Marketing, future scenario planning Karlsberg brewery E-Book

Florian Mayer

• Herausgeber: GRIN Verlag
• Sprache: Englisch

Veröffentlichungsjahr: 2003

Beschreibung

Examination Thesis from the year 2003 in the subject Business economics - Offline Marketing and Online Marketing, grade: 78, University of Leeds (Trinity and All Saints College), course: Adnaced Marketing, language: English, abstract: At the heart of the traditional approach to business strategy lies the assumption that by applying a set of analytical tools, executives can predict the future of any business accurately enough to allow them to choose a clear strategic direction. However, what happens when the environment is so uncertain as is more and more the case today in our fast-paced society that no amount of backward-oriented amount of data and analysis will allow business leaders to predict the future. One approach that has been applied successfully more frequently over the last couple of years is future scenario planning, where different business environment scenarios are imagined, developed and possible business stratgies planned out by internal and external experts. In this paper firstly a thourough competitive analysis of the German beer market as well as the company under study - Karlsberg Brauerei, a local South-West German brewery - is performed. Then, two distinct future scenarios are being developed from the data and analysis. These future business scenarios are followed by detailed strategic plans that recommend different ways the company can move to take advantage of future developments in its market.

Leseprobe

Table of Content

1. BEER INDUSTRY ANALYSIS

1.1 Overview German Market

1.2 PEEST Analysis of the German Beer Industry

2. COMPETITIVE ANALYSIS

3. FUTURE SCENARIOS

3.1 Scenario One

3.1.1 Strategy Plan Scenario One

3.2 Scenario Two

3.2.1 Strategy Plan Scenario Two

Page 1

Page 2

1. Beer Industry Analysis

1.1 Overview German Market

Germany is the largest beer-producing nation in Europe, and has not yet experienced concentration of its brewing industry on the same scale as the rest of Europe. The

market is dominated by domestic breweries, many of which are regional1. In 1999, 5000 different brands of beer where brewed, accounting for half the world’s total (please seeAppendix 1for market share of the most popular types of beer). There are 1291 breweries which together had produced around 110m hectolitres (1 hectolitre

(hl) equals 100 litre) beer at the end of 20022. Most of those breweries (60%) are small, regional companies with a production of less than 5.000 hectolitres per annum3(please seeAppendix 2for, among others, a comparison of the concentration of the German beer industry with the rest of Europe). Interestingly, while 140 medium-sized breweries (with a volume of between 5.000 and 500.000 hl/annum) have disappeared between 1995 and 2001, the number of small breweries (including brewpubs) has increased in the same time from 643 to 782 (please seeAppendix 3).The 50 biggest breweries share 60% of the market among themselves (for market share please seeAppendix 4).Another significant feature of the German brewing industry is its low profitability, with a margin of 1% compared to the UK with 10% (please seeAppendix 5for an index of the rise in living costs compared to the development of the price for beer).

.German drinkers are rather conservative in their choice of beer, which means they are loyal to their brand which is usually brewed locally and which they view as a product of extremely high quality. The result is that 90% of breweries sell their products within a 30-mile radius. This is one of the reasons why the market is ‘notoriously

difficult for foreign companies to penetrate’4. Another reason is the ‘Reinheitsgebot’, the German purity law, which prohibits artificial additives to improve quality or

1Euromonitor,(2001) ‚Market Research Europe: European Markets Beer’, May 2001, p.14.

2Praecklein, M. (2002) ‚ Trotz Brauereikonzentration: Die Biervielfalt in Deutschland bleibt’, fromDeutsche Presse-Agentur(DPA) - Europadienst,November 25, 2002.

3Rintelmann, F. (2002) ‚Der Bierdurst der Deutschen geht zurück’, inGeneral-Anzeiger,December 18, 2002.

Page 3

extend shelf life, which was lifted only in 1995. Before imports had to be clearly labelled and the transportation of local products over any significant distance was clearly inhibited. Also, the creation of beer mixtures and different flavours, which currently account for a rejuvenation of the market, was greatly restricted.

Nevertheless, the German beer market is increasingly becoming the focus of foreign investors. As previously anticipated by experts, the commitment of globally operating drinks groups in Germany therefore increased during the past years (please seeAppendix 6for the world’s biggest brewers). For example, the Belgian Interbrew, after acquiring Beck’s and Diebels in 2001, made further inroads into the German market by adding the Hanover brewery Gilde which owns the East German brand

Hasseröder, to its portfolio5. This means that Interbrew is now at the top of the biggest brewers in Germany with 11m hectolitres6. The Dutch Heineken group on the other side entered into a joint-venture with the Bavarian Schörghuber group (Paulaner, Kulmbacher, Hacker Pschorr) to form the Brau Holding International AG, which recently acquired a 45% stake in the Karlsberg group. Participations by international producers do not necessarily have to be seen as a threat for the domestic brewing industry but instead can create positive opportunities for German brewing groups: national brands can be placed internationally more quickly and the demand for distribution and service offerings results in better capacity utilisation domestically. Therefore, decisive companies do not have to view internationalisation as a threat, but instead can see globalisation as an opportunity for growth.

Further participations by international brewery groups are very likely in the future.

Experts predict that the market will be divided between six or seven companies7and Rudolf Boehlke of consultancy Ernst & Young estimates that 390 of the 580 biggest

breweries will have disappeared by 20158. Three of the biggest German lager brands, Warsteiner, Krombacher and Bitburger, have formed a coalition to share costs and

4Euromonitor,(2001) ‚Market Research Europe: European Markets Beer’, May 2001, p.14.

5Frankfurter Allgemeine Zeitung(2002) ‚Die grossen Biermarken lassen Platz für lokale Anbieter’, December 11, 2002; p.17.

6Vossen, M. (2002) ‚ Braukonzerne halten Bierbranche weiter in Atem’, inLebensmittel Zeitung,December 27, 2002; p.8.

7Praecklein, M. (2002) ‚ Trotz Brauereikonzentration: Die Biervielfalt in Deutschland bleibt’, fromDeutsche Presse-Agentur(DPA) - Europadienst,November 25, 2002.

8Finke, B. (2002) ‚Lizenz zum Panschen’, inDer Spiegel,September 16, 2002; No.38, p.101.