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Grolsch Growing Globally
Grolsch Growing Globally
MAY 6, 2011
PANKAJ GHEMAWAT
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takeover of the world’s 51st largest, Royal Grolsch N.V. of the Netherlands, for €816m in cash—84%
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more than Grolsch’s value over the previous month. Nick Fell, SABMiller’s Marketing Director,
explained the logic of the deal:
“[Grolsch is] a fantastic brand. It’s North European, it’s a fantastic product, it’s got
unimpeachable brewing credentials and authenticity and credibility. And it’s a damn good
product. So for anybody interested in developing their premium beer business, this is an
absolute peach of a brand to get hold of… we see huge potential for it in our global footprint,
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particularly in markets like Latin America and Africa where we’ve got a strong route to market
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Grolsch had hitherto focused on developed markets, particularly the UK, US, Canada, Australia,
New Zealand and France, in pursuit of its goal of becoming one of the world’s top 10 global beer
brands. Groslch was already the world’s 21st largest global brand, measured by international (non-
domestic) volume (see Exhibit 1). International volume had grown to account for slightly over one-
half of total volume and, going forward, seemed to offer much more potential. Drinkers often rated
Grolsch higher than larger brands, including Heineken, the top global brand as well as the leader in
Grolsch’s home market (see Exhibit 2). And Grolsch had started up a state-of-the art brewery in 2004
that could be expanded at little incremental cost.
The acquisition closed and in February 2008, Grolsch became an independent subsidiary of
SABMiller. Rob Snel, head of Grolsch International since 1999 and an employee since 1984, was
named Grolsch’s new CEO shortly thereafter. He had to decide what changes, if any, to recommend
to its global strategy.
1 This compares the relative positions of SABMiller with the two other major breweries, InBev and Anheuser-Busch as of the
end of 2006. SABMiller’s fiscal year ends in March.
2 “Q&A with Nick Fell, Marketing Director, SABMiller,” SABMiller, www.sabmiller.com. Accessed Nov. 30, 2007.
________________________________________________________________________________________________________________
This case was prepared by Professor Pankaj Ghemawat and Michael Jordan, Research Assistant, as the basis for class
discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form
or by any means – electronic, mechanical, photocopying, recording, or otherwise – without the permission of Pankaj
Ghemawat.
Company Evolution
Grolsch traced its history back to a brewery, in the Dutch town of Groenlo near the German
border3 that was purchased by Willem Neerfeldt in 1615. By the late 1800s, the brewery had come
under the control of Theo J. De Groen. In 1897, he introduced Grolsch’s iconic—and trademarked—
ceramic swingtop bottle, which was advertised as easy to open and allowing storage of beer for later
consumption. Marketing of the Grolsch brand began in 1918. In 1922, this operation merged with a
brewery in nearby Enschede (see Exhibit 3 for a map of the Netherlands), but Grolsch was retained
as the principal brand. By the 1960s, Grolsch had grown from a “regional” brand to become the
country’s second most popular, behind Heineken.
After the death of the head of the De Groen family in 1982, the next generation of family members
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agreed to an initial public offering (IPO) on the Amsterdam Stock Exchange in 1984.4 Subsequently, a
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non-family member was brought in to manage the company for the first time since the De Groens
Due to its stature in the Netherlands, the Dutch government honored the company with the
coveted “Royal” title in 1995, and the company was renamed Royal Grolsch N.V. In 1997, Grolsch
celebrated the 100th anniversary of its swingtop bottle; a company representative said, “After 100
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years, the swingtop is a great differentiator and still makes the Grolsch brand famous today.” In 1998,
the company decided to build a modern brewery which, after disruptions and delays (see below
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Grolsch had been incorporated as a two-tier company under Dutch law and had two major, fully-
owned subsidiaries: Grolsche Bierbrouwerij Nederland, which handled sales and marketing of Grolsch
in the Netherlands and also housed most production, logistics and facilities support except operations
with foreign partners; and, Grolsch International, which was responsible for the worldwide sales and
marketing of Grolsch (and other brands) outside the Netherlands and the UK and Ireland. The UK and
Ireland were handled by a 51:49 sales and marketing joint venture with Coors called Grolsch (UK) Ltd.,
which brewed Grolsch under license locally.
Exhibit 4 summarizes Grolsch’s recent financial and operating history. In 2007, Grolsch’s total
volumes (including beers sold under exclusive distribution rights) increased by 3.1% to 3.3 million
hectolitres (hl),5 with volumes derived specifically from Grolsch brands decreasing by 3.4% to 2.8
million hl. Revenues grew by 4.8% from €317.6m to €332.9m and net profits edged forward from
€19.2m to €20m during the same period.
Prior to the takeover by SABMiller, Grolsch had emphasized growing faster than its key markets
while achieving a return on investment that exceeded its average cost of capital (estimated to be 7.5%
by one investment bank6), steadily increasing earnings and dividends per share, and maintaining a
healthy balance sheet. It paid attention to non-financial stakeholders as well, especially employees
and its local community. Indicators of employee welfare ranged from an average payroll cost of
€60,000 per employee (payroll accounted for 15% of revenues) to the complimentary case of Grolsch
3 Groenlo means Green Forest in Dutch. The town was also known as Grol and Grolle.
4 Dominic Walsh, “Swing was the thing when popped tops reached Top of The Pops,” Times Online, Nov. 20, 2007,
http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article2903549.ece
5 1 hl = 100 litres. An average bottle holds 333 millilitres (0.333 litres). Cases vary from 8 to 12 litres by volume.
6 “Grolsch: How much to pay for U.S. fantasy?” Fortis Investment Bank, Feb. 23, 2007, p. 4.
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Grolsch: Growing Globally PG0-001
beer traditionally delivered every week to employees’ homes. About 850 of the 875 employees were
based in the Netherlands, as were all members of the executive and supervisory committees. The
company had particularly strong ties to the eastern part of the Netherlands, especially Enschede
(population 155,000), home to its headquarters and the new brewery. It did, however, seek managers
and sales people with multiple language skills and international experience and education.
To achieve its objectives, Grolsch had articulated the following vision and mission:
Vision: The brewing industry has failed to keep pace with the changes in consumers’
preferences for drinks. This has created a mainstream category that is under pressure from
other drinks. Grolsch believes in the strength of beer in the drinks market.
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Mission: Grolsch is going to break through the mainstream and restore beer’s premium status.
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In its presentations to investors, Grolsch emphasized that it targeted a premium, differentiated
Products
Exhibit 6 shows the company’s product range, which was organized into two main brand
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families: Grolsch and Amsterdam (the company also distributed small amounts of imported Belgian
beer such as Grimbergen). The Grolsch brand was the centerpiece of the company’s strategy. Its
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flagship product, Grolsch Premium Lager, represented 90% of the company’s domestic volume,
although nine variations were also marketed in the Netherlands. The Grolsch brand was the focus, as
well, of the company’s UK joint venture and the brand accounted for two-thirds of all exports, with
Grolsch Premium Lager being the only product sold in many markets.
Grolsch Premium Lager was classed as a pale lager7 and the company emphasized that its malty,
relatively bitter taste made it distinctively refreshing. Groslch was brewed to one recipe, which was
in strict conformance with German purity laws, and was aged for a minimum of six weeks, compared
to two to four weeks for many of its competitors. One beer enthusiast described the aroma as a
“peppery hop with a spritzy citric edge to it,” and its taste as “an obviously well-attenuated beer
whose balance is toward the dry and bitter [that is] quite refreshing.”8 Beer guru, Michael Jackson
agreed: “it has a fresher, more herbal, hop character than most international lagers, and a cleaner malt
background,” but provocatively asked, “is that enough?” His conclusion? “Not today. The
differences between popular lagers are refinements.”9 Grolsch management strongly disagreed.
In addition to its core Grolsch products, the company devoted considerable attention to
packaging. The green swingtop bottle played a particularly key role in entering foreign markets. As
Tom Wilms, Consumer and Market Insight Manager, put it:
“We use the swingtop as a door opener especially in a market that is very crowded in the
premium segment…Once the volume starts picking up, we introduce the crown cork (i.e.,
7 A lager is a type of beer that is brewed by using a bottom-fermenting yeast in comparison to ales, which are brewed with a
top-fermenting yeast. While the tastes of both lagers and ales vary greatly depending on the ingredients and process, lagers are
generally lighter and crisper whereas ales tend to be darker and stronger. Lagers dominate the overall market for beer.
8 Blog, http://www.epinions.com/content_129738444420. Accessed April 2, 2008.
9 M. Jackson, “Behind the mystery of Grolsch,” originally published in The Observer, July 1, 2001,
http://www.beerhunter.com/documents/19133-001561.html, July 9, 2001. Accessed April 1, 2008.
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regular bottle cap). In nearly all of our key markets, most of the volume is in crown cork
bottles.”
In 2007, a new, standardized green crown cork bottle, with a stylish look, an embossed Grolsch
logo on flattened sides and an accompanying crate, was introduced with much fanfare worldwide,
after a two-year development process. In early 2008, the company was also in the process of
introducing a new green swingtop bottle globally. This marked a particularly significant change in
the Netherlands, where the swingtop bottle had been brown for 111 years. Bottles for the Dutch
market were mostly returnable whereas bottles sold elsewhere were non-returnable. Bottles shipped
out of the country were offered in more varied sizes and had country-specific labels. Aside from
bottles, cans accounted for 30% of total volume and were more standardized, although there were
two different designs (one for the domestic market and another for international markets). Kegs were
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significant as well, particularly at home in the Netherlands.
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Grolsch’s other product range centered on Amsterdam, positioned as a non-premium brand and
sold mostly in tall 500-millilitre cans at supermarkets and smaller independent shops. Amsterdam
beers were available in five varieties and were considered to have a smooth but strong taste: the
strongest, the Maximator, had 11.9% alcohol content by volume (compared to 5% for Grolsch
Premium Lager). Four markets—France, Russia, Australia and Africa—accounted for 95% of
Amsterdam’s volume.
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Despite the company’s clear focus on the premium Grolsch brand, the brand’s total volume had
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actually declined from 3.2 million hl in 2003 to 2.8 million hl in 2007, as exports more or less
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stagnated while the Dutch and UK markets shrank. Total volume (including Amsterdam and other
smaller local brands under license) changed from 3.4 million hl to 3.3 million hl over the same period,
with the growth of the Amsterdam brand making up for some of the decline in the Grolsch brand.
Markets
Although Grolsch dated back to the beginning of the 17th century, it began to look beyond the
Dutch market only in the middle of the 20th century. Exports commenced after World War II and in
1946, amounted to 3,000hl or 10% of total production. (Indonesia, the largest foreign market,
absorbed 1,000hl.) However, exports were curtailed in the 1950s by buoyant domestic demand.
Interest in internationalization revived in the 1970s with domestic stagnation and shrinkage, and the
example of Heineken, Grolsch’s larger Dutch rival, making impressive headway (see Exhibit 7 for
comparative timelines). In the second half of the 1970s, Grolsch set up its own import organizations
in the United States and the United Kingdom. Distribution deals in Canada, Australia and New
Zealand followed in the mid-1980s.
The 1990s saw investments, for the first time, in foreign production, starting in developed
markets. In 1990, Grolsch acquired Wickuler, a regional German brewer, in a move that doubled its
capacity. And in 1992, after having grown Grolsch into the UK’s third largest premium lager brand, it
bought Ruddles, a small UK brewer, as much for its distribution network as for its ale brands. But
both moves were quickly unwound. It sold Wickuler in 1994 to one of Germany’s largest brewers,
Brau and Brunnen, and signed an agreement to distribute Grolsch in Germany with the latter. That
same year, it formed a joint venture partnership with Bass, under which the latter took over
production and distribution for the UK. Ruddles was divested in 1997.
The opening up of Eastern Europe in particular prompted a shift in focus in the second half of the
1990s, towards emerging markets: Grolsch invested in Poland and Russia and set up representative
offices in Brazil and China. In Poland, Grolsch acquired an indirect stake in a brewery in 1995 but
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Grolsch: Growing Globally PG0-001
sold it in 1998 because of poor profitability and an inability to build up its stake to a majority level.
One Grolsch executive added, “The Polish brand Zywiec was bought by Heineken and there was no
need for two Dutch players in the Polish market.” A distribution agreement with the purchaser was
later annulled. In Russia, Grolsch paid in 10% of the capital for a small new brewery in 1999, but sold
its stake to the majority owners in 2000. They, in turn, sold it to Turkish brewer Efes in 2004, whom
Grolsch still licensed to brew and distribute the Amsterdam brand in Russia.
The Asian financial crisis, had significant ripple effects in Eastern Europe, including a massive
devaluation of the ruble in Russia, and pushed Grolsch back to focusing on developed markets. It
entered France in 1999 by setting up its own distributorship—the only country with such an
arrangement—which focused on selling the Amsterdam brand. Grolsch stepped up efforts on the
Iberian Peninsula with an investment in Portuguese distributor Cereuro and a distribution agreement
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with Spain’s La Cruz del Campo. The Cereuro investment was halved in 200510 and in Spain,
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Heineken bought out La Cruz del Campo.
Key Markets
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According to Grolsch, Western Europe accounted for 88% of its revenues and 94% of its
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contribution margins, i.e., Western European markets’ average contribution margin was twice as high
as others’ (23% vs. 11%).11 If fixed production costs (13% of revenues) were allocated in proportion to
revenues, Western Europe accounted for 103% of operating profit (EBIT). But in order to build
international volume, beer exports from the Netherlands were actually transferred to Grolsch
International at variable production cost.
Grolsch’s home market of the Netherlands accounted for close to one-half its total volume, an
estimated 65% of revenues, and a much greater share of EBIT. That said, market shrinkage and
discounting had put Dutch brewers under significant long-term profit pressure. Grolsch, with 13% of
volume, was part of a second tier of competitors that included Bavaria (17%) and Interbrew (14%),
behind market leader Heineken (46%), which controlled the country’s two largest brands, Heineken
and Amstel. Grolsch was the third largest brand, and was particularly strong in the eastern
Netherlands.
Grolsch’s second largest market was the United Kingdom, where it owned 51% of Grolsch (UK)
Ltd., a joint venture that brewed Grolsch under license, in partnership with MolsonCoors (which
came in after Bass was taken over and broken up). The UK accounted for 25% of Grolsch’s total
volume and 1.5% of the UK market. Grolsch was ranked fifth in the premium lager market behind the
top three brands: Stella Artois, Kronenbourg and Budweiser.12 In 2007, Grolsch’s 51% stake in it
generated about 12% of its operating profit, down from 18% the previous year because of market
shrinkage and supermarket pricing pressures.
10 “Portugal Sumolis Boosts Stake in Cereuro to 90.05 Pct,” Portuguese News Digest, April 15, 2005.
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Grolsch’s third largest market was the United States, to which—like virtually all other markets—it
exported beer from the Netherlands. Analysts estimated that Grolsch’s US volume had stagnated at
about 140,000hl—4% of the company’s total and 0.5% of US import volume (overall, imported beer
represented close to 15% of total US consumption). Grolsch was ranked 11th in the imported premium
beer market (the top three brands were Corona, Heineken and Beck’s).13 An agreement in 2006 with
market leader Anheuser-Busch to distribute Grolsch in the US had been hailed as key to become a top
10 imported brand by quadrupling volume. But the acquisition by SABMiller, which owned
Anheuser-Busch’s biggest US competitor, Miller, ended that arrangement.
France was Grolsch’s fourth-largest market with volumes estimated to be around 100,000hl,
almost all of which was made up by the Amsterdam brand. The Amsterdam brand was ranked
second in strong beers behind Bavaria.14 Canada was the next in line (and the fourth-largest for the
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Grolsch brand), with volumes estimated to be about one-half those in the US. Grolsch had given its
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Canadian distributor, Sleeman, a license to brew Grolsch Premium Lager nationally. Grolsch was
Over time, Grolsch had developed a MABA (Market Attractiveness, Business Assessment)
framework to assess international opportunities. The Market Attractiveness (“MA”) analysis
included: total volume and volume growth in hectolitres of the international premium lager segment;
the price premium between the international premium lager segment and the top volume lager
brands; and, the geographic and cultural distance between the market and Grolsch’s home base in the
Netherlands.
The distance measure had four components: differences in languages; non-membership vs.
membership of the European Union (of which the Netherlands was a founding member); the landed
cost of transport; and differences in GDP per capita. The Business Assessment (“BA”) involved the
total volume and volume growth of Grolsch premium lager, variable commercial contribution
(contribution margin minus the direct expenses associated with serving a market), and Grolsch’s
share of the premium lager segment. Exhibit 8 provides more detail.
Each year, the company worked through these calculations to assign aggregate scores to each
market being considered. Markets with high scores were classified as “key,” those with somewhat
lower scores as “seeding,” and those with low scores as “trading.” Exhibit 9 shows the output of the
2006 MABA analysis. A Grolsch executive commented that: “The MABA is a tool that informs us in
our decisions. At the end of the day, the senior management decides on whether a market is key,
seeding or trading each year during the annual strategic planning sessions.” Key/seeding markets
were served by one of two main groups within the sales organization, Brand Builders, and trading
markets by the other, Direct Export. The Grolsch policy for trading markets was to generate profits
each year. The profitability was measured by ensuring that exports to trading markets covered at
13 Ibidem.
14 Ibidem.
15 Ibidem.
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Grolsch: Growing Globally PG0-001
least variable costs and the direct expenses associated with management such as transportation, sales
people, marketing and customer service.
Operations
Grolsch followed German purity laws and emphasized the finest natural ingredients, the absence
of additives such as stabilizers, the combination of two types of hops—an innovation dating back to
the 1600s that was celebrated in the company’s logo—and a long maturation process. Some attention
to procurement scale had recently been overlaid on the traditional emphasis on high-quality
ingredients: in 2002, Grolsch formed a purchasing alliance with German brewer, Warsteiner.16 And
internal training programs reinforced the legacy of craft-like, high quality brewing by emphasizing
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the theme of “Craftsmanship is Mastery.”
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In 1998, Grolsch began to plan for a large new brewery to consolidate its two relatively old
facilities: the Groenlo brewery, which produced for export, and the Enschede brewery, which
produced for the Dutch market. The two towns waited anxiously as Grolsch chose between them and
finally opted for a location outside Enschede. During the planning phase, an explosion destroyed
parts of the old Enschede brewery, forcing a major scramble to keep operations going. In 2001, after
delays, Grolsch received governmental approval to build. When the new brewery opened in April
2004, it had cost €277m,17 and had a capacity of 3.2 million hl that could be increased to as much as 6
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million hl. (In the short run, expansion to 3.7 million hl was planned at an additional cost of €10m).
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Grolsch estimated that it would save €1m in operating costs annually by optimizing production, but
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no significant headcount reductions were anticipated. Pride in the new brewery - described as the
most modern in the world - focused on its state-of-the-art, environmentally friendly technology.
Grolsch’s new brewery was located on a major highway and was about 200 kilometers from the
main Dutch shipping port, Rotterdam. Beer was transported by truck to markets within the European
Union, at costs estimated to range from about €1.47 per hectolitre to Germany to €6.68 per hectolitre
to Spain.18 Transportation to all other markets was by ship, in 20-foot, 40-foot or 45-foot19 containers
at costs estimated to be €10-15 per hectolitre (see Exhibit 10 for more detailed estimates).
Marketing
Grolsch’s other marketing policies, pricing, promotion and placement were meant to reinforce its
positioning as a premium product.
Pricing
Grolsch was priced similarly to Heineken and was considered a standard lager brand within the
Netherlands. Overseas, Grolsch positioned the brand at premium prices. In three of its six largest
non-domestic markets—the US, Canada and Australia—Grolsch was priced at a discount to other
16 “Grolsch, Warsteiner boost alliance with Italy deal,” Reuters News, Jan. 28, 2003.
19 20-foot containers were a shipping standard and were 8 feet high x 8.5 feet wide and 20 feet long. 40-and 45-foot containers
had the same height and width as 20-foot containers with the only difference being length.
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leading European imports. Thus, in the US, the average off-premise20 retail price of Grolsch Premium
Lager was about $3.18 (€2.53) per litre in 2006, compared to Heineken at $3.48 (€2.77) and Budweiser
at $2.13 (€1.70). And prices in Canada approached standard rather than premium levels, with C$4.50
(€3.16) for Grolsch vs. C$6.24 (€4.38) for Heineken and C$4.44 (€3.11) for Budweiser. In the UK
pricing was comparable to the leading premium lagers: Grolsch averaged £1.90 (€2.79) per litre
versus £1.93 (€2.84) for Stella Artois, £2.11 (€3.10) for Budweiser and less than £1.50 (€2.20) for
standard lagers. In France and Russia—the markets where the Amsterdam brand was the key driver
of volume gains—Grolsch Premium Lager was priced substantially higher than other premium
lagers.
Promotion
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Like most brewers, Grolsch undertook a wide array of promotional activities. For example, the
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launch of the new green bottle in 2007 was supported by advertising in print media, the Internet (to
of on-premise locations through its relationship with MolsonCoors (the country’s second-largest brewer
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and the owner of the largest brand, Carling), advertising reinforced the “Green Light District”
campaign in which customers were served Grolsch beer in locations saturated with Grolsch imagery.
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UK TV advertising also played up Grolsch’s Dutch origins, often by poking fun at them, e.g., with a
Dutch spokesperson speaking English with an exaggerated Dutch accent.
Dutch roots were also accentuated in TV advertising in other markets since Grolsch believed that its
main locational advantage was the image of beer from Northern Europe and, especially, the Netherlands,
which became a major exporter (to England) back in the 14th century and now exported more of its
production—about 50%—than any other major producer. This country-of-origin advantage had been
validated by Heineken, which imported its beer into the United States instead of producing it locally and,
as the second largest import, behind Corona, sold more than 5 million hl of it there a year, at the highest
prices in the market. But Dutch origins had to be pitched differently in countries less familiar with the
Dutch: as one executive put it, “Few people in the US have specific knowledge about the Netherlands.” In
addition, while UK and US advertising ostensibly shared the English language, the content of the ads had
to be varied greatly to reflect other large cultural differences between the two markets (see Exhibit 11). In
the US, the allure of the Grolsch swingtop bottle featured prominently in a new commercial, “Got that
Swing” aired during the professional (US) football playoffs and throughout the year in New York’s Times
Square. This differed markedly from Grolsch’s edgier UK commercials. The broader approach, in both the
US and Canada, was to use targeted advertising and promotional campaigns to reach trendsetters in select
regions of the country. Promotional efforts in other, smaller markets, were much more modest.
Placement/Distribution
Grolsch emphasized that it selected the best route to the consumer by market, in cooperation with
importers, distributors, brewers and retailers. Placement or distribution arrangements in the Netherlands
had had the most time to mature. In off-premise channels, Grolsch resisted aggressive price promotions
(by supermarkets, particularly) and emphasized its premium products, packaging and ancillaries such as
20 Off-premise was also called off-trade and referred to supermarkets, specialty stores and other shops. On-premise (or on-
trade) signified restaurants, bars, hotels and catering.
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Grolsch: Growing Globally PG0-001
the PerfectDraft®21 dispenser system.22 Grolsch relied on on-premise channels more than its rivals and
owned six beverage wholesalers that handled half its sales, guaranteed financing of premises and
equipment by bar-owners and owned properties operated as bars and restaurants.23
Distribution in the United Kingdom had also been in place for some time—since 1994, despite the
change in the joint venture partner from Bass to MolsonCoors (Grolsch was MolsonCoors’s second largest
lager brand in the UK after Carling). But elsewhere, there had been more turnover. In the US, Canada,
Australia and New Zealand, Grolsch was on its third or fourth set of distributorships since the mid-1990s
(see Exhibit 12 for details). Except for France, where Grolsch owned its own local distribution and Russia,
where Efes was licensed to brew Amsterdam beer, most other countries had seen similar changes.
Industry Dynamics
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In 2005, global beer volumes were 1.5 billion hl (155.2 billion litres) and total retail value—
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including, in many countries, a very sizeable tax component—amounted to €354 billion.24 Globally,
volumes had grown at 2.7% per year while global value had increased by 4.7% per year between 2000
and 2005.25 Beer markets in developed regions such as North America, Western Europe and Japan
had recently been flat or had suffered slight decreases in volume between 2000 and 2005. Global
volume growth was driven by developing regions such as Eastern Europe and Asia Pacific, in both of
which volume had grown by more than 5% per year. Exhibit 13 shows information on past and
projected volumes in the 20 largest country markets. Overall, lagers accounted for nearly 95% of
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market volume and 90% of value, and ales, stouts and no/low-alcohol beer for the remainder.
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Partly because of the low price-elasticity of demand for beer (estimated at -0.3 for the Netherlands,
for instance), brewers responded to volume pressures by trying to build up the premium part of their
portfolios, often by launching premium line extensions to recognized brands.26 Worldwide, premium
lager represented 16% of volume and 28% of lager value in 2005, up from 15% and 23% respectively
in 2000. Standard lagers accounted for 53% of volume and 58% of value—both figures down a few
percentage points from 2000—and economy lagers for the rest. Exhibit 14 tracks the premium lager
segment by region over time.
21 The PerfectDraft® system was an appliance developed by Philips and was an appliance designed to replicate draft beer
served at bars and restaurants. Several major beer brands marketed 6-litre kegs suitable for the appliance.
22 Grolsch Annual Report 2006, Dec. 31, 2006, p. 12.
23 Ibidem.
25 Ibidem.
26 “The World Market for Alcoholic Drinks,” Euromonitor International, Dec. 2006, p. 12.
9
PG0-001 Grolsch: Growing Globally
Nevertheless, in markets such as the US (by far the world’s largest importer), nearly all successful
foreign brands were shipped from the brewery of origin because of the perceived importance that US
consumers placed on “getting a real import.” Some of the successes had been truly spectacular, as in
Corona’s ascent, past Heineken, to the ranks of the largest import and the second largest premium
brand in the US market. But brand shares were generally stable in most developed markets,
especially in Europe, in spite of significant advertising competition that swallowed up 4 to 8% of
revenues for most major brewers. And at a global level, the combined market share of the top ten
brands stood at 18% in 2005, versus 19% in 1995.29 Most of the top ten brands generated the majority
of their volume from a single market such as Budweiser and Miller from the US (although SABMiller
did brew Miller outside the US as well) or Skol from Brazil. Some brands, however, did have a large
and broad presence outside their home markets (see Exhibit 1).
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Where concentration had taken place was at the company level. Because of acquisitions and, to a
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lesser extent, joint ventures and organic growth, the five largest brewers had come to account for 38%
• InBev resulted from an €8 billion merger between Belgium’s Interbrew and Brazil’s AmBev
in 2004, and had a broad presence, with particular strengths in Europe and Latin America
and significant weakness only in North America.31
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SABMiller had been formed when SAB (South African Breweries) acquired Miller from Phillip
Morris in 2002 for €6 billion. It was strong in Africa and Eastern Europe; because of Miller, the
Order reference F351024
share of its sales accounted for by North America was even larger, but the share of profits much
smaller (see Appendix A for additional information).
• Anheuser-Busch’s footprint was the mirror image of InBev’s: very focused on North America
(in addition to its leadership in the US, it owned 50% of Mexico’s Modelo, the producer of
Corona).
• Heineken, despite its reputation as the global brand, derived nearly 70% of its revenue from
Western and Eastern Europe. This figure would increase as it absorbed the market-leading
UK operations of Scottish and Newcastle (S&N, previously the thirteenth largest brewer by
volume), which it, along with Carlsberg, had taken over and broken up in the first half of
2008.
• Carlsberg was much smaller and even more dependent on Europe, especially Western
Europe, but would end up with a more balanced European presence after absorbing S&N’s
half of their erstwhile Eastern European joint venture, Baltic Beverages Holding.
Rumors of additional deals were rife in the brewing industry. The one most talked about in early
2008 was a possible merger between In-Bev and Anheuser-Busch. The two had already moved to take
advantage of their complementary geographic positions by announcing that Anheuser Busch would
import InBev’s leading brands—Stella Artois, Beck’s, Bass Ale—to the US (casting a pall over
Grolsch’s tie-up with Anheuser-Busch for the same purpose). Some analysts were predicting that the
29 Internal Grolsch Company Presentation, “Consolidation in the Global Beer Industry,” Management Team Meeting, Feb. 26,
2007, slide 18.
30 SABMiller Annual Report 2007, Online Edition, http://www.annual2007.sabmiller.com/2_gfootprint/gbeermarket.html.
Accessed Aug. 23, 2007; and, The Brewing Industry, PaineWebber Analyst Report, Feb. 25, 1998, pp. 31-32.
31 Gilles Castonguay and Nicholas Winning, “Interbrew buy of AmBev wins shareholder approval,” Reuters News, Aug. 27,
2004.
10
Grolsch: Growing Globally PG0-001
probability of a merger was high due to “growth in emerging economies, cost savings and
complementary geographies.”32
Despite feverish consolidation activity, evidence on its profitability was mixed. An academic
study of short-run stock market reactions to the announcement of 21 major mergers and acquisitions
in brewing between 2000 and 2005 found that 11 elicited negative reactions.33 It also concluded that
cumulated reactions of this sort were negative across transactions by Interbrew and Heineken, and
positive for SABMiller. But SABMiller’s positive record was due to just one deal: the purchase of
Bavaria, the market leader in Colombia, for much less than expected. And the stock market’s negative
reaction to the Interbrew-AmBev mega-merger, for example, seemed not to anticipate the efficiency
increases that the new management team from AmBev subsequently squeezed out of the old
Interbrew operations.
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Looking at the positions that resulted from such moves suggested some additional conclusions.
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According to the same academic study, the relationship between the geographic spread of 48 large
listed brewers and measures of their accounting profitability was negative and statistically
significant, and there was no simple relationship between overall company size and profitability.34
Instead, the brewers who earned the highest margins per hl seemed to combine high levels of
revenue per hl with strong scale within key national markets (see Exhibit 17). There was also evidence
of a strong correlation between market concentration and profitability at the national level (see
Exhibit 18).35
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Outside of the major brewers, there were thousands upon thousands of commercial breweries
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worldwide. Smaller brewers typically competed on the strength of their local reputation, history and
advertising voice. But even some of the smaller operations were, often with the help of major brewers
as well as resources generated by strong domestic positions, beginning to globalize. For example,
Baltic Beverages Holdings, the object of the tussle between S&N and Carlsberg, had begun an
aggressive pan-European export and distribution drive with its Russian Baltika brand. As Baltika’s
president put it: “The international interest in Russia and Russian business is great, and in my
opinion it would only be natural for foreigners interested in Russia to try some Russian beer. And
once they’ve tried it, the product's quality will eventually win out—just as was the case with Corona
beer, which was originally a Mexican brand.”36
32 Jonathan Ratner, “Brewers to merge, analyst says,” Financial Post, National Post, July 24, 2007, p. FP6.
33 Oliver Johannes Ebneth, “Internationalisierung Und Unternehmenserfolg Börsennotierter Braukonzerne,” Göttingen, May
2006, p. 141.
34 Ibidem.
35 Ibidem, p. 42.
36 Galina Stolyarova, “New Ambitions for Russian Beer,” Business Week, July 3, 2007,
http://www.businessweek.com/globalbiz/content/jul2007/gb2007073_616975.htm?chan=search. Accessed Aug. 23, 2007.
11
PG0-001 Grolsch: Growing Globally
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9 Miller Lite SABMiller 21.2 9 Brahma InBev 6.6
10 Super Dry Asahi 17.5 10 Tuborg Carlsberg 4.9
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11 Tsingtao Tsingtao 15.6 11 Beck's InBev 3.6
12
Grolsch: Growing Globally PG0-001
4.50
Grolsch
4.00
3.50 Heineken
Quality Rating (1-5)
3.00
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2.50
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2.00
1.50
1.00
0.50
Educational material supplied by The Case Centre
-
Copyright encoded A76HM-JUJ9K-PJMN9I
Explanation: This chart places leading beer brands (based on non-domestic volume) by volume in millions of hl
(shown on the x-axis) and quality rating (shown on the y-axis). Average quality ratings are subjective in nature
and were gathered by users of the website (rateitall.com) rating the taste of each beer. The scale was: Terrible (1),
Bad (2), Ok (3), Good (4), and Great (5).
Source: Compiled by case writers based on volume information presented in Exhibit 1 and quality rating averages by
searching on rateitall.com. Accessed May 28, 2008.
13
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Copyright encoded A76HM-JUJ9K-PJMN9I
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14
0
0
PG0-001
Exhibit 3
25
Sea
25
North
Terneuzen
Europoort
The Hague
50 km
IJmuiden
Den
Haarlem
50 mi
Dordrecht
BELGIUM
Helder
Tilburg
Rotterdam
Maastricht
Map of the Netherlands
Utrecht
Nijmegen
AMSTERDAM
Eindhoven
Leeuwarden
Amhem
Zwolle
Delfzijl
Assen
GERMANY
Groningen
Enschede
Grolsch: Growing Globally
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Grolsch: Growing Globally PG0-001
Purchased for use on the Postgraduate Diploma in Strategy & Innovation, at Warwick Business School.
Financials fixed assets (FFA) 27.1 50.9 54.3 41.8 46.7 46.5 40.8 45.8
Inventories 13.8 15.1 16.2 14.6 17.7 16.7 16.5 19.8
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Receivables 48.1 36.7 41.6 39.5 46.5 56.9 57.1 80.6
Share price - year end closing 23.80 22.01 20.66 22.56 23.15 21.85 31.40 47.88
Share price - high 25.20 24.20 24.30 23.48 25.00 26.10 33.59 48.00
Share price - low 18.20 15.50 19.49 16.85 20.90 21.28 21.15 24.20
Order reference F351024
Weighted average number of ordinary shares** 16,921,507 16,921,507 16,921,507 16,921,507 16,921,507 16,921,507 16,921,507 16,921,507
Other Data
Number of Employees 862 902 882 873 895 880 868 875
Note: In 2006, a plus dividend of 0.33 was paid on top of the basic dividend of 0.67. In 2007, no dividend was paid due to the
sale of the company.
**The number of shares entitled to dividends at year end were 16,921,507 shares for the entire period (these refer to the number
of shares held by third parties).
Source: Grolsch Analyst Report, Fortis, February 23, 2007, p. 9 with additions by case writer based on Grolsch Annual Report
2007, pp. 35-37. Volumes (2000-2003) taken from Annual Report 2003, p. 5 and volumes (2004-2007) taken from
Annual Report 2007, p. 7.
15
PG0-001 Grolsch: Growing Globally
Adapted focus
and growth target
Adapted
core markets
vision/mission
Expansive on-trade
policy
Adapted market
Adapted market position
Investments:Increases in
Marketing budgets, costs of
Development and investment Adapted brand strategy
in core market - Advertising campaign
Top-line:
Focus on growth
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Adapted organizational in full-grown beer Adapted product
structure: Business teams, markets Proposition
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innovation department, R&D -New design
Bottom-line:
Adapted production Focus on cost Enhancing the efficiency
and internal logistics: structure and of the new facilities: Efficiency in
Flexible labor efficiency brewing process and efficiency
in filling lines
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16
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
Order reference F351024
Source:
Exhibit 6
Swingtop Bottle
Ale
Grolsch: Growing Globally
Amber
Company Documents.
New Bottle
Range of Grolsch Products
Weizen
Premium
Cans
Other Products
Blonde
Premium
Grolsch Premium Lager
Amsterdam Range
17
PG0-001
Purchased for use on the Postgraduate Diploma in Strategy & Innovation, at Warwick Business School.
Taught by John Colley & Chengwei Liu, from 4-Apr-2019 to 4-Oct-2019. Order ref F351024.
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Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
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PG0-001 -18-
1976-Grolsch
Mid-1990s:
1946-Grolsch begins importers set up
1897-The Swingtop Push into Eastern
exporting to Egypt, in the US.
is introduced Europe & Latin America
Curaçao, Surinam, 1977-Importers
2007-SABMiller
Gold Coast, India, set up in the UK Early 1990s
1615 Acquisition of
1876-Builds Sri Lanka, China, Acquisitions 2004-New Grolsch
Willem Neerfeldt 1922-Two breweries
a new brewery 1895-The De Groen Malta and Indonesia in Germany Factory
Starts brewing merge
family takes over & UK
In Grolle
GROLSCH
Early 1980s-
1592-The first 1864-Gerard 1889-Heineken 1914-
Consistent 2000s-Buys
incamation of the Heineken buys the presented at Reach 1927-First 1935-Acquires 1954-New green 1970s-
colour is used. breweries in Latin America,
Haystack in Amsterdam Haystack brewery World Fair in Paris volumes of International breweries in label and logo Buys
Amstel Light Russia, Egypt & Lebanon,
is established 300,000hl acquisition in Egypt, Dutch East with the “smiling breweries
introduced to 2004-JV with Asia Pacific
Belgium Indies & Belgian e’s” in Europe,
US Breweries for China
HEINEKEN
Congo Opens new
1917-First
1939-Heineken 1948-Freddy brewery in
exports to Early 1990s-
goes public Heineken returns
Holland Push into
the US from 2 years 1968-Heineken
1932-Establishes Eastern
in the US as a merges with Amstel:
Malayan Breweries Europe.
manager at the 50% of the Dutch
with other investors: Mid 1990s:
company market and 70%
1933-Re-enters the Buys European
of exports
US after prohibition brands
Source: By case writer based on images and data from Grolsch and Heineken’s websites
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Grolsch: Growing Globally PG0-001
Purchased for use on the Postgraduate Diploma in Strategy & Innovation, at Warwick Business School.
Rated 1 to 5 RANGE: RANGE: RANGE: See the four distance
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Usage permitted only within these parameters otherwise contact info@thecasecentre.org
from 0 hl 0 hl 0% specific measures
to over 10 million hl over 1,000 hl over 40% below
DISTANCE
Copyright encoded A76HM-JUJ9K-PJMN9I
Note: Each measure is rated from 1 to 5. The ranges are shown under each heading.
Source: Drawn by case writer. Based on company documents.
19
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20
Market Attractiveness
Source:
PG0-001
UK
USA
Exhibit 9
Russia
Poland
France
Canada
Sweden
Australia
Medium
High
Low
New Zealand
Canada
Company Documents.
Key
Key
Key
Key
Key
Key
2000
Strong
Australia
Trading
Seeding
Seeding
MABA Input and Scores
UK
Russia
Key
Key
Key
Key
Key
Key
2006
Trading
Seeding
Seeding
New Zealand
Sweden
Average
USA
Spain
MABA Graph 2006
Business Assessment
France
Poland
Weak
China
Grolsch: Growing Globally
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Grolsch: Growing Globally PG0-001
18.00
16.52
16.00
14.00 13.39
12.06
12.00
10.54
10.00
8.43
Purchased for use on the Postgraduate Diploma in Strategy & Innovation, at Warwick Business School.
8.00 6.68
6.10 5.93
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5.47
L
d
lia
y
en
m
ia
da
na
nd
n
,N
an
an
c
ai
S
iu
U
ra
an
ed
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us
U
al
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Fr
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Sw
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Au
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G
Educational material supplied by The Case Centre
ew
te
ot
Copyright encoded A76HM-JUJ9K-PJMN9I
R
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Value US UK Rhetoric US UK
Individualism 70.8 15.8 Direct Speech 91.7 2.6
Modernity 45.8 0.0 Emotional/Sexual Appeal 78.9 8.1
Achievement 70.8 10.5 Humorous Appeal 21.1 91.9
Tradition 4.2 44.7 Special Occasion? 85.7 16.2
Eccentricity 4.2 81.6 (24 TV ads) (38 TV ads)
Source: Zahna Caillat and Barbara Mueller, "The Influence of Culture on American and British Advertising: An Exploratory
Comparison of Beer Advertising," Journal of Advertising Research, Vol. 36, 1996.
21
PG0-001 Grolsch: Growing Globally
United States 1976-1995 Imported under its own company, Grolsch Importers Inc. in Atlanta, Georgia
1996-2001 Sales, distribution and marketing by Canada's Seagram Company
2001-2006 Sales, distribution and marketing by United States Beverage (USB)
2006-present Sales, distribution and marketing by Anheuser-Busch
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Canada 1984-1997 Distribution by Cordevin (later named Rymax)
1997-2002 Distribution by Rollick Beverage Company
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2002-present License to brew, distribution and marketing by Sleeman
Germany 1991 Purchase of two regional breweries under a single structure (Rheinisch-Bergische
Brauerei)
1994 Sale of one of the breweries (Wickueler) to Brau and Brunnen
1994-present Distribution by Brau and Brunnen
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Poland 1995 Acquisition of indirect stake in Elbrewery (EB) and Hevelius Brewery
1996 Purchase of 25% of Australian equity firm Brewpole (which owned 51% of EB and
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Hevelius Brewery. The other 49% was owned by the Polish government)
1998 Sale of its 25% stake of Brewpole
1998-2003 Distribution by Brewpole
2003-present Distribution by Carey Agri
Russia 1999 Investment of €115,000 in the building of a new brewery in Ufa, Bashkortostan
2000 Sale of stake in the brewery
2006-present Alliance with Efes to brew and distribute the Amsterdam brand
France 1999-present Distribution under its own company, Bières d'Europe with a focus on the Amsterdam
brand
22
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PG0-001 -23-
000s hectolitres 2000 2001 2002 2003 2004 2005 2006F 2008F 2011F
CHINA 223,116 227,145 241,420 255,626 286,348 309,255 330,039 368,326 426,382
USA 235,047 236,654 239,676 237,484 234,969 232,582 230,721 225,901 220,522
GERMANY 103,309 101,042 100,564 97,183 95,639 94,994 94,200 93,094 91,232
BRAZIL 81,836 83,880 84,850 82,876 85,494 90,623 94,248 100,474 108,724
RUSSIA 55,174 62,987 70,713 76,252 84,790 90,225 95,650 105,257 115,908
JAPAN 71,764 71,547 69,780 65,817 66,344 63,708 63,106 60,562 56,063
UK 58,550 58,250 58,750 59,120 58,999 57,674 58,060 57,505 56,500
MEXICO 50,297 50,939 51,183 53,311 54,684 57,133 59,373 63,540 68,626
SPAIN 29,153 31,083 30,870 33,450 34,621 35,590 36,480 38,065 40,792
POLAND 25,072 25,204 27,121 28,318 28,865 30,363 31,650 33,800 36,000
SOUTH AFRICA 23,481 23,015 23,349 24,050 24,940 25,600 26,638 28,000 30,500
VENEZUELA 18,100 19,910 17,550 15,334 21,234 22,565 23,852 25,748 28,575
CANADA 20,709 21,213 21,335 21,491 22,094 22,178 22,535 23,020 23,739
UKRAINE 10,392 12,247 14,043 15,701 17,490 21,503 24,133 27,888 32,591
FRANCE 21,467 20,807 20,629 21,168 20,224 20,354 20,252 20,009 19,711
THAILAND 10,664 11,720 12,682 15,788 16,191 17,290 18,417 20,950 24,675
ITALY 16,258 16,672 16,330 17,440 17,194 17,262 17,318 17,492 17,755
COLOMBIA 15,498 14,288 15,313 15,217 15,553 17,006 17,762 19,569 21,352
AUSTRALIA 17,400 17,300 17,150 17,000 16,900 16,850 16,800 16,550 16,250
SOUTH KOREA 16,499 17,787 18,274 17,722 17,629 16,663 16,533 16,483 16,475
TOTAL TOP 20 1,103,786 1,123,689 1,151,581 1,170,347 1,220,203 1,259,418 1,297,767 1,362,233 1,452,373
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PG0-001 Grolsch: Growing Globally
Exhibit 13 (continued)
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Others 25,736 24,899 TOTAL 77 74
TOTAL 298,880 294,214
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EAST EUROPE (Top 5) EAST EUROPE (Top 5)
RUSSIA 55,174 90,225 CZECH REPUBLIC 161 159
POLAND 25,072 30,363 ESTONIA 63 93
UKRAINE 10,392 21,503 LITHUANIA 63 91
CZECH REPUBLIC 16,517 16,205 SLOVENIA 88 82
ROMANIA 11,470 14,575 CROATIA 86 81
Others 42,338 45,746 TOTAL 40 55
TOTAL 160,963 218,617
CENTRAL & SOUTH AMERICA (Top 5) CENTRAL & SOUTH AMERICA (Top 5)
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AUSTRALASIA AUSTRALASIA
AUSTRALIA 17,400 16,850 AUSTRALIA 91 83
NEW ZEALAND 3,056 3,159 NEW ZEALAND 80 78
TOTAL 20,456 20,009 TOTAL 89 82
24
Grolsch: Growing Globally PG0-001
Purchased for use on the Postgraduate Diploma in Strategy & Innovation, at Warwick Business School.
- Premium Lager 15.2 15.4 15.8 16.2 16.4 16.4
- Standard Lager 56.7 55.5 54.0 53.0 52.5 52.0
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- Economy Lager 28.1 29.1 30.2 30.8 31.1 31.6
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: The World Market for Alcoholic Drinks, Euromonitor International, Dec. 2006, pp. 68-69.
25
PG0-001 Grolsch: Growing Globally
SALES OF LAGER BY IMPORT VS DOMESTIC SPLIT BY REGION VOLUMES (in billion litres)
Purchased for use on the Postgraduate Diploma in Strategy & Innovation, at Warwick Business School.
Imported 0.1 0.1 0.1 0.1 0.2 0.2
Domestic 20.9 21.4 21.4 21.3 22.5 23.8
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Asia Pacific 34.8 36.9 38.8 40.7 42.9 44.8
Imported 0.4 0.4 0.5 0.5 0.6 0.6
Domestic 34.4 36.5 38.3 40.1 42.3 44.2
Africa and Middle East 11.9 11.3 11.3 14.5 16.7 17.5
Imported 1.1 1.3 1.4 1.7 1.9 2.1
Domestic 10.8 10 9.9 12.8 14.7 15.4
Note: Totals were calculated by case writer and may not exactly tie to other figures mentioned in the report due to rounding.
Source: The World Market for Alcoholic Drinks, Euromonitor International, Dec. 2006, pp. 76-77
26
Grolsch: Growing Globally PG0-001
Total Volume (hl million) - 2007 271.0 216.0 189.6 119.8 115.2 51.6 49.3
5-Year Volume Growth 20.2% 13.3% 3.0% 7.1% 7.2% 4.2% 5.1%
Revenues 2007 (Euro million) 14,430 13,608 12,194 12,564 6,007 4,879 4,524
Revenues/hl in Euros 53.25 63.00 64.30 104.87 52.14 94.64 91.68
5-Year Revenue Growth 15.6% 17.9% 3.4% 6.3% 5.3% 9.0% 9.1%
EBITDA 2007 (Euro million) 5,324 2,946 3,647 2,292 1,092 1,564 721
EBITDA/hl in Euros 19.65 13.64 19.23 19.13 9.48 30.35 14.62
5-Year EBITDA Growth 28.9% 22.1% 11.2% 4.2% 7.4% 9.8% 12.6%
Purchased for use on the Postgraduate Diploma in Strategy & Innovation, at Warwick Business School.
Geographic Distribution of Volume Sales (2006), in percentages
Central & South America 42.0 21.8 0.9 2.4 0.1 68.9 2.2
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North America 4.5 29.4 82.6 7.4 0.3 28.0 73.8
Major Brands Skol (15%), MillerLight BudLight Heineken Carlsberg only Corona Extra Coors Light
(Percentage in parentheses refers to Brahma (15%), Carling (33%), (11%), Amstel (excluding (60%), Modelo (49%), Carling
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how much the brand makes up of the Chopp (10%), Black Label Budweiser (4%), Star BBH): Especial (20%),
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company's overall volume) Antarctica (8%), Castle (27%), Harbin (2%), Carlsberg (14%), Victoria Keystone Light
Pilsen (6%), (5%), Miller (9%), Natural Cruzcampo (25%), Tuborg (7%), Pacifico (8%), Coors
Stella Artois Genuine Draft (7%), Busch (3%), Others (15%), Super (6%), Others (3%), Others
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(4%), Quilmes (4%), Others Light (5%), (80%) Bock (6%), (13%) (20%)
Cristal (3%), (68%) Others (19%) Holsten (6%),
Others - over Others (46%)
200 brands
(62%).
All exchange rates were assumed as the 365-day interbank average from Oanda.com
Where EBITDA was not reported in annual reports, depreciation and amoritzation was added back to EBIT/Operating profit.
*SABMiller's fiscal year end is in March 31.
**Carlsberg includes Baltic Beverage Holding (BBH), which was a 50-50 joint venture with Scottish & Newcastle throughout the
period.
Source: Compiled by case writer with information from Canadean and company annual reports.
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PG0-001 Grolsch: Growing Globally
50,00
43,40
45,00 Strong scale combined
40,00 37,30 with extreme rev/hl
35,60 Benefiting from scale or
35,00 high rev/hl
30,00 Lack of scale, low
25,30 25,20 rev/hl or both
23,70
25,00 21,50
20,00 17,90 17,50 17,00
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15,70 15,30
12,90 12,80 12,50
15,00 12,10 11,50
9,60 8,20
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10,00 7,20
AmBev
SABMiller
CCU
S&N
Kirin
Anheuser Busch
Femsa
Foster's
Efes
Asahi
San Miguel
Modelo
Bavaria
Carlsberg
InBev
Diageo
Heineken
MolsonCoors
Tsingtao
Sapporo
Lion Nathan
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28
Grolsch: Growing Globally PG0-001
30 % R2
South
Africa
25 %
Brazil
20 %
EBITA Margin
Canada
Russia Czech Republic Australia
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15 %
Ireland
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Netherlands
0%
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HHI
Explanation: The Herfindahl index (HHI) is widely used to measure the degree of industry concentration and is
calculated by summing the squares of the market shares of all firms in an industry. The Herfindahl index is
higher if a few key players have high market shares than if market shares are spread more evenly across a larger
number of firms. Thus, three companies splitting 100% of a market evenly implies a Herfindahl index of 3,333,
whereas ten companies splitting 100% of a market evenly implies an index of 1,000. The maximum value of the
Herfindahl index—in the case of monopoly—is 10,000.
Source: Oliver Johannes Ebneth, “Internationalisierung Und Unternehmenserfolg Börsennotierter Braukonzerne,” Göttingen,
May 2006, p. 42.
29
PG0-001 Grolsch: Growing Globally
Strategic
Strategic Priority
Priority Explanation
Explanation Targets
Targets
Creating a balanced and Our geographical spread of operations enables 10% 11%
attractive global spread us to capture growth in beer volumes in the organic volume group revenue
of businesses developing markets, and value growth as growth growth
consumers around the world trade upwards (organic
from economy to mainstream and from constant currency)
brands
mainstream to premium brands.
Developing strong, Our aim is to develop an attractive brand portfolio 47% 15%
relevant brand portfolios that meets consumers’ needs in each of our international growth
in the local market markets. In many markets, because the growth growth of in premium
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is fastest at the top end, we’ve been focusing Peroni volume
therefore on our international premium brands, Nastro Azzurro in Europe
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such as Peroni Nastro Azzurro and regional
brands such as Kozel in Europe.
Constantly raising Good operational performance has always been 12% 20 basis points
the performance of a SABMiller strength. While operational standards EBITA growth increase
local businesses are already high we are continually pushing them (organic ingroup
higher as evidenced by growing EBITA and constant currency) EBITA margin
higher margins.
Leveraging our We are leveraging our global scale to grow the 18% 17%
global scale business. Our business platform enables us, for revenue improvement in
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brands and build our regional brands. In addition the last effectiveness
we are using our scale to transfer skills, methods three years at Miller over
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Source: SABMiller plc Annual Report 2007, March 31, 2007, pp. 75-76.
30
Grolsch: Growing Globally PG0-001
Appendix A (continued)
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Order reference F351024
31