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Competitor Analysis
Of
Kingfisher Beer
Submitted by:
(PGPM 2010, Section C, Group 2)
Abhinav Singh 10P121
Amrita Nadkarni 10P126
Anket Gupta 10P128
Jalad Mukerjee 10P142
Shah Dhaval 10P169
Table of contents
1. Introduction 3
2. SAB Miller India 3
2.1 Vision & Mission statement 3
2.2 Company background 3
2.3 Porter’s five forces 4
2.4 brand description 5
3. SWOT Analysis 7
3.1 Strengths 7
3.2 Weaknesses 8
3.3 Opportunities 8
3.4 Threats 8
References 9
2
1. Introduction
Though the Indian beer market is primarily dominated by Kingfisher, there is chiefly one main
competitor - SAB Miller. SAB Miller has premium beer brands in the market with the likes of
Haywards, Royal Challenge and Fosters. Another strong regional beer is Indus Pride, again owned by
SAB Miller. SAB Miller has a 35 % market share and has expanded strategically to take control of
beer markets at most places in the country. Mohan Meakin, which launched India’s as well as Asia’s
first brewery with popular beer brands such as Lion and Golden Eagle, also competes with the UB
Group.
In our analysis, we objectively aim to perform a swot analysis of all these competing beer brands as
well as find out the dynamics that exist in the beer industry.
2. SAB Miller India
2.1 Vision & Mission Statement
“Our vision is to be amongst the 3 most admired beverage companies in India.”
“Our mission is to own and nurture local and international beer brands that are the first choice of the
consumer.”
2.2 Company Background
SABMiller India is a subsidiary of SABMiller Plc, one of the world’s largest brewers. SABMiller has a
brewing presence in over 40 countries across four continents and a portfolio of over 150 brands. It
employs over 38,000 people worldwide in 81 breweries and 27 bottling plants. Outside the USA,
SABMiller plc is one of the largest bottlers of Coca-Cola products in the world. SABMiller
Plc is listed on the London and Johannesburg stock exchanges.
SABMiller has operated in India since October 2000, when it acquired Narang Breweries, followed by
the acquisition of Mysore Breweries Limited and Rochees Breweries Ltd in 2002. In May 2003, it
entered into a joint venture with Shaw Wallace & Company to form Shaw Wallace Breweries
Limited, thereby adding the popular brand Haywards to its portfolio. The management control
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rested with SABMiller. Over the years, SABMiller has cornered nearly one third of the Indian beer
market with brands such as Haywards 5000, Haywards 2000, Haywards Black, Knock Out, Royal
Challenge, Castle Lager and Fosters. With eleven world-class breweries strategically located across
India, SABMiller is well positioned to easily access and efficiently service the beer markets across the
country. The market share of SAB Miller in India currently stands at 36 %, way ahead of its nearest
competitor and inching closer to the leader Kingfisher.
2.3 Porter’s five forces
New Entrants - SABMiller operates in ‘challenging’ markets, which in the past has limited the threat of
new entrants. These markets tend to have a fragmented brewing industry and given the capital and
knowledge required to setup a brewing enterprise; this creates high barriers to entry meaning that the
threat of new entrants is low. However, in developed markets the industry is consolidated and
dominated by a few, larger players. As such, these large companies, like SABMiller tend to own multiple
brands with different market positions. In this market, it is much easier for competitors to launch rival
products that compete directly on price and thus eroding market share. SABMiller has experienced this
problem in North America with its rivals entering into a price war with SABMiller.
Suppliers - SABMiller is the second largest brewer in the world by volume. As such, they are able to
leverage their global reach to benefit from economies of scale. In this event it means that the bargaining
power of suppliers is unlikely to be too great.
Buyers - The diversification of risk is an important part of SABMiller’s strategy. By having operations in
many different countries, if one country is under-performing then this is usually counter-balanced by
other countries that perform better than expected. The example of Botswana, which did not do as well as
anticipated, compared with Tanzania, Uganda and Mozambique, which had a solid performance.
Substitutes - Premium brands have been identified as the fastest growing segment. However, if
disposable incomes fall, customers may decide to switch to lower cost brands. The switching costs within
the industry are low and so this could have a negative impact on SABMiller, who have positioned
themselves to take advantage from the growth in premium brand sales.
Competitors - In developing markets the industry is fragmented and SABMiller has plans to further
consolidate its business in these areas. However, in developed countries, the competition is fierce. The
industry is more mature and consolidated. There are a fewer number of industry giants who occupy a
number of different strategic spaces with their brands. The strategic groups identify a group of firms that
are operating in the same space within an industry, either with a similar strategy and/or business model.
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This helps management to get a truer picture of the competition and can affect the mobility of the firm in
terms of their positioning with an industry. In this type of industry the switching barriers within strategic
groups are low.
2.4 Brand Description
SAB Miller India has a rich repertoire of premium beer brands, each being a preferred choice of the
masses and having created a niche demand for itself. The various brands are as follows:
Haywards
Haywards 5000 is India's largest selling strong beer brand, which perfectly combines strength
with quality credentials that meet the high expectations of today’s demanding consumers.
Launched in the year 1983, Haywards 5000 is synonymous with strong beer in India. Haywards
5000 is brewed with the choicest of malts and hops lending itself to a unique flavour profile to
suit the Indian taste and preference. Haywards 5000 is the hallmark of original and authentic
strong beer which other beer brands aspire for. With such credentials, it is not surprising to see
men get together over Haywards 5000. It is the language of friendship amongst men who are
proud of their masculinity and look forward to a great time with their friends and peers.
Haywards is the most successful beer brand in the stable of SAB Miller India contributing to bulk
of its revenues. It enjoys a market share of 23 % of the Indian beer market.
Knock Out
Knock out is a strong beer in circulation mostly in the southern India region with leading market
share in the state of Andhra Pradesh. The beer is distributed in Andhra Pradesh, Maharashtra
and Karnataka. Ever since its launch in 1984, Knock Out has grown from strength to strength to
establish itself as one of the leading strong beers in India. The popularity of Knock Out is also
evident from the fact that despite being available in limited markets, as many as three lakh beer
bottles are guzzled by consumers every day. Knock Out enjoys an 8 % market share in the Indian
beer market.
Royal Challenge
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Launched in the year 1993, Royal Challenge Premium Lager is the second largest selling mild beer
in India. Royal Challenge is brewed with the choicest 6 malt barley. Its long brew duration
provides it with a distinct, smooth taste and rich flavour. It has all the hallmarks of a great beer -
Color that is golden honey, taste that is smooth and crisp, lace that sticks to the wall of the glass.
This is the beer for the discerning who have the confidence to make their choices based on their
superior taste and knowledge rather than just following the crowd.
The brand has moved from strength to strength since its re-launch by SABMiller in 2004, and has
set itself on a growth momentum that is well ahead in the mild beer industry. It has now become
the largest selling mild beer brand in many large beer markets, including Andhra Pradesh, Uttar
Pradesh and Orissa. Besides being available across most states in India, Royal Challenge Premium
Lager is also exported to USA, Europe, Middle East, Australia and Hong Kong. Brewed from select
malts and imported hops, on a specially developed recipe by the brew-masters from SABMiller,
one of world’s largest brewers with over a hundred years of heritage, Royal Challenge symbolizes
a perfect harmony between the high art of brewing and the assurance of modern technology.
Royal Challenge Premium Lager offers a difference with an edge. Besides its international class
packaging, premium image and path breaking advertising, what sets the brand apart is the long
brew cycle which lends it a distinctly smooth and easy flowing taste. It enjoys a healthy market
share of 6 % of the Indian beer market.
Foster’s
Foster's Lager is a uniquely brewed Australian beer. Brewed with the finest sun-dried malted
barley and the purest water Foster's has always been at the forefront of brewing technology and
the Foster's Lager brewed today is the result of over a century of attention of the brewing art.
Quality has been the strength of Foster's since its earliest days and remains a paramount concern
at every stage of the beer's journey from brewery to consumer. Foster's crisp, clean flavor won it
immediate international acclaim when it was first brewed in Melbourne in 1888. Today, more
than one hundred years later, it is still recognized as one of the world's best beers. SABMiller
India now brews & markets Foster's in various parts of the country. Foster’s enjoys a market
share of 3 % of the Indian beer market.
Some of the other beers belonging to the SAB Miller India are Indus Pride
and Peroni.
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3 SWOT Analysis
3.1 Strengths
SAB Miller India is a subsidiary of SAB Miller PLC which is second largest beer maker, by
volume, in the world
Positioned second in the Indian beer market behind United Breweries
In a span of just 10 years SABMiller India has been able to corner one-third share of the Indian beer
market. It has performed remarkably well in strong beer segment with Haywards 5000 and Knock Out.
Together they constitute 31% market share of the strong beer market in India. Royal Challenge and
Fosters are also very popular in the mainstream mild segment and together constitute a market share of
28%.
Diversified brand portfolio
SAB Miller India hosts a range of premium and popular beer brands that have created a
niche market for themselves and command a dedicated and loyal customer base. The brands
include Royal Challenge, Peroni, Foster’s, Indus Pride, Knock Out and Haywards.
Strategically located manufacturing facilities facilitating effective distribution channel. SAB
Miller has breweries at ten locations spread across India that caters to different markets
all over the country.
With 10 high quality breweries located strategically across 9 states in India. SABMiller India has a
market capacity of 5.7 Million HL. The company’s brewery in Andhra Pradesh is India’s first brewery to
have a capacity of 1.5 Million HL, which is twice the size of the second largest brewery in India.
Constant upgradation of brewing facilities in line with global standards
Dedicated Corporate social responsibility focus
SABMiller India has undertaken a range of citizenship initiatives.
With the objective to improve the barley supply chain, SABMiller India initiated a ‘Malt Barley
Development Programme’, called Saanjhi Unnati (“Progress through Partnership”) in Rajasthan in the
2005. This project assists the farmers and local community in maximizing land use and securing good
income. It has now grown to 15 Centres in 4 districts of Rajasthan with membership of over 8000
farmers.
SABMiller India, as a company recognizes HIV/AIDS is a major threat to the world of work. In 2007 it
started its HIV/AIDS internal workplace programme jointly with International Labour Organization (ILO).
The programme has been extended to supply chain (truckers) and trade (liquor retail outlets)
Water is one of SABMiller India’s top Sustainable Development priorities. This is reflected in the “5R”
water management strategy which has internal measures to Reduce, Recycle, Reuse and external
measures to Replenish and Redistribute.
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3.2 Weakness
Each state has its own excise laws, whereby movement of goods from one state to another
is time consuming and costly
Inability to raise prices of the product as it is mainly fixed by government
Price regulations by the Government has hit SAB Miller’s revenue collections
Missed Opportunity in TN
SAB Miller has no plant in Tamil Nadu, thereby its inability to participate in the second
biggest beer market in India has hampered its sales figures
3.3 Opportunities
Per capita consumption of Beer is one litre, way below the world average
Growing per capita incomes raising people’s aspirations can impact beer sales positively
India has the highest number of young people who are the potential consumers for the
Company
Easing of the regulatory environment can lead to tremendous market growth
3.4 Threats
Rising cost of raw materials
With prices of almost all the commodities rising, maintaining the margins is a great challenge
for the brewery.
Talent attraction and retention:
In the last few years, the attrition rate at SAB Miller has climbed upto as high as 22% ( Source:
SAB Miller website)
Increasingly competitive environment with all major global players entering the Indian
market
Partnership between competitors:
Heineken partnering with UB gives it a national reach for an aggressive roll out of the Brand.
High taxes and regulations:
During the recent years, Government has enforced tough regulations and raised the taxes
for this sector. Therefore, the high costs of doing business in this sector act as a significant
threat to SAB Miller India.
Prohibition on advertising
The advertising restrictions placed on alcoholic beverage industry in recent years make it
harder to achieve brand loyalty.
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