels throughout 2007. 2007). In addition. iceboxes. half of the people who watch the game are beer drinkers and it is almost guaranteed they would not get up to get a bag of chips.To sustain the lifecycle and building longevity for the Budweiser brand. Budweiser being an intensive distribution are having more distributors consolidating due to health and higher fuel cost in which will shave down cost of distribution operation .Here's to Beer program campaign that gives a voice to the entire beer industry that will drive category growth in 2008. distributors distribute Budweiser to their specific destinations through all available outlets geographically and territorially in which law permits such as grocery stores. are also means of promotion. Having 70% of wholesalers buy their beers to resell.

to celebrate the repeal of Prohibition for beer.SWOT Analysis Type of factor Location of factor Internal Favourable Strengths y y y Unfavourable Weakness y y Leading market position Strong brand Product development expertise Market concentration High dependence on wholesalers External Opportunities y y y Threats y y Growing beer consumption in china Advertisements and sponsorship Focus on other beverages Industry consolidation Rising raw material prices Marketing Strategies Branding The Budweiser Clydesdales have been the symbol of Anheuser-Busch for more than 75 years. the hitch thundered down Pestalozzi Street carrying the first case of post-Prohibition beer from the St. There are eight horses driven at one time. Anheuser-Busch executives bask in the wisdom of that risk-taking first cable buy. The Budweiser Clydesdales are a group of Clydesdale horses used for promotions and commercials by the Anheuser-Busch Brewing Company. August A. In fact. the King of Beers knew that while broadcast ads might reach the masses. but ten horses are on each team to provide alternates for the hitch when needed. Busch Jr. five that travel around the United States and one that remains in their official home at the company headquarters at the Anheuser-Busch brewery complex in St. Louis. male sports fanatics. where they are housed in a historic brick and stained-glass stable built in 1885. The . Today. with a market share of 48 percent and climbing. Louis brewery. Anheuser-Busch expands the range of its demographic targets-and diversifies its cable buy. and Adolphus Busch III. Assorted Clydesdales are also used as animal actors in television commercials for Budweiser beer. They were formally introduced on April 7. To their father¶s delight. The first commercial ever run on ESPN was a pitch for Budweiser. 1933. cable advertising targeted the very specific in this case. early ESPN fans might have thought they were watching the Bud Network because its logo appeared so frequently. particularly in Super Bowl ads. Missouri. as the dominant domestic beer in the U.. There are six "hitches" or teams of horses.S. Even in 1979. presented a hitch of horses to their father to celebrate the day.

"One of the ways we measure success is to develop entertainment promotions we can bring to retail that are fun. adults 50plus. early returns on the E! and CNBC promotions are positive. Beyond ESPN and TNT. chief among them reaching the financial community. "because during the CNBC Power Lunch program with Bill Griffith. selected spots on BET.com and E! online. Along with these are spots in National Basketball Association games on TNT. a late-night party-and event-driven show hosted by Brooke Burke." McLoughlin says.m."Current Anheuser-Busch buys include ESPN. McLoughlin adds that A-B also wanted an Internet component.m. "The benefit for Bud is we reach our targeted co-ed audience. But A-B expanded its buys into E! and CNBC because it wanted to reach entertainment TV viewers as well as upper-income viewers in white-collar jobs. more white-collar."According to McLoughlin. A-B has also expanded into entertainment and financial programming. and two new major promotions on E!'s Wild On and CNBC's 11 a. Upscale adults aged 50 and older.m. A-B is adding more niche networks as it seeks to reach women. co-ed and clearly tied to a TV program has happened with E!. however. In May. business block. with hefty schedules on NCAA college basketball. according to Competitive Media Reporting. which it enjoys with CNBC. Budweiser will be the only beer sponsor doing promotions on Wild On." McLoughlin notes. Michelob and O'Doul's. "We had several objectives. while ESPN remains A-B's anchor buy on cable. however. In the past.7 million on network cable to pitch Bud Light. vice president of corporate media at Anheuser-Busch. Five years ago Anheuser-Busch spent only $4. with winners vying to attend the "Ultimate Wild On" parties in the Hamptons. including bars and cafes. African Americans and Latinos.m. among others. are more likely to embrace A-B brands such as the nonalcoholic O'Doul's and Michelob." McLoughlin explains. Major League Baseball and SportsCenter. South Beach and Las Vegas. we've . that number more than doubled to nearly $10 million."McLoughlin says. Last year."Our specific goal to develop an entertainment promotion that was fun. "Americans. National Hockey League games."Spending big bucks on a big all-sports network is a no brainer. "The CNBC agreement is very interesting. and men in particular. "With CNBC. these A-B spots include commercials for Michelob Light and O'Doul's." Of equal import.-6 p. "Cable does an excellent job in delivering male audiences. "But we use cable in a different way than just buying spots. We take a sponsorship/ownership position involving developing programs that promote our brand and promote the individual cable networks. we associate our brand with a known host. business block. We wanted to reach an adult demo 25-54 that is more upscale. and our wholesalers can take this promotion to their retail accounts. for example.company is pouring more and more money into specific niche network programs to push brews such as Bud Light. "Network cable does that for us. A constant on-air presence during the 11 a.--6 p." McLoughin says. are clearly fascinated with the stock market. On an even more ambitious note. A-B also created an agreement with CNBC last year to become one of four exclusive advertisers allowed to run special logo spots adjacent to CNBC's real-time ticker scrawl. Viewers who go to the CNBC Web site also see that it's sponsored by O'Doul's." says Peter McLoughlin. our logo is actually on the computer screen he uses when he goes online. co-ed and tie our brand into television programming. Wild On games will be available at Bud retail outlets. including sponsorships on signature shows on E! Entertainment Television and CNBC. A-B dollars were highly targeted and very carefully placed with one aim in mind: reaching Bud's primary target audience of males 21-34 and 21-49.

been able to reach a much broader adult demo interested in the financial markets. A-B's expanding cable palette is a sign that the king of brews is stepping up to target an ever-widening audience. Wild On. We are set up to do integrated marketing across our two networks (E! and Style) and E! Online on a turnkey basis with a single goal: to help advertisers like Budweiser to sell product. "They wanted to reach a young. upscale. "Bud came to us looking to target entertainment enthusiasts.S. specifically through our latenight hit. and in more than 158 million worldwide in 101 countries. For Mcloughlin." .CNBC is currently in 75 million households in the U. E! senior vice president of ad sales." says Neil Baker."Both campaigns are seven-figure exercises for A-B. 2149 adult audience and wanted to center an integrated platform campaign. E! Entertainment Television estimates its subscriber count will hit 70 million by year-end.

Production .

and drive towards profitability and growth. both today and tomorrow. However. but those brands fall into self-contained categories as well. communications. Thus. wine.Environmental Scan The beverage industry is extremely competitive. of beverage have its unique issues and needs. who are now competing for market share in several important regions of the world (Hutter.). which has reorganized the industry and strengthened the market positions of the industry¶s largest brewers. there prevailed a significant litigation that advanced the industry¶s self regulation of advertising and marketing practices. Expansion into key emerging markets has become a strategic priority for leading firms. such as: ‡ Economics & Demographics: o Population/Consumer base: What is the size of the population? What is the demographic makeup of the population? What are the growth trends? Is there an emerging middle class? How is the population disbursed? o Employment: Are there available jobs? What is per-capita income? Is the job market growing? o Infrastructure: Does the region have established infrastructure such as roads. advocate coherent and sensible positions on important regulatory projects. It also explores opportunities for process improvement and cites specific solutions that can empower beer companies to meet industry challenges. extend alliances in the broader alcohol beverage industry. processes and requirements. and the increasing power of global retailers. lawmakers. agriculture. which is limiting the industry¶s growth potential and forcing many companies to focus on emerging markets. Over the past years. a growing emphasis on product safety. 1). such as ever-changing consumer tastes. Consequently. they must streamline their processes in order to drive real. pg. and law enforcement officials. With so few options for growth. This enhanced the efforts to further reduce illegal underage drinking and drunk driving. Growth Opportunities The saturation of traditionally thriving beer markets such as North America and Europe has driven the consolidation of the industry. and strengthened relationships with regulators. Major brewers have sought growth through strategic mergers and acquisitions. A few global ³beverage giants´ produce many brands. When making strategic growth decisions firms must evaluate a new market based upon specific criteria. The beverage market includes several different products that can be grouped into two main categories: alcoholic (beer. with global annual sales exceeding $325 billion USD.market economy? o Taxes: Is there a stable tax structure? Is it Pro or anti-business? . and often each type. spirits) and non-alcoholic (carbonated soft drinks. market saturation has been reached in much of the developed world. profitable growth ± all while ensuring that they effectively meet the demands of both customers and consumers. utilities. The beer industry is the biggest sector of the Alcoholic Beverage industry. and regulatory fronts. it is a collection of markets with many different types of products. with private labels greatly influencing the environment. This paper also provides insights on the market trends of the beer industry and on the issues relevant primarily to beer producers or distributors. Each category. energy. sports drinks. juice. the ³beverage´ market is not really one market. water. companies that operate in the industry face considerable competitive pressures. etc. It outlines the specific challenges facing the companies operating in this arena. private sector? o Business climate: Is there an established local beer industry? Is there a free. legal. In this paper we have highlighted a number of the significant achievements on the legislative.

India. we have identified several emerging markets that have significant growth potential for large-scale brewers. . South Africa. Russia and Latin America. The following pages provide a brief analysis of the following regions: China.‡ Consumer Tastes & Market Trends o Beverage Preferences: Do current beverage preferences pose any barrier to market entry? o Health & Social Issues: Are there any health or social issues that may pose a risk to expansion into this area? o Competition/Opportunity: What firms already operate in this area? What is the current makeup of the beverage marketplace? How much market share can we capture? o Limiting Factors: What are the logistical or operational challenges for doing business in this area? How will our supply/distribution chains function in this region? ‡ Governmental & Cultural Factors o Government: How much influence does the government have on the private sector? Is the government stable and ethical? What is the government¶s attitude toward alcohol? o Government Regulations: Has the government imposed any restraints to trade or favored certain industries? o Cultural Issues & Factors: Is there any Religious or social opposition to alcohol? o Societal & Ethical Norms: Is leisure time important to the culture? Is drinking a social norm? Is alcohol viewed as ethically acceptable by the culture? ‡ Environmental Factors & Growth Strategy o Agricultural Opportunity: What is the climate? Can we locally grow our ingredients? o Costs of Importing/Exporting: What type of operation will the logistics of the environment permit? o Dynamics of the Local Market: Are there local brewers that we can acquire or merge with? Do they have favorable market share? Do they have positive partnerships with key suppliers and distributors? With these guidelines in mind.

Plant Layout .

A rapidly growing population. growing urban workforce with 7. regionalism.economic disparities. India¶s young emerging middle class offers tremendous upside growth potential in urban areas ‡ Favorable agricultural climate & network: India¶s climate is favorable for the harvesting of hops and barley. Threats ‡ Political instability: The recent terror attacks in Mumbai have served as a reminder that political unrest is a very real threat in India. An escalating conflict or the persistent threat of terror could have significant effects on India¶s development and consumer potential. Opportunities ‡ Continued Growth Potential: Despite the logistical challenges. Weaknesses ‡ Market Saturation: Although market saturation is only a marginal concern. India¶s rapid growth will require an astute government capable of keeping peace while maintaining a free market system and an educated.2% unemployment. ‡ Regional and logistical challenges: Like China. There exists potential to establish supply relationships with local commodity producers. makes India a highly competitive emerging market. India has an established local beer industry and. prices and consumer tastes. combined with a healthy domestic brewing industry. ‡ Steady growth in beer market: India has an active domestic brewing industry that includes many local firms and a growing increase in foreign investment.India Like China. regionalism. India is one of the world¶s fastest growing consumer markets. employed population. the primary natural ingredients in beer. This regionalism creates a number of logistical challenges for a volume producer attempting to reach economies of scale and establish a country-wide brand. it is worth noting that a rush of foreign investment.2% until 2011 (mindbranch.1 billion (CIA World Factbook) ‡ Emerging Middle Class: India has a healthy. Final Analysis: . Strengths ‡ Population: 1.com). ‡ Socio economic growing pains: The disparity between India¶s thriving urban centers and impoverished rural areas creates the potential for civil unrest. India is a highly regional market containing significant disparities such as regulatory issues. political unrest and the potential for growing pains temper this market¶s attraction. has the potential to make establishing an extensive supply and distribution chain a capital-intensive undertaking. beer sales in India are forecast to grow at a compound annual growth rate of 17. Furthermore. an emerging middle class with rising per-capita incomes and blossoming urban centers make India a powerful emerging market. However. combined with inconsistent infrastructure and urban/rural socio. India¶s emerging middle class is relatively young. 63% of the country¶s population is between the ages of 15-64 (CIA World Factbook) and a flurry of foreign investment across all sectors has broadened and westernized the tastes of this young population. although per -capita consumption is low. as the country becomes more westernized younger generations have the potential to be high-volume consumers. Although per-capita beer consumption is relatively low. Not every firm that expands into India will survive and the long-run forecast figures to see this region experience its own period of consolidation once the rush of investment has waned.

We recommend an acquisition strategy. . India¶s young emerging middle class and favorable agricultural climate make this an attractive expansion opportunity.Despite its challenges.

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