The Global Brewery Industry Presented by Cohabitants Asker Objective Formulation of International Business Strategy by the Beer Companies with the perspective of reconciling the twin issue of Standardization: To achieve economies of scale to stay competitive. Localization: To achieve market share Why Brewery Industry is unique? Case 1: There Is no Global Beer only Local. Top Ten Brewers Worldwide 2006 Millions of Barrels, Hostilities Reasons: 1 . Beer is bulky and too expensive to export, it is brewed domestically 2. Foreign producers will license their brand name products to local producers to gain a local arrest presence. . In addition, imports of alcoholic beverages are traditionally heavily taxed 4. Rival domestic producers usually tie up local distribution channels. 5. Government also product domestic breweries , such as in Germany where the Reinforcements purity rules have protected Indigenous beer for over 400 years. Source: Enchantresses- Busch (2007) via http://www. Enchantresses. Com/ med ;a Binned Brand Portfolio Budweiser brand is sold in North American Zone. The Budweiser family of brands had 11. 6% share of the U. S. Market and remained the number one brand in Canada.
Budweiser Is the number one beer In North America. Stella Ratios Brand Is the number one International beer brand In Argentina. Beck Is the number one German beer in the world; Germany is the largest market grew in Gabrielle Brand Portfolio Gabrielle has an attractive brand portfolio that meets customer needs in different markets. The premium international beer includes Pipeline Require, Person Nasty Azure, Miller Genuine Draft and Grossly along with market leading local brands such as Caligula, Castle, Miller Elite, Snow and Tykes. Scrabbles Brand Portfolio: Case 2: Imports of Alcoholic beverages are heavily taxed.
Scenario in UK Source: Alcohol: Tax, price and Public health (2008) Assessed via www. As. Org. UK Taxation of Alcohol is a effective mechanism for reducing alcohol problems. Government should deliberately adopt a policy of taxing alcoholic drinks so as to reduce consumption (British medical Association, Faculty of public health, royal medical college of psychiatrist and All party MSP, 2006) Excise Duties in United Kingdom for Beer in Pence( 1973-2008) Overview of Brewery -rope -Rene Global Brewers (19982004) It is an unprecedented drive for consolidation primarily effected through a series of gig profile mergers and acquisitions.
The aggregate volume of the world top ten brewers has grown at more than the four times the pace of total industry volume since the mid sass Top ten brewers= 914(1 ,475 ml); Others =563 952 Source: Beneath and Thieves (2005) Transaction multiples of major Merging and Acquisitions in the Brewing Industry 2000-2005 Year Activity 1999 Merging between Brazilian Brahmas and Companion criteria Antarctica in 1999 which led to the creation of Amber the largest brewing company in South America. 2000 Merging of Scrabbles (Denmark)and Orca (Norway) to form Scrabbles breweries;
Scrabbles ( Denmark) acquired Greensboro (France) . Acquisition of Hart wall (Finland) by the Scottish & Newcastle (United Kingdom). The acquisition of Miller (USA) brewing by South African Breweries(SAAB) Acquisition of Bra GAG (Germany) by Heinlein (Netherlands) Belgium Interbred and Brazilian Amber merged to create the largest brewer in the world Im-bee Enhances-Busch,(USA) the industry leader, took over Hardin, the biggest brewer in northeast China, for $mm Gabrielle(South Africa) has agreed to buy the Foster’s beer brand in India in a $mm deal as it seeks to build a stronger foothold in the subcontinent.
On 19 November 2007, the board of Royal Grossly NV accepted a в?816 million offer for the company by Gabrielle. The takeover was completed with the deleting of Crotch’s shares on 20 March 2008. Goldberg Kraals Roberts provided a rare fillip for the private equity industry after confirming its maiden acquisition in South Korea in a deal worth $1. Ban. Shrink Holdings, one of Japan’s leading beer and beverage companies, has won exclusive negotiating rights to buy up to 43. 5 per cent of San Miguel Brewery (dominant beer in the Philippines) in a deal that could 2002 2003 2004 2005 2006 2007 2008 009 Motives Behind the Merging and Acquisition For the Brewing groups M seem to be the fastest and most efficient approach to capturing the benefits with access to new markets and, at the same time, to being Bleakly et al, 2004). For example : Gabrielle acquisition of Miller brewing company in USA in 2002 and Joint venture with Coors brewing company in 2008.
More specifically the M-Motives are thought to be good for shareholders: Economies of scale: The combined company can often reduce duplicative departments or operations , lowering the company’s costs relative to theoretically the name ( Rail, 2002) Increased revenue (due to lack of competition): this motive assumes that the company will be getting rid of a major competitor and increasing its power to set prices. Synergies: better use of complementary resources (Sketcher and Schmidt, 2004). Taxes: A profitable company can buy a loss maker to exploit the target’s tax shield.
Geographical or other diversification: This is designed to smooth the earnings results of a company, which over the long term smooth the stock price of a company, giving conservative investors more confidence in investing in the company. (Gleam et al, 003). Process to understand the phenomena in a better way Analysis of the External environment? Industry is attractive or Unattractive for globalization. Insights on emerging and industrialized economies? Why there is more number of Acquisitions and Joint venture in the Brewery Industry? Hey have realized the need to solve the twin issue of national responsiveness and standardization? 2. If so how they do it? External Environment- Meta level development in the world economy Increase in number of regional trade agreements notified to GATE/WTFO 1950-2008 Source: Author (2009) compiled from WTFO (2008) The upsurge in the number of regional trade agreements has lead to the collective platform for globalization . Most of the nation belongs to at least one regional groupings on the trade agreement.
It can be argued as the deepening of economic integration which represents successive step towards globalization. For Example Impact of NONFAT on Brewery Industry. Impact of Trade liberation’s in Europe 1993 Export and Import flows of Beer in the EX. Countries in 1993 1 . Market liberation’s across Europe has allowed firms to invest equity to acquire the full ownership of established breweries across Europe rather than minority loading. Impact of Trade Liberation’s 2. In 1989 when communality collapsed Hungary was found to have a better climate for foreign investment than the other countries in the region.
For example: German brewer Bra and Brunet Gag, Interbred, Gabrielle and Heinlein made a investment in Hungary. 3. In 17 September 2001 China has agreed to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTFO rules (WTFO, 2001). Followed by the liberation’s of Chinese market the 600 breweries in china registered an export value of Emerging economies that previously featured traditional beer markets are now quickly developing many commercial characteristics which are once associated exclusively with developed economies. In addition to the rise of the global middle class, emerging markets are also being reshaped by ongoing arbitration. United Nations (2008) predict that more than 650 million people will migrate to urban centers over the next decade. 0 enables brewers to reach additional customers more efficiently and effectively.
Rising incomes, demographics shift towards arbitration and increasing categorization of tastes among younger generations are the major reasons for the internationalization of Scrabbles in the emerging markets of Eastern Europe and Asia Beer Markets in four emerging economies: Relation between PEST ad Meta level Trends in the Brewery Industry: Source: Author (2009) The five forces of Brewery Industry competitiveness Insights on emerging and industrialized economies.
Product life cycle theory for brewery Industry: It can be argued from the Figure 4. 6 that the markets in the early stage of the product life cycle (Africa, China and Central and Eastern Europe) is characterized by paid growth, explosive proliferation of firms and low barriers to entry and later when the market becomes mature (Latin America, USA, UK and France) the customers become more knowledgeable and markets in this stage are characterized by competitive nature where growth rates are expected to be flat or slightly declining.
Overview of Different markets in Brewery Industry: Promising Growth in Emerging Economies Chief operating officer of the Asia division of Australia’s foster Brewing group (2005) predicts that China’s market for beer will grew at a rate between 10 and 25 percent per annum. The segment of foreign beer is expected to grow 15-30 percent per year. Global consumption, by comparison, is growing at 1. Percent per year. Consumption Characteristics of different beer markets: Source: Author (2009) compiled from Scrabbles Annual report (2008) Scrabbles Strategy in China In 1998 Scrabbles opened a IIS$mm Greenfield brewery near Shanghai to produce premium beer. However, following losses over several years, Scrabbles sold its equity stake to Toasting, a leading brewery in the north of China, at a loss.