Is China Thirsty for Canadian Craft Beer?

What’s on Tap TodayThe Company Overview

The Target Market

Marketing Mix

The Chinese Beer Market

The International Strategy

Video Story Time

Craft beer is…

craft beernoun

a beer made in a traditional or non-mechanized way by a small brewery

Company OverviewCompany Overview

based in Surrey, BC“Dedicated to brewing world class craft beer with the best ingredients”

The Selection Process 1Focus on Consumers Between Ages 25-54

The Selection Process 2Focus on both Males & Females

The Selection Process 3Focus on both Retail Stores & Restaurants/Pubs

Perceptual Mapping

The Expat Appraisers“Beer, it's the best damn

drink in the world” in 2010, 600K expats in China familiar with the whole craft beer

culture fueled the beginnings of micro

brewing in China

24,358

8,023

7,306

5,591

Number of Expats in Shanghai in 2010

AmericanGermanCanadianBritish

The Urban Millenials

“Beer in one of my favorite drinks now”

1/3 of population are millenials Western university degree affluent urban consumers started switching to imported

premium beers foreign brands associated w/

status and well-being live for TODAY & enjoy life to

the fullest

The Beersnissmen aka Beer Snobs

“Let’s drink it as long as it is strong and

expensive” “Each beer bottle brings

friendship to a higher notch, every bottle of baijiu helps sealing a deal.”

job ads requiring drinking skills Drinking banquet baijiu culture health trend & gender equality

focus Imported beer viewed as luxury preference of dark stouts

The Crafty Ladies

“Why not, if it’s healthy and low-alcoholic”

nonexistent in the past urbanization & financial

independence contributed to rising trend

health trend & gender equality focus

preference for light lagers (taste and APV)

The Brewbies aka Beer Newbies

“Is it cool? Is it reasonably priced? Sign

me up!” made popular by Chinese

studying overseas + beer festivals

urbanization & financial independence contributed to rising trend

consumer confidence & small living spaces

Price

Chinese beer @ CAD $1.31 to $2.62 Budweiser lager @ CAD $1.27 (6.13 yuan) imported beer @ CAD $2.62 - $5.23 (100 – 200% more) imported craft beer @ CAD $10.47 - $19.63 per liter Russell Premium Price starting @ CAD $13 (63 yuan) Russell Special Price @ CAD $10 (48 yuan)

o conspicuous consumption & fulfillment of ego needso Russell Brewing positioning as the premium beer

Product

based on taste, beer is light or strong preference for light and sweet fruity beer growing demand for low-alcohol lagers (12 Russell beers)

4 new beer lines (Chinese friendly lines)1. line for beer enthusiasts2. line for women3. line for newbies4. line for businessmen

Place weak brand loyalty representative office set up is costly do distribution biz with a local agent e.g. Ecovis establishing potential markets and clients be in charge of arranging the beer sales a performance based commission

International Strategy

Exporting indirect aggressive

Advantages:• less risky• opportunity to study and learn about Chinese beer market

Disadvantages: • shared profit margin• no direct contact with consumer base, may impede long term

expansion plans

PromotionTwitter-like

Facebook-y

International Strategy

First time overseas therefore using Domestic Exporter/Importer FVI CapitalExporter driven by salesOffers least amount of Risk

Pricing Strategy

Dual Pricing Strategy Importing taxes 17% from Vancouver to

ChinaShipping CostsCommission to Domestic ImporterExchange Rate

Marketing Strategy

Hire Marketing Firm - Grey Group China Focus on International Brands wanting to expand brand

to Chinao They will do market research for us and sampling

dayo When our target market goes shopping

peak days they are shopping Create a Social Media Strategy Use local Social Media channels to get the work out

about product Run by Grey Group China Sampling Day and 1 Day Sale

Risk Mitigation Strategy

No start-up costs, just commission paid to exporter Sampling day will give us immediate market research

• Do they like the flavour• Is the branding correct• What are their thoughts on this beer• Does it have a premium taste and look

Allow us to see how the Chinese market enjoys Russell Brewing prior to us fully committing to the market

2-year plan to begin to brew locally

Risk Mitigation Strategy

China: 100.4 bn Japan:24.8 bn India:5.2bn 24.5% of Global market share World’s largest beer market 4631 kl beer whereas U.S. 2408 Largest in volume but not in revenue U.S. 25%beer sales come from economy lager whereas in China

82%

Opportunities & Threats

Opportunities

o Growth in disposable income

o Growth in Internet Retailing

o Women having more purchasing power

o Social media as an effective promotional tool

Threats

o Uneven income distribution

o Fierce and unfair competition

o Anti-extravagance campaign

o Increasing corruptiono Middle Class Migration

Competition

Leader in the Chinese Beer Market with 23% market share Social Media and Online Retailing (Jd.com and Tmall.com) Snow Beer: JV between SABMiller and CRE Greatest brand share 21%, Tsingtao 9.3%, Harbin 5.8%,

Budweiser 2.6%

Tsingtao

o 2nd largest market share 18%o Focus on premium brands Yi Pin

and Augertao Goal: to increase premium beer

saleso Backup from Asahi

Anheuser Busch InBev

o 3rd largest brewer in Chinao Acquisitions: Jilin Ginsber Draft

Beer and Jiangsu Regal Beero Top ten fastest growing breweries

in the marketo Harbin performing wello Global brands: Budweiser and

Stella Artois are sold as premium beers

o Launches Corona as premium beer

Competition Continued

Cheers & Thank You

High Quality

Low Quality

Low Price

High Price