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Growing Globally
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Table of contents1.Current business situation - Independent subsidiary of SAB Miller - Current global strategy : Key market, 4P, SWOT - TOP 10 Quantitative goal
2.Issues & Options - Target countries - Return on Investment
3. Recommendation - Go to new market strategy
4. Conclusion
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1-1. BackgroundSAB Miller
(Second largest brewer)
Royal Grolsch N. V.(51st largest brewer)
Grolsche Bierbrouwerij Netherland
Grolsch International
Grolsch(UK) Ltd.(JV with Coors)
New CEORob Snel
Acquired by SAB in 2007
Expect to sell Grolsch premium beer in Latin America and Africa where SAB Miller has got a strong route to
market
SAB Miller Strategy Capture growth in beer volume in
the developing markets Develop attractive portfolio Keep good operation Leverage global scale
1-2.Current Global StrategyVision: The brewing industry has failed to keep pace with the changes in consumers’ preferences for drinks. This has created a mainstream category that is under pressure from other drinks. Grolsch believes in the strength of beer in the drinks market. Mission: Grolsch is going to break through the mainstream and restore beer’s premium status.
Focus on growth in full-grown beer market
1 Innovation department, R&D
2 Marketing investment
3 Expansive on-trade policy
4 Target Growth core market
5 Vision and mission
6 Market position
7 Brand campaign
8 New Design/New concepts
Focus on cost structure and efficiency
1 Internal logistics
2 Decrease in overhead expenses
3 New facilities
4 Decrease in cost price
4Reference: Exhibit 8
Strategy GoalGlobal Top 10
Brand
1-3.Current Marketing StrategyMarketing Strategy (4P)
Netherland US UK France
Product -Grolsch: Premium beer(Swingtop)-Amsterdam: non-premium beer -Grimbergen: Imported beer
-Grolsch: Premium beer(Swingtop)-Amsterdam: non-premium beer -Grimbergen: Imported beer
-Grolsch: Premium beer(Swingtop)-Amsterdam: non-premium beer -Grimbergen: Imported beer
-Grolsch: Premium beer(Swingtop)-Amsterdam: non-premium beer -Grimbergen: Imported beer
Price Standard: Discount: Comparable: Higher:
Placement/Distribution
Price promotion, PerfectDraft dispenser system, on-premise channels
Distributed by Anheuser-Bush
Grolsch UK Own local distribution
Promotion Advertising Got that Swing Green Light District campaign
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1-4.Financial situation
2000
2002
2004
2006
0.0%
4.0%
8.0%
12.0%
-
0.4
0.8
1.2
Return on AssetsROANet Profit ratio (Net Profit/Sales)Asset Turnover
1. Slow Sales growth rate • CAGR of sales 2.2% (2001-
2007), which is very slow to achieve the goal of Grolsch (To be top 10 brand) .
2001200220032004200520062007-2%
0%
2%
4%
6%
8%
10%
Sales Growth rate
Sales Growth rate
2001 2002 2003 2004 2005 2006 20070
5,000 10,000 15,000 20,000 25,000 30,000
CashDebt
Cash and Debt (2001 - 2007)
2. Significant profitability drop• ROA has been significantly dropped
due to start-up of state-of-the art brewery in 2004.
3. Cash has been reduced and debts have been increased (2001-2007)
• Due to start-up of state-of-the art brewery since 2003 and lower profitability, (1) Debt is increased and (2) Cash is decreased.
1-5.SWOT AnalysisStrength-SAB Miller’s Strong route channel and global production -Grolsch 21st brand and its taste and quality
Weakness-No approach to developing market-Lack of price elasticity
Opportunity-Increase Premium lager consumption -Expand beer consumption in developing market
Leverage SAB Miller channel to promote Premium beer
Access to developing market
Threat-Market shrinking in developed market-Price pressures-Non beer drinks
Focus on Premium beer
Target developing market
Cost reduction
Propose to change the current strategy 7
2. Issue and options
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Issue How to reach Global Top 10 (more than 4.9 M hl volume )in non-
domestic market
Option 1Change current strategy
Option 2 Keep current strategy
Target Current and emerging market
MKT Growth Growing
Match with SAB Miller’s strategy
Leverage SAB Miller asset and meet their expectations
Target Developed market
MKT Growth Shrinking
Match with SAB Miller’s strategy
No planned>
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3-1. Recommendation
4) How is business return?
1) Which countries should our company enter into?
2) How do we enter local markets (JV, Acquisition,
Start-up)?
3) How do we create business strategy?
Market Selectio
n
Entry Stra
tegy
Business
Strategy
Financial Plan
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Market Selectio
n
Potential Market Volume
Distance
Imported
Brands Growth
1) Market Selection Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
MABA Framework
MA• Volume of Premium• Volume Growth of Premium• Price Differentiation• Language• EU Relation• Transport in EUROS• GDP per capita
BA• Volume of Grolsch• Volume Growth of Grolsch• Variable Commercial
Contribution• Grolsch Share
Potential Market Volume
1) Market Selection Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
CH
INA
GE
R
JAP
AN
UK
RU
SS
IA
SP
AIN
BR
AZ
IL
TH
AI.
..
AU
ST
R...
SO
UT
H...
ME
XIC
O
UK
RA
INE
FR
AN
CE
ITA
LY
VE
NE
Z...
CO
LO
...
SO
UT
H ...
PO
LA
ND
CA
NA
DA
US
A
-
50,000
100,000
150,000
200,000
250,000
300,000 Potential Market Volume (000s hl)
Imported Brands Growth
2000 2001 2002 2003 2004 20050.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5 Western Europe Imported ShareEastern Europe Imported ShareNorth America Imported ShareLatin America Imported ShareAsia Pacific Imported ShareAustralasia Imported ShareAfrica and Middle East Imported Share
3% growth
7% growth
6% growth
15% growth
8% growth
No growth
11% growth 11
= -PotentialTotal
Consump.Major Co’s
sales
bil. litre
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Distance
1) Market Selection Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Go to …
GDP per capita in 2005
Member of EU
Language (EN, German, Dutch) Transport
CHINA 1,731 No No ExpensiveUSA 42,516 No YES(EN) CheapGERMANY 33,543 YES YES(GR) CheapBRAZIL 4,739 No No ExpensiveRUSSIA 5,337 No No AverageJ APAN 35,781 No No ExpensiveUK 38,122 YES YES(EN) CheapMEXICO 7,667 No No ExpensiveSPAIN 26,056 YES No AveragePOLAND 7,963 No No AverageSOUTH AFRICA 5,234 No YES (EN) CheapVENEZUELA 5,445 No No ExpensiveCANADA 35,088 No YES (EN) AverageUKRAINE 1,829 No No ExpensiveFRANCE 33,819 YES No CheapTHAILAND 2,690 No No ExpensiveITALY 30,479 YES No AverageCOLOMBIA 3,393 No No ExpensiveAUSTRALIA 33,948 No YES (EN) ExpensiveSOUTH KOREA 17,551 No No Expensive
Strong re
lationship
Rapid growth rate
Huge potential
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2) Entry Strategy
South Africa
Brazil China Competitive market Number of beer company: 800→300 (M&A)
No.1: Snow beer (華潤雪花 ) : MS17.8% JV with SAB MillerNo.2 : Tsingtao(青島 ): MS13.2%No.3: Anheuser-Busch InBev (Belgium)MS11.9%
Occupied by major brewery groups
No.1: Anheuser-Busch InBev : MS 70%No.2 : Grupo Schincariol : MS11.6% Grope of KirinNo.3: Petrópolis brewery : MS9.8%
Monopoly market No.1: SAB Miller (MS 98%)
Web Data 2009BRICs経済研究所レポート 2006
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
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2) Entry StrategyFully-owned
subsidiaries
Joint Venture
Off-shoring
Licensing
Exporting
Investment High Middle Middle Low Low
Local customerAccess
High High Middle Low Low
Distribution Channel
High Middle High Low Low
Management Control
High Middle Middle Middle Low
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Utilize SABMiller’s
facility
utilize channel of JV
(SABMiller & Snow beer)
License out to Petropolis
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3) Business Strategy for S. AfricaMarket Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Utilize SABMiller’s facility by adding Grolsch’s brewery line,
Grolsch bar for promotion
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Grolsch’s original taste as imported product
(dry and bitter, refreshing)
Premium imported beer120JPY / 350 mL can
Utilize SABMiller’s channel & brewery
Grolsch bar
Grolsch bar with premium atmosphere
Product
Price
Place
Promotion
3) Business Strategy for S. Africa
Homemade alcohol is common More PPL like to drink beer at
bar Beer has cool & sophisticated
image
Utilize SABMiller’s facility with additional brewery construction
Economic growth More PPL love premium beer Beer price (Domestic75-120JPY, Imported150JPY)
SABMiller is No.1 in Africa SAB has brewery & distribution
channel
Need differentiation from SAB Miller’s brand
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Target: Middle-High class
3) Business Strategy for BrazilLicense out to a local company with strong promotional
support
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
3) Business Strategy for BrazilLicense out to a local company with strong promotional
support
Preference of strong alcohol Female workers love beer
Grolsch’s original taste as imported product
(dry and bitter, refreshing)Product
Economic growth More PPL love premium Beer Price (Domestic100-130JPY, Imported 260JPY)
Premium imported beer150JPY / 350 mL can
No related company of SABMiller Maintain management power
License out to a local company (Petroporis)
Huge demand while eventsBeing an official sponsor of Samba carnival, Football
events
Price
Place
Promotion
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Target: Guests of Events
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3) Business Strategy for ChinaUtilize channel of JV (SABMiller & Snow beer)
Promotion at high quality place
Collaboration with Snow Beer
Promotion at supermarket & restaurant
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
3) Business Strategy for China
Preference of light tasteLocalized light taste
Premium rangeProduct
Economic growth More PPL love premium
Premium imported beer100JPY / 350 mL can
SABMiller has JV
Utilize SABMiller’s JV channel
High quality supermarketFamous restaurant
SABMiller has JVDifferentiate SABMiller
TV commercial, at site promotion (girls)
Price
Place
Promotion
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Utilize channel of JV (SABMiller & Snow beer)Promotion at high quality place
Target: People love to share time
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3) Business Strategy2008 2010-2016 2017 Goal
STEP 1 STEP 2
全社
電力・通信事業
建築・道路事業
樹脂事業
Additional line in
SABMiller
License out to
Local Co.
Co-promotion with JV
Maintain current positioning (Premium)
Current Market
(Europe)
South Africa
Brazil
China
Co-promotion with SABMiller
Intensive promotion support
World Top 10 Brand
Marketing research
Market Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Global Strategy Proposal
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4) Financial PlanMarket Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
Revenue assumption = (Marginal consumption) * (Premium Lager ratio 16.4%) * (Price 120yen/can)EBITA = Revenue * EBITA Margin 26%
Revenue assumption = (Marginal consumption) * (Snow beer share 18%) * (Premium Lager ratio 16.4%) * (Price 100yen/can)EBITA = Revenue * EBITA Margin 5%
Revenue assumption = (Total consumption) * (Petropolis share 9.8%)* (Premium Lager ratio 16.4%) * (License fee 5euro/hl)EBITA = Revenue * EBITA Margin 21%
Investment is referred from an investment case, being estimated 5 billion yen for 0.4 million hl beer productionReference: Sapporo beer factory investment in Vietnam
Benefit Investment
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4) Financial PlanMarket Selecti
on
Entry strateg
y
Business
Strategy
Financial plan
• IRR of the strategy implementation
is 10.4%, which exceeds the average cost of capital (estimated to be 7.5%)
• Total volume of Grolsch will reach
4.9 mil. hl (TOP 10 level) including current market growth 1.9 mil. hl
-14,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
Investment SA Investment BR Investment CHEBITA SA EBITA BR EBITA CH
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Investment(mil. J PY) - 2,660Volume(mil. hl) 0.028 0.068 0.103 0.137 0.146 0.156 0.167 0.179 0.191 0.205Revenue(mil. J PY) 957 2,343 3,514 4,686 5,012 5,361 5,734 6,133 6,560 7,016EBITA(mil. J PY) 249 609 914 1,218 1,303 1,394 1,491 1,595 1,706 1,824Investment(mil. J PY) 0Volume(mil. hl) 0.404 0.830 1.277 1.747 1.794 1.842 1.891 1.941 1.993 2.046Revenue(mil. J PY) 242 498 766 1,048 1,076 1,105 1,135 1,165 1,196 1,228EBITA(mil. J PY) 51 105 161 220 226 232 238 245 251 258Investment(mil. J PY) - 9,952 - 100Volume(mil. hl) 0 0 0.428 0.571 0.600 0.630 0.661 0.694 0.729 0.766Revenue(mil. J PY) 0 0 12,242 16,322 17,138 17,995 18,895 19,839 20,831 21,873EBITA(mil. J PY) 0 0 612 816 857 900 945 992 1,042 1,094
- 12,313 614 1,687 2,255 2,386 2,526 2,674 2,831 2,998 3,176
10.4%IRR
SouthAfrica
Brazil
China
CF
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4. ConclusionPropose to change the current global strategy to
reach Global Top 10 brand① Enter to developing market
- South Africa- Brazil- China
② Focus on Premium beer with localization
Achieve 4.9 M hl volume in 2017 South Africa, Brazil China → 3.0 M hl Western Europe →1.9M hl IRR
9.6%>7.5%
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Nobuya YOSHIZAWA
Eiji KOIZUMI
Goshi FUJIMOTO
Natsuhi INOUE
