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Anheuser-Busch InBev (AB-Inbev) is the leading global brewer and one of the world's top five consumer products companies. In 2004 Interbrew has acquisited the Brazilian beer company AmBev. In 2007, InBev was the second largest brewing company in the world. In 2008 Inbev took over Anheuser Busch and the company name changed to Anheuser Busch - Inbev. By the acquisition 100 beers, flavored alcohol and nonalcoholic beverages, 10 theme parks across the United States through the company's family entertainment division and the Anheuser-Busch Packaging Group division were included. For 2010, AB-Inbev recorded revenues of $36,3 billion a growth 4.4% compared to the previous year. The company provides directly employment to approximately 116,000 people worldwide. (AB-Inbev 2011)
Mission and Vision
AB-Inbev his ambition is to become "The Best Beer Company in a Better World"
"We strive, in all we do, to ensure that we produce the highest quality products, provide the best consumer experience, and maximize shareholder value by building the strongest competitive and financial position. And we must use this increasing financial capacity and our global reach to deliver on our Better World commitment." (AB-Inbev 2011)
Product Range & Operating Markets
AB InBev has a focus brands strategy (focus brands are those in which most marketing money is invested, and to which greatest proportion of share of mind is dedicated). The focus brands account for two-thirds of total sales volume, and is divided into three groups:
AB-Inbev has a wide and strong brand portfolio with Stella-Artois, Budweiser and Becks, they have three global flagship brands enhancing brand recall and recognition among global consumers. With a portfolio of more than 200 brands AB-Inbev has a strong global market position. Beside the global flagship brands they have multi-country brands like Leffe and Hoegaarden, and leading local brands such as Bud Light,Brahma, Chernigivske, Crown, Harbin, Jupiler, Klinskoye, Michelob, Quilmes, Sedrin, Siberian, Skol and among others
The company prioritizes a small group of the 200+ brands with greater growth potential within each relevant consumer segment.
Product portfolio analysis (Boston Matrix)
A good way to understand the AB-Inbev's resources is to undertake a portfolio analysis of the products it has on the market. The boston Consulting group matrix can be used to determine what priotires schould given in the productporfolio of a business.
With a portfolio of more then 200 brands it is a very difficult exercise to put all the brand in the matrix. I decided to use their main brands and new launches that are communicated on the AB-Inbev corporate website.
AB-Inbev has devided their brands in different categories: Global brands, multi country brands, local champions and others. If you analyse the porfolio I came to the conclusions as figured in the matrix.
Figure 5: Boston Consulting Group matrix (McDonald 2007)
The Stars are the brands with a high market growth potential and a high market share. AB-Inbev's global brands; Becks Budweiser and Stella Artois; belongs to this categorie because they operate already on global scale but they are still opportunities to grow more.
AB-Inbev multi-country brands; Leffe and Hoegaarden have already high marketshares in France and Belgium but there is still a very large potential in other markets where they are entering. For example since the launch in America the sales revenue is increasing each year.
Cashcows of AB-Inbev are their local strong brands in their country with a number one or number two positions also categorised by AB-Inbev as Local Jewels. On the AB-Inbev website they communicate 11 brands but I'm sure that they have more cash cows brands. The mentioned brands are Antarctica (Brazil), Brahma (Brazil), Bud Light (America), Chernigivske (Ukrainin), Harbin (China), Jupiler (Belgium), Sedrin (China), Skol (Brazil), Klinskoye (Russia), Quilmes Cristal (Argentina), Sibirskaya Korona (Russia)
Dogs are AB-Inbev brands that operates in a niche market with low revenues compared to their top brands. In every country they have smaller local brands that are important to offer a variety of beers to consumers with different tastes and to have a power in negotiation contracts to their customers as pubs and supermarkets. A
To classify dogs in a product range I only focused on the United Kingdom market.
Boddingtons is a refreshing, smooth and sessionable beer. It is renowned for its golden colour, full-bodied flavour and malty, morish taste with smooth, tight creamy head. Brewed in Manchester since 1778, Boddingtons has an ABV content of 3.8% and 4.1% in cask.
The legendary status of Bass is symbolized by its iconic red triangle, recognized as the first registered trademark in the United Kingdom.
Bass is the most famous English ale in the world, and has been brewed in Burton, England since 1777. It is a full-flavoured ale that is still brewed to an original recipe, using only the finest ingredients and the experience of generations. It is brewed with two strains of yeast to produce a complex, nutty, malty taste with subtle hop undertones, and which has widespread appeal to repertoire drinkers and beer lovers around the world.
The brand has had an incredible pedigree for centuries. It has been painted by Manet, fought over by Napoleon, and served on the Titanic. Throughout history, it has inspired greatness. It challenges consumers today to reach for more, to reach for greatness with Bass.
The pride of Prague, Staropramen appeals to consumers' search for authenticity and superior quality. Staropramen is a full-bodied lager of unrivalled quality. It is brewed at the Prague Breweries, using traditional Czech brewing methods, and is the leading beer in Prague, the capital of the Czech Republic.
The brand is sold in over 30 countries and continues to build on consumers' desire for enjoyment of the highest quality and most authentic premium beers in the world.
Prague's favourite beer since 1869.
A Full bodied, high quality Czech pilsner (5% ABV).
One of the top 20 premium lagers in the UK market.
YOY on Trade growth + 32%.
In a pint of Staropramen you can enjoy rich hop aroma, soft malty flavour and quenching bitter finish very refreshing on the palate.
Brewed in Burton since 1777, Draught Bass is the oldest brand of Bass Brewers.
It is a full-flavoured beer and is also the most famous English ale in the world.
Brewed to 4.4% ABV, Draught Bass is still brewed to an original recipe using only the finest ingredients and the experience of generations.
It is brewed with two strains of yeast to produce a complex nutty, malty taste with subtle hop undertones, which has widespread appeal to repertoire drinkers.
Budweiser Brew No. '66' http://www.inbev.co.uk/6EA4308701634708A2C0F573FB911D2E_385FC5EE1860448AAEE7BE2ED430FFF5.htm
Questions marks are the the new launches
Budweiser is also called 'the Great American Lager` brewered on base of the orginal recipe of 1876. Budweiser is one of the largest beer selling beer in the World with biggist revenue in America. Stella Artois is a Belgian premium beer focussed on heritage and perfect serve distribution in nearly 80 countries. Beck's, the third global brand of AB-Inbev, is brewed according to the uncompromising German Reinheitsgebot (Purity law) present in more than 100 countries worldwide. Leffe and Hoegaarden are special beers with their origin in Belgium. They are well recognized in Western Europe particularly in France and Belgium. They are increasing presence in more then 60 countries including the US and Canada.
Thanks to such strong brands, AB-Inbev is strengthening their position in a very competitve beverage market.
Anheuser-Busch InBev is a truly global brewer, that apporates in six operational Zones; North America, Latin America North, Latin America South, Western Europe, Central & Eastern Europe, and Asia Pacific. In 19 countries AB-Inbev holds the No. 1 or No. 2 market position.
North Amercia is for AB-Inbev the biggest market with around 42.1% of their revenue gained. Although their volume decreased last year with 3,1%. North America stays the most important market for AB-Inbev.
Latin America North is good for 27.6% of their total revenue. The volume compared to last year grew 9.6%
Western Europe is with 10.6% of the total revenue the third biggist market for AB Inbev. The volume dropped in the market with 1.6% compared with 2009.
Latin America South was good for an increase in volume 0.7% what makes it the fourth most important market in revenue with 6.0% of the total revenue.
Central and Eastern Europe
External marketing audit
In the mission of AB-Inbev they redefined the part of ar Better World into 3 pillars - responsible drinking, environment, and community
As the world's leading brewer, they set an example to other alcohol beverage companies to encourage the responsible enjoyment of our products.
By the use of consumer campaigns AB-Inbev promote the responsible dring and discourage alcohol abuse including drunk driving and underage drinking.
The ingredients used to brew beer come from planet earth. The sustainability of their business and sustainablity of the environment go hand in hand. Focussing on the environment by taking into account the climate change and the objective of reducing their carbon footprint is an important objective for them. In their 3 year plan they aim to reduce water usage, energy use, CO2 emissions reduction for every hectoliter of beer they produce. As fourth aim they want to demine the waste and byproduct recycling rate by 99%.
Anheuser-Busch InBev makes significant economic
contributions to the well-being of the communities
where we operate around the world through the jobs
we provide, the salaries and wages we pay, and the taxes
we contribute to local and national governments.
Brewing a Better World
AB InBev strives to be the Best Beer Company in a Better World. After the combination of Anheuser-Busch and InBev, the company took the opportunity to take corporate social responsibility to a new level. To initiate the effort, AB InBev created the "Beer & Better World Taskforce," a team dedicated to implementing an aggressive three-year Better World plan. The taskforce is guided by the newly established "Better World Council," comprised of senior company leaders and two Board of Directors members. The Better World plan is three-pronged:
· Responsible Drinking - promote responsible drinking and discourage alcohol abuse, including drunk driving and underage drinking, through focused consumer campaigns. Programs include: Drunk Driving Prevention, Underage-Drinking Prevention, and Responsible Drinking Prevention
· Environment - being as efficient as possible in use of natural resources, such as the water used to brew beer; recycling byproducts and waste; and taking on the shared challenges of the future, such as climate change, by reducing the carbon footprint
· Community - takes many forms, from employees volunteering their time for a community beautification project, to a donation of canned water in times of disaster, to charitable donations
Carlsberg Breweries A/S
The mean operatining markets of Carlsberg with over 500 brands are Europe and Asia. They are the fourth largest beer company in the world with 500 brands. They also makes and sells Coca-Cola in Denmark and Finland. Brands differ significantly in price, volume, and target audience, but the strongest market share is held in Northern Europe. Some of its brands include Baltika, Carlsberg and Tuborg are three of the top six brands in Europe. Baltika is ranked as the number one European brand.
Operating in over 70 countries, Heineken produces 170 international brands of beer. In addition to beer, they also market and sell wine, sodas and other soft drinks. Their two principle international brands are Heineken and Amstel, but the company has over 200 international premium, local, and regional brands, including Tecate, Dos Equis, and Cruzcampo.
SABMiller markets and produces over 200 brands of beer worldwide and sells in over 70 countries. SABMiller is the second largest producer of beer in the U.S., behind AB InBev, holding 30% of the market share. International brands include Pilsner Urquell, Miller Genuine Draft, and Peroni Nastro Azzurro.
Off trade and on trade
The alcoholic beverage industry is a mature and defensive industry. Historically, alcoholic beverages have been defined as staple goods, and although their consumption does not greatly decrease with a struggling economy, they do extremely well when the economy is booming, and consumers have higher levels of discretionary income. The industry suffered its worst year in nearly 20 years in 2009. However, beer sales have continued to moderate through 2010. Price increases are expected, as a method of covering increasing commodity costs, packaging expenses and freight charges. Also, while beer sales typically claim the largest percentage (85%) of the alcoholic beverages industry, they lost market share to wine and spirits in 2009.
Governments have always strictly regulated the sales of alcoholic beverages. In nearly every country in the world, when the government starts struggling to pay debts, there is a noticeably larger tax placed on beer, wine and spirits. Such is the case in most countries currently struggling to come out of the recession.
Industry Consolidation: Lack of Organic Growth
The beer industry has been experiencing significant consolidation since 2004, creating several global brewing powerhouses. Most recently notable were the 2008 acquisition of Anheuser-Busch by InBev and the merger of Molson Coors Brewing Co. with SAB Miller. One characteristic of an industry that is entering the consolidation phase is that it is difficult to find opportunities for organic growth; however, the acquisition of Anheuser-Busch by a European company will allow for greater international growth and market penetration.
Growth Opportunities: Emerging Markets
China, Eastern Europe, Mexico and Latin America offer great growth prospects for beer companies. China surpassed the US as the largest global consumer of beers in 2003, and has continued to grow. AB In-Bev holds stake in several of China's breweries. In Eastern Europe, the Czech Republic has the highest per capita alcohol consumption in the world. Also, Russian demand for beer has also been increasing due to government promotion and attempts to lower the vodka-intake. However, this region was hit hard by the global economic crisis, and governments are using taxes on alcoholic beverages to cover budget deficits. Finally, Mexico and Latin America could prove very promising as well, as beer sales have been on the rise. In this region, however, a weak economy is a mildly inhibiting factor, yet it shows potential to be an excellent market in the long term, as there appears to be an increasing level of prosperity. Also, it is important to note that there has been an industry shift in countries such as Argentina and Chile, who have historically been wine-drinking countries. These countries have seen recent market share turnover from wine to the beer industry. AB InBev holds 50% equity ownership of Grupo Modelo, a Mexican brewing company, which has had very successful last few years of sales, and thus AB InBev stands to profit from this. AB InBev also holds strong market share in Brazil.
Beer growth has slowed since the 1990's with the exception of the low-carb and low calorie drinks, due to the increased health consciousness of consumers. Last year, four out of the top 5 selling domestic beers are light-beers and in 2009, Bud Light became the world's top-selling beer, surpassing Budweiser. Beer companies are hurriedly jumping on this bandwagon. MillerCoors released MGD 64 as their low-calorie product, and Molson Coors of Canada launched Molson Canadian 67, along similar product lines. What has AB InBev done to profit on this trend? Early this year, they launched their new product, Select 55, with only 55 calories and 1.9 grams of carbohydrates.
Another trend is the growing popularity of craft beers. Craft beers are defined as beers produced in microbreweries and which are made with 100% malted barley. These have risen in popularity against global, mass produced lagers such as Budweiser and Bud Light. To use this trend to their advantage, AB InBev launched Bud Light Golden Wheat, which is a premium light unfiltered wheat beer that targets the tastes of the craft beer drinkers.
Although the beer industry has seen stagnant growth the last two years, high levels of industry consolidation, an increasing market share of wine and spirits, and a growing popularity of craft beers, AB InBev is in a good position to tackle these trends. International growth is more feasible now with the merger of the two companies, allowing for more growth globally. AB InBev continues to have a presence in emerging markets such as China and Mexico, which should prove very profitable in the long run. Also, new product releases are helping AB InBev ride the popularity of light drinks and craft beers.
Internal marketing audit
Competitive advantage and sustainability
Analysis of markets (Ansoff matrix)
The Ansoff matrix helps to simplify a company's competitive situation into two variables - products and markets - and helps companies decide their strategic thrust.
Figure 6: Ansoff matrix (Jobber 2010)
Product development: the new innovations as Jupiler Force, Stella Artois cidre are products that will be sold in ex
· The leading global brewer
· One of the world's top 5 consumer products companies
· Four of the top 10 selling beers in the world
· Strong position in world's 6 largest beer markets
· Geographically diversified with a balanced exposure to over 23 developed and developing countries
· #1 or #2 position in over 20 markets
· Over 200 brands
The primary target market for the beer industry is ages 21 - 24. In 1999, the target age group began to increase for the first time in two decades. As consumers leave this age group, they begin to drink other alcoholic beverages, such as wine, but since this age group has again been expanding since 1999, beer sales are expected to see continued growth in the coming years.
The top 10 of the Most Valuable Global Brands in the beer category is dominated by AB-Inbev with four brands;Bud Light, Budweiser, Stella Artois and Skol.
Scale of operations and leading position across multiple geographies ABInBev has expanded its operations across six geographical zones covering North America, Latin America North, Latin America South, Western Europe, Central and Eastern Europe, and Asia Pacific.
The company holds nearly 48.9% and 42.4% market shares in the US and Canada respectively.
Besides, it is the leading player in the Latin America where it holds nearly 68.7% market share in Brazil, 74.4% in Argentina, 97.1% in Bolivia, and 97.5% in Paraguay and Uruguay. The company also has substantial market share in Europe. It holds nearly 57.6% share in Belgium, 43.7% in Luxembourg, 42.1% in Croatia, 91.8% in Montenegro, 39.8% in Ukraine. In the Asian region, ABInBev holds 41.5% market share in South Korea and nearly 11.1% in China. Overall, the company is a number one or two players in 19 countries.The company's extensive operations and leading position in top beer consuming regions like US, Europe, and Latin America renders a significant competitive edge. The leading position not only enhances the sales volume but also the sales value boosting
the financial strength of the company. Moreover, the company can capitalize on the platform for
enhancing its future top-line growth prospects.
The brands are the foundation and the key to the long term success of Anheuser-Busch InBev. The global brands, the key multi-country brands and the 'local jewels' strategies are based on Value based brand stragey. By defing the consumer values they adapt the process of marketing and communication around their brands. They base their market approach on resource-based marketing. The right beer for the right consumers based on the values of the consumer. (AB-Inbev 2011)
Program (WCCP). Besides, the company is utilizing several platforms for promoting its various
brands.The company developed a social media site, ABExtras.com, in the US to promote its brands
during Super Bowl. Beck's, a flagship brand of the company, created the Gig Finder app for iPhone
and iPod Touch to connect with the music enthusiasts. Bud Light Lime utilized the YouTube platform
to create social buzz through the promotion of ash mobs during the launch events.These were some
of the instances were the company employed innovative marketing strategy to promote its brands.
Considering the stringent government regulations for alcoholic beverages in several countries, the
company has effectively utilized these platforms to enhance its overall sales globally.
AB-Inbev faces the problem of a decling market for its Western Europe and Central and Eastern Europe segment. The Western Europe revenues of FY2010 was 3,937 million USD a decline of 3.1%. The segment volume declined by 2.5% compared FY2009. The Central and Eastern Europe recorded revenues of $1,619 million in FY2010, a decrease of 0.5% as compared with FY2009. The Europian Market is good for 15.3% of the total revenue which pose a threat to AB-Inbev profitability and their market share in Europe
Datamonitor estimate in their 'Beer in Europe' report a negative growth in the European market until 2014 of an average of 0.6% a year in revenue and a negative volume growth of 1.4% a year. The marketvolume in 2014 will be decreased by 9% compaired to 2008.
Restructuring initiatives aimed at improving the liquidity position
The company undertook restructuring initiatives in FY2009 in order to reduce its financial debt
amounting to approximately $56,660 million as of 2008. As part of this initiative, the company sold its InBev USA subsidiary to the affiliate of KPS Capital Partners. Tsingtao Brewery Group was sold to the Asahi Breweries. Furthermore, Tennent's Lager brand and associated trading assets were disposed to C&C Group. Also, the four metal can lid manufacturing plants in US were sold to Ball Corporation, theme parks business to private equity firm Blackstone Group and Central Europe and the Balkan operations to CVC Capital Partners. Through the disposals of its businesses, ABInBev repaid around $37.6 billion of its original acquisition facility of $54.8 billion, removing a large part of the financial risk. The company's strategic decisions to reduce the debt through disposal of assets also helped it in reducing its debt to $45,174 million in 2009, a decrease of 20.2% as compared to 2008. The continued streamlining of its operations would help the company in further improving its liquidity position so as to ease out the debt burden on the balance sheet.
Alliance with iTradeNetwork
ABInBev signed a contract with iTradeNetwork (ITN) in 2009. ITN is a leading global provider of on-demand supply chain management and intelligence solutions to the food and beverage industry. As per the agreement, ABInBev will receive on-demand procurement solution from ITN for its UK retail customers. The alliance with ITN provides a platform for ABInBev to offer a range of support services to provide a full online transactional service to pubs, restaurants, hotels and other leisure outlets in the UK markets. The association with ITN would not only strengthen the company's online services but would also enhance its trading partner relationships, revenue growth opportunities and cost rationalization.
Association with FIFA would enhance the company's brand recognition
ABInBev has been associated with the popular FIFA events. Budweiser, one of the flagship brands of the company, has been selected as the official sponsor of the FIFA 2010 and 2014. The company further leveraged this opportunity to promote its local leading brands by winning sponsorship rights in select markets with strong football legacy. Several of the company's brands; including Brahma in Brazil, Jupiler in Belgium and the Netherlands, Hasseroder in Germany, Sibirskaya Korona in Russia, Chernigivske in Ukraine, and Harbin in China; became sponsors and official beers in their respective markets. The association with popular event like FIFA World Cup has given the company exposure and recognition as the events are broadcasted to millions of fans across the world. The company could leverage the popularity of football to promote its beer brands; enhancing its top-line growth opportunities during the event as well as post event.
Now launches of Cidre and Jupiler Force
Uncertain economic environment in Europe could adversely impact the company's debt repaying capacity The company incurred substantial indebtedness in connection with the Anheuser-Busch acquisition. The debt was partly financed with fully committed credit facilities and the senior acquisition facilities. The company's debt figures amounted to nearly $45,174 as of 2009 resulting in a debt to equity ratio of 1.55. However, the continued turbulence in the European economies due to the fiscal deficit crisis in several countries could pose threat to the company's repaying capacity. The adverse investment scenario, among many things, puts pressure on the interest rates. Unfavorable interestrate condition would increase interest cost beyond what is currently anticipated by the company. These extra costs could have a material adverse impact on ABInBev's cash flows, and results of operations putting it at a disadvantage against less leveraged competitors like Carlsberg.
The switch to other alchol beverages or local speciality beers
New gouverment legalisations