Exporting Alcoholic Beverages to USA

8/10/2019 Exporting Alcoholic Beverages to USA

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Social-Cultural Reasons Alcohol consumption is part of everyday life;

clubs, recreation etc. Holidays such as St. Patrick's day (about 3

million pints (about 0.5 Liters) of Guinness aredowned, according to Guinness)

Social events like the Super Bowl where

alcohol consumption increases. Religion doesnt affect much on alcoholic

consumption.


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Economic Reasons

13 th Most Beer consuming country Average of 81.6 liters per person

high income country with a GDP of 16.8trillion dollars with a population of 316 millionpeople

Growth Rates Largest Importer


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Factors Affecting Product Adoption Compatibility Complexity

Major Problems

Patriotic view Great Competitors Need Huge budget for marketing to reach

customers


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Market: Geographical Analysis


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Consumer Buying Habits andPreferences


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Product

Tusker


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About Tusker

TUSKER is brewed from 100% Africaningredients that are all locally sourced; the barley is from the Savannah and the Maasai

Mara, the spring water is from the AberdareMountains and all the yeast is developedlocally which means that you feel closelyconnected to the brand's origins and roots.

Tusker Lager is the oldest and most famousbeer brand in East Africa. It is brewed by EastAfrica Breweries Ltd (EABL) and targets adultsin the legal purchase age (LPA).


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Tuskers Brand Name

Tusker stands for authenticity, pride andtogetherness - values that all Tusker brandshave in common. The brand also stands fortrue friendships, cementing the bondsbetween good friends.

The brand is committed to providing the bestquality lager anywhere, because it is brewedusing the finest ingredients.


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Beer products in U.S


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Competitors analysis

Bud lights- Bud light beer was created in 1876 byAdolphus Busch in his quest to create a national beer forthe United States.Bud light is an American -style lager known for its fresh

and delicate fruit notes, malt sweetness and a sharpfinish.It is considered a medium-bodied, balanced beer ("Budlight Fact Sheet", 2011). While Bud light has been aroundfor over a century; every batch follows the identicalfamily recipe that Adolphus Busch once used.The recipe has been maintained by five generations ofBusch family brewers.


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4 ps of bud light Product- Bud light recipe consists of the following ingredients: barley malt,rice, water, hops, and yeast. Bud light has been criticized by beer critiquesthat the taste is bland and bitterPrice- The price to distributors is $.08 per ounce on containers over 660ounces and the price for containers less than 660 ounces is $.12 perounce. The suggested retail price is a mark-up of $.05 cents per ounce.Promotion- The promotion of Bud light includes: advertising, salespromotion, and direct marketing. The advertising of Bud light consist ofpurchasing billboard ads in major cities throughout the United States. Italso includes purchasing TV ads for domestic commercials during sportingevents and widely watched programming. They also purchase ads in mensmagazines and websites specifically in the United States in order to reachout to the target market.

Place- Bud light is distributed through all alcohol shops and leadingsupermarkets across the united states. Consumers can purchase Bud lightfrom a variety of locations including: gas stations, carry outs, bars, pubs,nightclubs, restaurants, and at sporting events.


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TARGET MARKETS OF ASL Young men: Young

men consume morealcohol as comparedto women whereby,according to theGallup poll menbetween the ages 18to 49 drink the mostin the USA.

Young women :

According to Galluppoll, 67% of womenbetween the age 18and 49 consumealcohol in the US.

Sports fans: Accordingto B/R, beer is as mucha part of sports as isthe equipment used toactually play the game.


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EXPECTED SALES- 2015 In the first year of operations, we do not expect

to have a high level of sales. The sales forecast foryear one of operations would be

Beer- $54400 (which means we expect sell 32000units of beer in the first year at a price of $1.70per 500ml of a beer bottle).

Spirits- $80000 (which means that we would sellaround 5990 units of spirits which would includebrandy, gin and vodka in the first year at a priceof approximately $17 per 750ml of a bottle.


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EXPECTED PROFITS- 2015

The profits made for the first year ofoperations would be ($150,000) due to

excessive competition and a hugeamount of money would be usedfor promotion and advertising.


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MARKET PENETRATION We will use a sensitive approach as to how we want to

be viewed that is our first impressions. We need tomake alcohol beverage consumers aware of our beerand spirits.

One of the first strategies that will be use to penetrateour product into market is going to be done by focusingon our pricing and sales strategy.

We could offer free samples of our products atsupermarkets example, Walmart, Krogers, ShopRiteamong others or liquor stores like BC liquor Store for ashort period of time during our introduction stageswhere our products will be sold.


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MARKET COVERAGE

Adapt to the countrys procedures, as wellas the different cultures in the whole of theUnited States of America. We will have toadapt to the languages and dialects thatare spoken in the country which in this casewould be English. We will strictly have to

adhere with the alcoholic laws of the USAwhereby different states have different lawsof where liquor can and cannot be sold.


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PRODUCT ADAPTATION ORMODIFICATION

CORE COMPONENT:No product adaptations will be madeto our core component as we are looking intostandardization of our alcoholic beverages in all themarkets that we offer our products in.

PACKAGING COMPONENT:Our brand name will remain thesame no matter where we go. The only time we will changeour brand name is if it is offensive in a certain culture inone of our markets. No modifications made beforeexportation.

SUPPORT SERVICES COMPONENT:This section willbasically deal with our sales persons that we employ in theUSA and how they behave with our potential customerswhich is why they need to go through extensive trainings.


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PROMOTION MIX: ADVERTISING Objectives: to create awareness and to motivate buying decisions of the

consumers. Media Mix: comprise of TV commercials, billboards, contracts with football clubs

and the internet for international marketing. Our billboards will have to be strategically placed in places around bars. An

example of where a billboard would be appropriate in is the Los Angeles Board

walk which has a high population of adults as it has so many casinos where adultsare not likely to let children go. We would also make contracts with football clubswhereby we could serve only our beverages at their football or hockey matches.

Message: The slogan we will use for advertising our alcoholic beverages is fromAfrica with love which will differentiate us from the other Native Americanbrands.

Costs: One of our advertising media was TV commercials which would be quite

expensive for us whereby we could end up spending approximately 15 million onthem. Sports contract would cost approximately around 1.5 million. While theinternet would not be so costly with an approximate expense of 1 million.


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PROMOTION MIX: SALESPROMOTION

Objectives: to give great value to consumers, savings made on theside of the consumers that will attract them to our procucts.

:To stimulate demand and create initial product awareness. Coupons: We will send our coupons to our potential consumers

through paper mail or electronic mail and our existing consumers

will get coupons on a purchase whereby we could give them a 10%discount on their next purchase. We will also give out discountsand free items to our consumers , they would get a free beer glasswith every purchase of 5 beers.

Premiums: At the introduction stage it would be too early tointroduce a reward system. We would establish a reward system forour loyal customers as time passes and we reach the growth andmaturity stages of the product life cycle.

Costs: Use of coupons would use up at least a 150,000 for mailingpaper and electronic mail coupons.


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PROMOTION MIX: PERSONAL SELLING

We will carry out personal selling by hiring a fewcompany representatives for our brands why willinteract on one with our potential customers so

as to increase the market share of our products.Our personal selling will take place in oursponsored events. Example, the contract we havewith the football clubs would be a good platform

to enable personal selling to take place. We will spend about Kshs 50000 on personal

selling.


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PROMOTION MIX: OTHERPROMOTIONAL TOOLS

Guerrilla marketing: could use guerrilla marketingwhereby we could have graffiti put up on buses or onwalls in neighbourhoods where graffiti is allowed.

We could also come up with clothing like t-shirts orcaps with our brand name to create awareness in themarket.

Product placement: could be used in a way that wecould

sponsor one of the highly viewed shows in the US likeAmericas got talent, among others.


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DISTRIBUTION FROM ORIGIN TO DESTINATION

Port Selection:

Origin port: The maritime port of Mombasa, North Beach

Destination port: Port of Orlando, Florida

Mode Selection:1. Railroads and motor carriers (not possible)

2. By cargo ships3. Cargo planes


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Although faster, the airplane has to make over5 trips which would cost 3 times more, eachtime, than the cargo Ship and would cost

twice as much to insure, due to the fragilenature of the cargo (bottles of beer), whichwould eventually add to the cost of the

product .


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Packing

Aluminum cans are becoming widely popular due tobeing lightweight, resistance to breakage, handlingadvantage, excellent graphics, convenience,

portability and favorable image among consumers. Most of the beer in the States have aluminum

packaging. This is also done to encourage recycling.


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The glass bottles, though, hold a sense ofquality and class.

Thus the export can consist of both aluminumcans and glass bottles with different priceranges focusing on different consumer

segments. Glass bottles can then be used in places such

as hotels, restaurants, wines and spirit shops.

Metal cans can be sold in supermarkets andother retail shops for off premise drinkers.


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Documentation required for shipping

Bill of lading A straight bill of lading

Dock receipt Commercial Invoice Certificate of Origin


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Insurance claiming

If there is damage with the cargo, theshipper can report the incident. After aninspection from the insurance company,

depending on the results, a claim can be filedfor the replacement or compensation of thecontents of the cargo, in this case beer.


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PRICE DETERMINANTS

These are the factors that will define the priceat which Africa Spirits Ltd products will beoffered to the USA. They will directlydetermine the price that the importers willhave to pay for the spirts and beer.

There are two types of price determinants Internal External


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Internal price determinants

Marketing objectives The marketing objectives of Africa Spirits Ltd will

determine the pricing strategy that will be used.Prices of its spirits and beer will be set accordingto the marketing objectives it has to meet.

Survival

The costs that the business has in its normaloperation have to be covered so that it does notmake loses and it actually stays in operation.


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Internal Determinants Current Profit maximizationBasically setting prices that will increase the currentprofit. Africa Spirits Ltd also wants to capture the growingdemand and make sure that they Make hay when the

sun shines. Market share leadershipThis involves setting prices so as to obtain the highestpossible sales in the market in relation to competition.

Quality of product leadershipHigh quality products have a high cost of production inmost cases and in order to cover these costs.


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The price of our products.

The beer will be priced at $1.70 per bottlewhereas the spirit will be charged at $17 perbottle.

VARIABLE

COST($)

FIXED

COST($)

TOTAL

COST($)

BEER 0.9 0.8 1.70

SPIRIT 12 5 17


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Marketing mix strategies

Product design The design of packaging in terms of the bottles

and cartons of spirits and beers that AfricaSpirits Ltd will be packaging their product in willalso add to the products cost itself

Distribution The choice of distribution channel and the

expense involved in distribution of Africa Spiritschoice of distribution channel will add to thebusinesss operation costs so they will have to beadded into the products cost.


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Costs

The varying nature of costs at different productionlevels will influence the setting of the price.There are 3 different types of costs: Variable costs Fixed costs Total costsAfrica Spirits costs will determine the price of itsproducts.


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External factors of pricedeterminants

Nature of the market and demandCompetition

There are four different markets that have different that offerdifferent levels of competition.

Pure competitionthis is a market where there are many buyers and sellersand they have a little direct impact of the prices of thecommodities that they are dealing in.

Monopolistic competition

Many buyers and sellers who trade over a range ofaccepted prices Oligopolistic competition

In this type of a market there exists few sellers who aresensitive to each others pricing and marketing strategies

Pure monopoly In this case there is a sin le seller who has com lete control

Terms of sale


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Terms of sale

These are some of the terms that Africa Spirits willcome across in contact with when conducting businessabroad.1. C&F-the price invoiced or quoted by a seller for ashipment does not include insurance charges, butincludes all expenses up to a named port of destination2.CIF- A shorthand term for signifying that the priceinvoiced or quoted by a seller includes insurance andall other charges up to the named port of destination3.Delivered at Frontier-the seller fulfils its obligationsby delivering the goods at a specified point on theinternational border (not the customs border lying

inside the national boundary) of the buyer's country-


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Method of payment

Letter of credit A letter of credit is a commitment by a bank on

behalf of the buyer that payment to the exporter

will be made so long as terms and conditionsstated on the letter of credit are met and verifiedby appropriate documentation. Africa Spirits Ltdcould encourage the importer of its products to

use letter of credit to reduce the risk involved ininternational trade.(MOST COMMON)


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Method of payment

PrepaymentsIn this form of payment Africa Spirit Ltd will not have any credit risk since the paymentfor its product will be received in advance before the spirits and beers have beendispatched to the importer. Wire transfers and credit card payments are the commonoptions available to importers. Drafts

A draft specifies the necessary documents required for the transfer of the title of thegoods. Banks act as facilitators for their clients however, these drafts dont offer anyverification process and limited power in terms of an event of non-payment. Open accountThis is a transaction where the goods are delivered to the importer before thepayment for these goods is due, that is 30 days, or any other time period that isagreed by the importer and the exporter. Due to increased competition worldwide,

importers usually bargain for the exporters to provide an open account terms since itis common for the exporter to offer credit to the importer in the international market.However if Africa Spirits were to use this kind of payment method, it is advisable forAfrica Spirits to take up some form of security like export credit insurance.


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Method of payment

Documents

Exporting Alcoholic Beverages to USA