GLOBAL

FORCES AND
THE
EUROPEAN
BREWING
INDUSTRY
Trend for Mergers & Acquisitions
• Trend for mergers and strategic alliances among
the top breweries in Europe in order to maintain
their position at the Top in the European Market
• Interbrew’s market trend survey 2002, shows
that the consolidated global share of the top 20
brewers increased from 51% on 1990 to 65% in
the year 2002.
• In 2003, Anheuser Bush was one of the largest
brewer ranked by sales volume but with limited
overseas operations. In 2004 Brazilian Am Bev,
and Belgian Giant Interbrew merged to create
Im Bev, the largest brewer in the world.
Trend for Mergers & Acquisitions
• According to our research, in 2008, Im
Bev has merged with Anheuser Busch to
create A-B Inbev, the leading beer
producer in the world. 
• Cigarette and the Beer Industry - In 2002
the five largest global brewers accounted
for only 30% of the market share whereas
when merged with the cigarette industry,
the five leading players had a 60% market
share.
 Trend in Western European
market: Germany
• Even if the Western European market has
become 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 the
market.
• Consumption of lager has grown from over 50%of the
total UK market in 1990 to 62%in 2002. The trend was
towards increasing sales through supermarkets resulting
in 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 all
alcoholic beverages sale by volume and in the take
home market, the % is 72
 Trend for product development
• Varied consumer tastes require firms to
carry a more diversified portfolio of
products - there is an aspect of innovation
that needs to be taken into consideration
• Trend for product development such as
flavored beers to attract Youth Market.
Sales of flavoured beer mixed with either
lemon- lime soda or cola available in
draught and bottles had an increasing
market share up 30% in 2002.
 PORTER’S FIVE FORCES
• COMPETITORS
 High Industry Concentration
 Branding
 Diversification
 High Exit Barriers
 Increased Cost Efficiency
HIGH
 PORTER’S FIVE FORCES

• POTENTIAL ENTRANTS
 International Competition
 High Entry Barriers
 Tighter Legislation
 LOW
 PORTER’S FIVE FORCES

• BUYER POWER
 Low Switching Costs
 Change in Drinking Habits
 Increasing Brand Identity
 Wholesalers/Retailers
FAIRLY HIGH
 PORTER’S FIVE FORCES

• SUPPLIER POWER
 Volume supplied
 Quality of Raw Materials

 LOW
 PORTER’S FIVE FORCES

• SUBSTITUTES
 Other Alcoholic Beverages
 Non Alcoholic Beers and Soft Drinks
 Pubs & Bars
 Changing Social Habits

HIGH
 HEINEKEN
• HEINEKEN CLAIMS TO BE THE “MOST
INTERNATIONAL BREWERY GROUP IN THE
WORLD”
• IN 2004, BIGGEST COMPANY OF THE
EUROPEAN BREWING INDUSTRY
• EXPORT: 17.7 MILLION HL
• 11.7 %SHARE OF THE MARKET
• CURRENTLY OWNS 115 BREWERIES IN
MORE 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 STRATEGY
7. 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 acquisitions
other 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