The Aromatic Strategists This presentation analyses the strategy adopted by Angostura Holdings Limited to achieve competitive advantage in order to continue its progressive and dynamic market growth in the CARIBBEAN and the rest of the WORLD. INTRODUCTION Angostura Holdings Limited is based in Trinidad and Tobago Angostura is one of the Caribbeans leading spirits producers with a superb collection of Rum brands and is the worlds market leader for Aromatic Bitters WHERE IT ALL BEGANHISTORY IN THE MAKING HISTORY (COntd) SO WHAT ABOUT TRINIDAD DISTILLERS LIMITED? PRODUCTS MANUFACTURED BY TRINIDAD DISTILLERS LTD: ANGOSTURA LIMITED Background The Angostura Company was started in 1824 in Angostura, Venezuela and moved to Trinidad in 1875 Currently Angostura Limited markets Angostura Bitters and Rums locally and internationally ANGOSTURAS MARKETING STRATEGY The products marketed by Angostura Limited are: Fernandes Products marketed by Angostura Limited BRANDS of THE ANGOSTURA BRANDS COMPRISES THE FOLLOWING : INTERNATIONAL RUMS TRINIDAD JEWELS OTHER GEMS LIMITED EDITIONS ANGOSTURA BITTERS VMOST VISION / MISSION / OBJECTIVES / STRATEGIES / TACTICS VMOST VISION / MISSION / OBJECTIVES / STRATEGIES / TACTICS VMOST ANALYSIS Based on the VMOST factors the following is critically analysed; Vision Statement is flawed, emphasis is given on the Rum Industry and not the Aromatic Bitters. The Industry is more relatable to Angostura being the King of the Bitters Market and as such the emphasis should have been taken to the bitters. The vision should have also stated to be the most profitable company in the world and not only in the Caribbean. The Mission statements should inherently state the importance of the Aromatic Bitters as its niche product The Objectives should fundamentally place emphasis on the expansion of the Global Markets where the Aromatic Bitters is concerned The Strategy options should again focus more on the Aromatic Bitters and it marketable readiness towards the global markets. Additionally, the Trinidad Jewels should be marketed more externally The Tactics should place more detailed emphasis on the planning and development of marketing and distribution of the Aromatic Bitters globally and by extension seek more foreign brand ambassadors to carry on the legacy External Analysis THE EXTERNAL ANALYSIS CONSISTS OF THE BROAD ENVIRONMENTAL FACTORS THAT AFFECT THE SPIRITS INDUSTRY. THE EXTERNAL ANALYSIS WILL BE CARRIED OUT WITH THE FOLLOWING: PEST ANALYSIS INDUSTRY ATTRACTIVENESS (PORTERS FIVE COMPETITIVE FORCES) INDUSTRY LIFE CYCLE ANALYSIS KEY SUCCESS FACTORS COMPETITORS ANALYSIS COSTOMER ANALYSIS DEGREE OF TURBULENCE PEST ANALYSIS INDUSTRY ATTRACTIVENESS (PORTERS FIVE COMPETITIVE FORCES) INDUSTRY ATTRACTIVENESS (PORTERS FIVE COMPETITIVE FORCES) BARGAINING POWER OF SUPPLIERS Importation of raw materials, but many suppliers Competitive pressure is low. High concentration of purchasers Suppliers can easily forward integrate BARGAINING POWER OF BUYERS Wholesalers is essential in the market channel Customers are price sensitive Buyer is well-educated regarding the product Switching cost low from one seller product to next COMPETITIVE RIVALRY Large variety of Alcohol Products on Market International Competitors: Scotch Competitors are strategically diverse they position themselves differently from other competitors Low consumer switching costsTREAT OF SUBSTITUTES Switching costs are high Lower prices by competitors Differentiated Products Rum Quality is high in the Industry THREATS OF NEW ENTRANTS High capital cost to set up Distillery Government Regulations Preventative Liquor Surcharge Customer loyalty/ Branding Distribution Channels Seek to enter on small scale(high profit margin) INDUSTRY LIFE CYCLE ANALYSISLIFE CYCLE STAGE GROWTH This industry is in the GROWTH stage of its life cycle LIFE CYCLE REASONS Industry value added growth is almost equivalent to GDP growth Enterprise numbers in developing markets are growing Generally growing group of products Advanced rate of technological change KEY SUCCESS FACTORS CUSTOMERS- WHAT DO THEY WANT? Price affordability Consumers expect value for money-the higher the cost, better the quality Product must easily available at all social events, supermarkets, liquor martsCOMPETITION-HOW CAN ANGOSTURA BEAT ITS COMPETITORS Bitters has secret ingredients unique to its brand only-preferred by HRM Queen of England, US consumes 750,000 four oz. bottles annually Strong distributive network locally and internationally of bitterssold in 165 markets,95% of rum exported globally Domestic rum positioning enhanced, new premiumisation strategy-2013 launches the first premium rum in a new limited edition range ,No.1CORPORATION High emphasis on branding strategies-e.g.Angostura Aromatic bitters Global Cocktail Challenge 2010- new packaging leads to increased sales performance Unique techniques of Production (with only the highest quality molasses) & aging Master distiller ,John Georges has almost a third of a century in rum making experience The FBI (Food and Beverage Industry )is the largest in the non-energy manufacturing sector in T&T, Exports over TT $900 M COMPETITORS ANALYSIS COMPETITORS ANALYSIS Customer ANALYSISMARKET DYNAMICS: The introduction of laws against drinking and driving has brought about more responsible drinking habits Fall in oil prices can lead to increase in economy priced beverages Intense competitionCUSTOMER SEGMENTATION: DEMOGRAPHIC Market penetration achieved based on measurable statistics such as gender, age, income and education Buyer Behaviour:Cultural, Social, Personal and economic and Psychological Customer analysis DEGREE OF TURBULENCE ANALYSIS Internal Analysis THE INTERNAL ANALYSIS CONSISTS OF THE BROAD INTERNAL FACTORS THAT AFFECTS THE ORGANIZATION. THE INTERNAL ANALYSIS WILL BE CARRIED OUT WITH THE FOLLOWING: RESOURCE AUDIT VALUE CHAIN VALUE SYSTEM MC KINSEYS 7S FRAMEWORK VRIO FRAMEWORK CORE COMPETENCIES / DISTINCTIVE CAPABILITIES BOSTON CONSULTATIVE GROUP (BCG) MATRIX FINANCIAL ANALYSIS RESOURCE AUDITTANGIBLE RESOURCES Market leader for Bitters-product unique, key secret ingredient One of the Worlds leading rum producers-expansion has lead to the owing of distillers in U.S., Canada, Bahamas and Suriname AHL and TDL Ltd. are 100% locally owned Assets (building ,plant and machinery)-valued at TT$289 M House of Angostura -20 acre complex with Admin Facility , Museum, Art Gallery ,Auditorium, Merchandising shop etc. Inventory -TT$181 M,Cash -TT$190 M, Equity-$234M New packaging and premiumisation strategy( new bitters bottling facility opened -29th January,2014) Resource Audit INTANGIBLE RESOURCES Branding of the World famous bitters and rum (May 2001,launches international range of rums in the US) Strong advertising presence at Carnival ,Fetes, Tobago Jazz Festival Hosting of the Angostura Global Cocktail Challenge Competition Winner of numerous prestigious awards internationally Launching of the Smart phone Apps, Aromatic Bitters Cocktail (2013)& Phone a Taxi App (2015) CSR a top priority (Adopt a community, Laventille Steel Band, hosting of Kids Camp and Hamper Distribution) VALUE CHAIN VALUE CHAIN ANALYSIS VALUE SYSTEM The firm's value chain links to the value chains of upstream suppliers and downstream buyers. The result is a larger stream of activities known as the value system. The development of a competitive advantage depends not only on the firm-specific value chain, but also on the value system of which the firm is a part. For Angostura the value system is focused on the identification of opportunities to differentiate cutting costs where necessary (hence the removal of wholesalers and agents) but adding value wherever consumer preferences make so doing profitable. In their system chains information is regarded as a critical success factor in which businesses invest and are willing to share with like-minded trading partners those with whom trust has been built through commitment over time and with whom conversations focus on where the opportunities for adding value exist. Additionally,Angostura is focused on how the benefits of collaborative cost reduction and differentiation can be shared for the longer term benefit of all stakeholders in the chain. Notice also that in value chains, the barriers between firms (inter-organisational silos) that are so prominent in traditional supply chains, dissolve over time as the chain learns to pull together, as one, united in the focus on the final consumer and the sustainability of the chain as a whole. VALUE SYSTEM The Upstream Suppliers represent the supplier and agency associations. Suppliers are the entities that consist of breweries, wineries, and distilleries located throughout the country, region and the rest of the world. Liquor agencies are the entities that are primarily responsible for inventory management, sales, and product promotion. Angostura upstream associations were consistent in that all believe that status quo is not an option. The underlying theme of all suggestions was that free market conditions should take precedent over fairness and equity to retailers whereby suppliers and agents would have a greater control over how their products were moved through the supply chain (e.g., who distributed them). The implications of greater supplier control are that product selection and standardized pricing could be impacted in a positive way. The Downstream Buyers represent the retailer associations. Unlike the upstream associations, the general consensus of this group is that fairness and equity to retailers must be maintained (i.e., equal access to LTOs, standardized wholesale pricing, postage stamp delivery). The suggestions are centred on fixing the existing system rather than whole scale changes to the underlying principles of state agency type management since its majority owned by CL Holdings. MC KINSEYS 7S FRAMEWORK MC KINSEYS 7S FRAMEWORK VRIO FRAMEWORK VALUE ADDED - CORE COMPETENCIES Clear distinctive brand proposition that focuses solely on a closely defined customer group. Skills in customer relationship management. High manufacturing and distribution quality. Staff training and professional development. ISO certified in quality management and environmental management. Producer of the world renowned Aromatic Bitters. This company is responsible for producing the worlds most flavorful product, and is the preferred bitters all around the world because of its high quality. Wide span of corporate social responsibility. Production of consistent quality fresh distillates and finished cased product. Innovative package design and product perception. BOSTON CONSULTING GROUP (BCG) MATRIX FINANCIAL ANALYSIS Stock/Trade info AHL VS Manufacturing 5 year financial analysis VERTICAL ANALYSIS Profitability ratios ACTIVITY(short)/LIQUIDITY ratios Gearing ratios STRATEGIC FIT SWOT ANALYSIS TOWS MATRIX EVR CONGRUENCE ANSOFF DIRECTIONAL MATRIX STRATEGIC OPTIONS MAIN STRATEGIC OBJECTIVES QUESTIONS SWOT ANALYSIS TOWS STATEGIC MATRIX ENVIRONMENT, VALUES & RESOURCES [EVR] ANALYSIS ENVIRONMENTAL, VALUES & RESOURCES (EVR) CONGRUENCE ANALYSIS best fit More important than the basic idea of E-V-R is the concept of congruence. For angostura it was tried, tested and is true, that the organisation accomplish and achieved congruence of best fit since its environment, resources and values are mutually reinforcing; Its strategic position is strong; Its position in the sprits industry is solid and sturdy in local, regional & on the Global scale; Its place in the Aromatic Bitters industry is second to none. ANSOFF DIRECTIONAL MATRIX ANSOFF DIRECTIONAL MATRIX ANALYSIS STRATEGIC OPTIONSMARKET PENETRATION; - Use Aromatic Bitters as main focal point to gain advanced competitive advances in within the Global Market Incorporate and encourage the use of Aromatic Bitters worldwide with educating the masses of the history and benefits of the Aromatic Bitters encouraging the youth to become global brand ambassadors to take the bitters to boldly go where no bitters have gone before!MARKET DEVELOPMENT;- Develop strong relevant brand portfolios that win in the local market Develop marketing campaign to target young drinkers Use trend toward ready to drink beverages to develop new products MAIN STRATEGIC OBJECTIVES MARKET PENETRATION / MARKET DEVELOPMENT Ready to drink beverages is the new and future trend for alcoholic drinks compare to the traditional mixing of drinks; Angostura could develop new products such as rum and coke in a can or bottle, or more ready to drink mixes of products since they carry the mixture line of juices and liqueur together. The company has the internal resources and capabilities needed, such as skilled employee talent, its own state of the art distillery and a reputable position for producing innovative flexible quality products. With that in mind the ultimate conclusion for the company is to maximize on its current existing facility of the water purification process runned in one of its phases of the distilling process and produce, generate, brand and market its own line of WATER! Just imagine that! Brilliant! MAIN STRATEGIC OBJECTIVES Market development Influenced either by marketing gimmicks or friends who has great credibility With the correct marketing activities they can persuade this audience to be dedicated to the brand. Angostura needs to develop a Strategy that when a male consumer reaches the legal age to drink he must want angostura SBR, it buts be a legacy and with this strategy they can achieve that goal. Ready to drink beverages, water with bitters (health stomach). MAIN STRATEGIC OBJECTIVES They should adopt Market Penetration Some of the ways Angostura could use digital marketing are discussion boards, polls and quizzes, videos, photos, links to offsite promotions, and custom developed applications. Angostura should also look at behavioral targeting as this enables the company to develop unique,long-term relationships with individual customers. Through ongoing data collection and tracking,marketers can create personalized marketing and sales appeals based on a customer's uniquepreferences, behaviours, and psychological profile. Use Aromatic Bitters as main focal point to gain advanced competitive advances in within the Global Market YouTube videos on their profile pages in social media sites like Facebook or forward them to friends is what allows a popular video to go viral. The campaign has been a success to a point but it has not convinced the consumers to switch from scotch as it is felt that there is no added value to them. QUESTIONS? 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