Grolsch Final

8/13/2019 Grolsch Final

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Global Expansion Strategy

for

Royal Grolsch N.V.

Miko Abe

Yuichi Saito

Mitsuhiro Matsumoto

Changjing Xu
http://www.sabmiller.com/index.asp


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Agenda

Brand introduction

Challenge & Goal

Market assessment Marketing strategy

Operation

Finance projection


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GROLSCH INTRODUCTION


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Brand Summary

Fantastic premium beer from Netherland

Rated higher points compare to other brands

Historical beer (Grolschsiconic introduced 1897) Got Royal title on company name in 1995

Swingtop bottle is a part of Grolsh brand

Brand is aware in developed countries


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Grolsch products

Grolsch Premium Lager

(Strategic product / Premium segment)

Amsterdam

(Sold at retail stores / Non Premium segment)

*Also deal import Belgian beer but small volume


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Business Performance

Netherlands

, 50%

UK, 25%

Other

Western EU,

13%

U.S., 4%

Canada, 2%

Australia &

New

Zealand, 1%

Others, 5%

Grolsch's Business Global split (2007)

New Plant building

0

5

10

15

20

25

30

35

0

1

2

3

4

5

6

7

2000 2001 2002 2003 2004 2005 2006 2007

Millionhl

Net Sales

Net profit

Grolsch's worldwide sales (Volume)

& Profit


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Comparison of business performance

Company SABMiller Heineken Grolsch

Headquarters UK NetherlandsNetherland

Global Market Share 2006

(Volume)8.90% 6.30% 0.28%

Total Volume (hl million) 2007 216 119.8 6.1

5-Year Volume Growth 13.30% 7.10% -7.60%

Revenues 2007 (Euro million) 13,608 12,564 333

Revenues/hl in Euros 63 104.87 54.6

5-Year Revenue Growth 17.90% 6.30% 10.45%

EBITDA 2007 (Euro million) 2,946 2,292 59

EBITDA/hl in Euros 13.64 19.13 9.6

5-Year EBITDA Growth 22.10% 4.20% -3.61%


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Low profitability after 2004

Lower consumption outside Europe

Quality , but Volume

Issues


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Current biggest Challenge

Recognized as higher quality compare to other

international brands; however selling volume is

too small than others (21stin 2006)

e.g., Heineken

Budweiser

Grolsch Guiness

Huge GapData source: Exhibit 2 on Grolsch case


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Key Questions

Are we choosing right market?

Are we playing at right segment?

Are we distributing appropriate product? Are we doing right marketing?

Who are our target customers?


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Business Goal To be one of the top 10 brands in worldwide

Our target volume of Grolsch is 6.0 Mil. Hlto exceed Tuborg by Carlsberg

NON-DOMESTIC INTERNATIONAL)VOLUMES ONLYBrand Brewer

Volume Millions of HL

(2006E)1 Heineken Heineken 20.1

2 Corona Modelo 11.9

3 Carlsberg Carlsberg 10.8

4 Budweiser Anheuser-Busch 9.9

5 Amstel Heineken 9.6

6 Stella Artois InBev 97 Guinness Guinness 8.6

8 Fosters Fosters/S&N 8.6

9 Brahma InBev 6.6

10 Tuborg Carlsberg 4.9

21 Grolsch Grolsch 1.4


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MARKET ASSESSMENT


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Worldwide Beer Consumption

Unit: 000s hectolitres

China & USA is 2 big market

Most of developed countries consumption are slightlydeclining

Data source: Exhibit 13 on Grolsch case

Total consumption in countries


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Pros and Cons in China

Pros Worlds No.1consumption

SNOWs network Beer market will grow

Good marketing strategy will

expand demand

If successful, this contribute to

Asian market.Cons Low profitability

- Price competition is fierce

- Chinese brewers offers premium

beers at 20-25% cheaper.

Premium beer is only 5% in beermarket.

Urban people are interested, but

not rural people.

[ cultural aspects ]

Alcoholshould be strong. Beer

is like juice.

Evolution of beer market

segments


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Pros and Cons of USA

Source: BREWERS ASSOCIATION

Worlds No.2 consumption

SABMillersnetwork

Craft beer consumption increases


brand establishment to markets all

over the world

Pros

Beer market slightly declines

[ Cultural aspects ] Import beer should be

imported.

Cons


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Worlds No.2 consumption

SABMillersnetwork

Craft beer consumption

increases If successful, this contribute to

brand establishment to markets

all over the world

Pros Worlds No.1consumption

SNOWs network

Beer market will grow

Good marketing strategy willexpand demand


Asian market.

Beer market slightly declines

[ Cultural aspects ]

Import beer should be

imported.

Cons Low profitability

- Price competition is fierce

- Chinese brewers offers premium

beers at 20-25% cheaper.

Premium beer is only 5% in beermarket.

Urban people are interested, but

not rural people.

[ cultural aspects ]

Alcoholshould be strong. Beer is

like juice.

SNOW should focus

on mainstream beer


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MARKETING STRATEGY


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Re-launch Grolsch in US market

Strategy by Segment

Premium Segment

Distribute import product

Swingtop Bottle only

Selling at Restaurant, BAR,& Club etc. (no retail)

Face to face promotion by

serving staff of restaurant,

BAR, & Club Premium Pricing

Consumer Segment

Local Licensing Brewing

(use Miller plant in US)

Crown cap bottle

Use same bottle shape ofMiller; however color is green

Not iconic sealed bottle, Use

Labeling

Distribute thru retail stores Selling Millars sales networks

Reasonable Pricing

Increase Brand Awareness Increase Selling Volume

Retail Price

USD 7.00 per L Retail Price

USD 3.00 per L


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Product Positioning in US

Dry & Bitter Taste

Light Taste

National Brand Craft Beer

Grolsch

Premium

Swingtop

Expanding

FlatShrinking

Slightly Growing

Targeting

Targeting

Grolsch

Local Brew

US Market Outlook (2005 VS 2012)

2005 2012

U.S. Non-CraftBudwiser etc.) 84.57% 79.63%Imports (Heineken etc.) 12.50% 13.85%Craft 2.92% 6.52%


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Marketing Objective

Premium Segment Get incremental from

expanding segment by

GrolschsCraft beer

looks alikefeatures

Consumer Segment Earn Share from

Heineken & Carlsberg

Data source:

Beer Marketers Insights,

Brewers Association,

Nielsen Company,and Demeter Group estimates.


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PROMOTIONS


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Promotion in U.S. Market

Grolsch Girls

* Direct Speech 91.7% Special Occasion 85.7%The Influence of Culture on American and British Advertising: An Exploratory Comparison of Beer Advertising

Grolsch beer assistance

Face to face promotion in restaurant or exhibition, BAR, & Club

Direct SpeechSpecial Occasion


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Promotion in U.S. Market

Sponsor events for

Grolsch culture

Individualism 70.8% Achievement70.8% The Influence of Culture on American and British Advertising: An Exploratory Comparison of Beer Advertising

No-elite

advertisementGrolsch is beer lovers partner

Sale the culture and Brand image of beer lover

IndividualismAchievement


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OPERATIONS


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Improvement of operation

To improve the operation rate of the new

plant in Netherland by expanding premium

segment in U.S.

For reducing logistic cost, by shift operation of

consumer segment to Miller plant in U.S
http://www.google.co.jp/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=FIGiNi7veA3hVM&tbnid=4BYM2rf9z9-V7M:&ved=0CAUQjRw&url=http://www.suntory.co.jp/news/1999/7536.html&ei=SQZNUt-ICYWBkgXVmoCQCA&bvm=bv.53537100,d.dGI&psig=AFQjCNEJLw_pB1NeeJpjV2B97M-lGN797A&ust=1380865875290413


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Contribution to Financial statement

Marketing StrategyGrolsch premium (Swingtop Bottle) 0.5hl1.0hl (2012)

Grolsch Consumer 2.3hl5.0hl (2012)

Sales 332 Mil. (2007) 507 Mil. (2012)

Advertisement 5% of sales (2007)10% of sales (2012)

Operation Improvement

Operation rate of factory 50% (2007)100% (2012)

Reduction of shipment cost 35 Mil. as of 2012

(license fee + 5)


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Sales Projection

NL

50%

UK

25%

Other EU

13%

US

4%

CAN

2%

AUS

1%

Others

5%

% of sales (volume : 2007)

6.1hl(WW

share 2%)

NL

33%

UK17%

OtherEU

8%

US

37%

CAN

1%

AUS

1%

Others

3%

% of sales (volume : 2012)

9.3 hl(WW share

2.8%)

3.05 3.1 3.1 3.1 3.1 3.1

0.24 0.241.04

1.842.64

3.44

0%

10%

20%

30%

40%

50%

60%

70%

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2007 2008 2009 2010 2011 2012

Volumes(Milhl)

Others

AUS

CAN

US

Other EU

UK

NL

% of Grolsch brand

% of Amsterdam etc.

Brand Vol. (hl)

Grolsch (Premium) 1

Grolsch

(Consumer) 5

Amsterdam etc. 3.3

Grolsch

Our target is 6 hl


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Financial Projection

*WACC=10%, including Terminal value

153Mil.(growth rate = 0 %)

0%

2%

4%

6%

8%

10%

12%

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012

ROS

NetSales(Mil

Net Sales

Net profitROS

NPV 822Mil.(2007-2012: CAGR 8.8%)Growth rate = 7%

Our StrategyAs it is


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Summery

Our business goal will be achieved by renewed

marketing and operation strategy.

Acquisition of Grolsch will contribute to

portfolio expansion and branding of SABMiller.


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APPENDIX

InBev

Belgium,

12.70%

SABMiller

UK, 8.90%

Anheuser-

Busch US,

8.80%

Heineken

Netherlands,

6.30%

Carlsberg

Denmark,

5.20%Modelo

Mexico,

2.90%

Molson

Coors

US/Canada,

2.70%

Grolsch

Netherland,

0.28%

Others,

52.50%

Market Share (Volume)


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Netherlands

, 50%

UK, 25%

Other

Western

EU, 13%

U.S., 4%

Canada, 2%

Australia &

New

Zealand, 1%Others, 5%

Grolsch's Business Global spilit (2007)

Europe,

22%

North

America,

26%

Africa and

Asia, 8%

South

Africa, 21%

SABMiller (2007)


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APPENDIX


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Reuter news

Chinese brewers are offering premium beers

at 20-25 percent cheaper than foreign brands

and utilizing their extensive sales network,

undercutting foreign brands.

Premium beer 45% (foreign brands),

55%(national brands), domestic brands have

more advantage of cost-cutting.

Documents

Grolsch Final