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Friday 25 July 2014

Building a successful global beer brand – part 5

20th March, 2012 by db_staff

Having stressed the importance of creating – and sustaining – a sense of uniqueness for the global consumer, Kos Apostolatos, David Atkinson and Joseph Poore from management consultancy firm Marakon, compare two brands who got this right and wrong.

It is not enough to have a unique customer value proposition. A truly global brand also requires a business model that supports the brands uniqueness to reach its customers (e.g., privileged route to market, unique ability to engage new media, superior brewing scale).

Fifteen years ago, Foster’s looked like it would take the beer world by storm. It had secured global licence arrangements, had a one-of-a-kind advertising campaign and tapped into the laid-back Australian culture of beach, barbecue and watching TV with mates.

Volume has been steadily declining since 2005, including falling by 50% in the US (which it set out as a “priority market”).

What went wrong?

We believe that Foster’s suffered from confused positioning and lack of success in its home market.

In the last decade, Foster’s has gone through multiple re-brandings, positioned itself across every price segment (from discount in Ireland and Australia to super-premium in Portugal and Italy) and has used varied RTMs from JVs, distributor agreements and its own operators, all of which had different priorities for the brand.

Foster’s failed to drive success in Australia, meaning low visibility to tourists and no core to draw on to cross-subsidise A&P spend. SABMiller now has an opportunity to change all this.

At the core of the revitalisation effort is to re-establish the core of the customer value proposition the brand lost and fundamentally rethink the business model.

The comparison with Corona is instructive. Corona sits at the other end of the spectrum with a growing 1.5% of global beer market volume (#4 brand globally).

In 2011, the brand generated ~€0.5bn of EBIT, almost half of Modelo’s total at a 25% EBIT margin, a level of profitability on par with the soft drink giants.

It has consistent pricing (upper-premium or lower super-premium), very few SKUs, a consistent and clearly differentiated pack type, special consumption style (with lime) and “Mexican-ness.”

Unlike Foster’s, Corona is very strong and profitable in its home market and has one clear global RTM through its leading export team.

What went right?

Corona built a unique export business model based on its customer proposition. Outside Mexico and the US, Modelo participates in small, specific and highly profitable on-trade segments where it controls a niche position.

The result has been small but sustainably strong and profitable market shares in over 30 global markets and throughout Modelo has stayed true to the core strengths of the brand’s business model to drive profitable growth.

Exercise 2: Identify the unique customer proposition and right business model to support it.Develop a short-list of your brands with the potential to become global.Build a matrix listing key characteristics (e.g., positioning, image, packaging) and assess whether they have the potential of a unique proposition.

Build a global consumer map with major needs-based segments on it.

Position your selected brands onto the consumer map.

Assess the overlap and prioritise those brands you believe have the greatest potential (i.e., “accessible headroom for profitable growth”).

Place the competitor brands you believe have a global footprint or unique value proposition onto the map (these can be other beverage brands).

Assess the gaps and overlap; what is the unique position for your brands?

Select the brand with the right proposition and the least competition.

Consider the business model that will allow you to reach the right occasion or right consumer type (i.e. distributor model choice, outlet choice, sales team) and your desired price (i.e. through marketing mix, efficient supply chain, production agreements).

For further information, contact Kos Apostolatos +44 (0)7825 040 036, kapostolatos@marakon.com or David Atkinson +44(0)7809 779 829, datkinson@marakon.com

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