Corporate Strategies in Beer: Euromonitor

Corporate strategies in beer
Euromonitor
November 1998
The World Market for TITLE World
List of Contents and Tables

Introduction & definitions ...................................................................................................................... 1
The major players: global reach............................................................................................................. 1
Brand reach ................................................................................................................................... 1
TABLE 1 THE WORLD'S MAJOR BREWERS BY TYPE 1997 ................................ 2
The major players: product reach.......................................................................................................... 2
TABLE 2 PRODUCT FOCUS OF THE MAJOR BREWERS 1997............................. 3
The major players: focus on beer ........................................................................................................... 3
TABLE 3 THE MAJOR BREWERS BY BUSINESS ORIENTATION 1997 .............. 4
TABLE 4 CHANGING STRATEGIC FOCUS OF MAJOR BREWERS 1995-
1998 ..................................................................................................... 5
The major players: value ranking .......................................................................................................... 5
TABLE 5 MAJOR BREWERS RANKING BY NET BEER SALES 1997 .................. 6
The major players: volume ranking....................................................................................................... 6
TABLE 6 MAJOR BREWERS RANKED BY VOLUME SALES 1997...................... 7
Retail market shares: by emerging market ........................................................................................... 7
TABLE 7 BREWERS' RETAIL BEER VOLUME SHARES IN EMERGING
MARKETS 1997 ................................................................................. 8
Retail market shares: by developed market .......................................................................................... 9
TABLE 8 BREWERS' RETAIL BEER SHARES IN DEVELOPED
MARKETS 1997 ............................................................................... 10
Horeca market shares: by emerging market ....................................................................................... 11
TABLE 9 BREWERS' HORECA BEER SHARES IN EMERGING
MARKETS 1997 ............................................................................... 12
Horeca market shares: by developed market ...................................................................................... 13
TABLE 10 BREWERS' HORECA BEER SHARES IN DEVELOPED
MARKETS 1997 ............................................................................... 14
Strategic analysis: overview .................................................................................................................. 15
Strategic analysis: competitive advantage ........................................................................................... 16
Strategic analysis: the importance of scale .......................................................................................... 16
Strategic analysis: scale advantages ..................................................................................................... 17
Strategic analysis: small players' activities.......................................................................................... 18
Case study: the UK brewing industry: industry consolidation.......................................................... 18
Case study: the UK brewing industry: recent activity........................................................................ 19
Case study: the UK brewing industry: future outlook ....................................................................... 20
Global brand strategies: review............................................................................................................ 20
Global brand strategies: strategic focus by market ............................................................................ 20
Global brand strategies: broader product portfolios.......................................................................... 21
Global market strategies: manufacturer activity................................................................................ 22
Global market strategies: market entry strategies.............................................................................. 22
TABLE 11 EXAMPLES OF MERGERS & ACQUISITIONS IN MATURE
MARKETS 1995-1998 ...................................................................... 23
TABLE 12 EXAMPLES OF MERGERS & ACQUISITIONS IN
EMERGING BEER MARKETS 1992-1998 ..................................... 25
Global market strategies: finance for market entry ........................................................................... 26
Global market strategies: business re-engineering ............................................................................. 27
Global market strategies: portfolio restructuring............................................................................... 27
Euromonitor Page i
Global market strategies: financial engineering.................................................................................. 28
Euromonitor Page ii
CORPORATE STRATEGIES IN BEER
INTRODUCTION & DEFINITIONS

This report focuses on the strategies employed in the world beer market by the major world players.
It covers the following main areas:
The major players
Retail market shares
Horeca market shares
Strategic analysis
Case study: UK brewing industry
Global brand strategies
Global market strategies
THE MAJOR PLAYERS: GLOBAL REACH

This section considers the major global brewers. Euromonitor has identified three types of major
producers in the world. These can be grouped as:
• Global players – sell products as defined in this report across a number of regions and markets;
• Regional operators – sell products across markets but tend to focus on one or two regions;
• National players – sell products as defined in this report but tend to focus on one national
market.
The table below shows the world's major brewers, with details of the type of company they are and
their main market involvement.
Of the top brewers listed only four: Heineken, Interbrew, Carlsberg and Guinness can claim to be
global in terms of production operations. These players share one common characteristic: they all
come originally from small national markets (Netherlands, Belgium, Denmark and Ireland). Hence,
all players have at an early stage in their development sought overseas expansion in order to build
the scale required to operate efficiently.
Brand reach
The world's major players are either brand owners or licensed brewers and distributors for other
major brewers.
All the major players analysed in this report sell both their own brands and licensed brands. In other
words, for the world's major groups, the strategic decision has been to either:
• Build their own brands; or
• Capitalise on the brand strength of existing brands.
Euromonitor Page 1
Traditionally, the major brewers use imported or licensed brands to boost their premium product
positioning within their home market. The section in this report on marketing strategies shows that
"premiumising" is a central feature of the major brewers' marketing activities.
TABLE 1 THE WORLD'S MAJOR BREWERS BY TYPE 1997
Company Country of origin Type

Allied Domecq UK National
Anheuser-Busch US Regional
Asahi Japan National
Bass UK Regional
Brahma Brazil Regional
Carlsberg Denmark Global
Coors US Regional
Danone France Regional
Diageo UK Global
Foster's Brewing Group Australia Regional
Heineken Netherlands Global
Interbrew Belgium Global
Kirin Japan National
Miller Brewing US Regional
San Miguel Philippines Regional
Scottish & Newcastle UK Regional
South African Breweries South Africa Regional
Whitbread UK National
Source: Euromonitor
THE MAJOR PLAYERS: PRODUCT REACH

Lager is the principal type of beer sold worldwide. Consequently, most of the world's major
brewers tend to focus on this market. The only exception to this is Diageo (Guinness) and brewers
like Bass, Foster's and Whitbread which have major ale portfolios.
Despite the strong focus on lager, many of the world's lager brewers have important non-lager
brands, or are responsible (mainly via distribution deals) for the sale of ales and stouts in their own
markets.
The table below lists the main brewers profiled in this report and the key areas of the market in
which they operate.
Euromonitor Page 2
TABLE 2 PRODUCT FOCUS OF THE MAJOR BREWERS 1997
Company Standard Home market Premium lager lager Ale Stout
Anheuser-Busch US X X X –
Asahi Japan X X – –
Bass UK X X X X
Brahma Brazil X X – –
Carlsberg Denmark X X X –
Coors US X X X –
Danone France X X – –
Diageo UK X X X X
Foster's Brewing Australia X X X X
Group
Heineken Netherlands X X – X
Interbrew Belgium X X X X
Kirin Japan X X X X
Miller Brewing US X X – –
San Miguel Philippines X X – X
Scottish & Newcastle UK X X X X
South African South Africa X X X X
Breweries
Whitbread UK X X X X
Source: Euromonitor
Note: Entries in bold indicate a core strategic focus
THE MAJOR PLAYERS: FOCUS ON BEER

The table below considers the world's major players in terms of their focus on the brewing industry.
In terms of focus, there are three main types of players in the market:
• The specialists – beer sales alone account for 50% or more of their total sales;
• The strategists – brewing and closely-related activities like beer retailing account for 50-80%
of sales. For these companies, beer and its related activities is often one of two or three major
business areas for the company;
• The generalist – beer is just one aspect of their much wider business activities – beer/beer
retailing represents under 50% of group sales.
The focus on beer of the major groups has changed recently. Broadly speaking there are three types
of major brewers in the world:
• Those who are stepping back from brewing, either via diversifying into other areas or actively
pulling out of brewing;
• Those which have increased their focus on beer by selling other assets;
• Those which have not changed their strategic focus and remain firmly committed to brewing.
Euromonitor Page 3
TABLE 3 THE MAJOR BREWERS BY BUSINESS ORIENTATION 1997
Company Home market Type of operator

Allied Domecq UK G
Anheuser-Busch US S
Asahi Japan S
Bass UK ST
Brahma Brazil S
Carlsberg Denmark S
Coors US S
Danone France G
Diageo UK G
Foster's Brewing Group Australia S
Heineken Netherlands S
Interbrew Belgium S
Kirin Japan S
Philip Morris (Miller) US G
San Miguel Philippines G
Scottish & Newcastle UK S
South African Breweries South Africa G
Whitbread UK ST
Source: Euromonitor
Key: S = specialist (over 50% of sales come from brewing)
ST = strategist (between 50-80% of sales come from brewing or beer retailing)
Euromonitor Page 4
TABLE 4 CHANGING STRATEGIC FOCUS OF MAJOR BREWERS 1995-1998
Company Country of origin Strategic changes
Reduced focus on brewing

Kirin Japan Goal to reduce importance of beer
in activities to 50% of sales by
2000, but recently acquired 45%
of Lion Nathan
Allied Domecq UK Withdrew from brewing, now
focuses on spirits and wine and
drinks retailing
Whitbread UK Rumours Whitbread may withdraw
from brewing to focus on retail
and leisure activities
No major change of focus
Interbrew Belgium Beer is its core focus
Brahma Brazil Expanding in soft drinks, but
beer will remain its core focus
Carlsberg Denmark Expanding in soft drinks, but
beer will remain its core focus
Asahi Japan No major change
Heineken Netherlands Beer is its core focus
Coors US No major change
Miller Brewing US No major change
Foster's Brewing Australia Disposed of overseas beer
retailing activities and UK
breweries. Moved into wine but
beer still core focus
Bass UK Tried to increase the size of its
brewing operations but was
stopped by competition
authorities. Is now expanding
into drinks retailing and hotels
but has acquired an additional UK
brewery and is on the look out
for further beer acquisitions
Diageo UK Beer is of much less importance
to Diageo than it was to
Guinness, but is still a
strategic activity
Increasing focus on brewing
Danone France Beverages are now one of its
three strategic product areas.
Non-strategic businesses have
been sold
SAB South Africa Is selling some of its non-beer
assets
Scottish & Newcastle UK Beer has increased its
importance, with the purchase of
Courage
Anheuser-Busch US Disposed of non-core assets,
focusing more strongly on beer
San Miguel Philippines Demerged soft drinks interests,
so beer generates a higher share
of sales
Source: Euromonitor
THE MAJOR PLAYERS: VALUE RANKING
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These rankings are based on total sales of beer products as reported in company accounts. It will in
some cases include items outside the scope of this report, such as beer packaging activities and
sales of products like alcopops.
At the time of writing, not all the companies profiled had filed full 1997 accounts. Therefore,
Euromonitor has made estimates where necessary. In addition, some of the major brewers only
disclose gross beer sales (ie sales including excise taxes etc). To put all the company sales on an
even basis, Euromonitor has again made estimates for net sales where necessary.
Overall, Anheuser-Busch is the world's largest brewer in terms of value sales, followed by
Heineken of the Netherlands and then the two Japanese brewers Kirin and Asahi.
TABLE 5 MAJOR BREWERS RANKING BY NET BEER SALES 1997
US$ million msp
Anheuser-Busch 8,853
Heineken 5,377
Kirin 1 4,391
Asahi 1 4,137
Interbrew 1 3,892
Diageo 3,568
Scottish & Newcastle 2 3,496
Bass 3 2,932
Carlsberg 2,455
Brahma 2,384
South African Breweries 2,362
Coors 1,822
Foster's Brewing Group 4 1,773
Whitbread 5 1,629
Danone 1 1,276
San Miguel 752
Source: Euromonitor
Notes: 1 Estimate
2 Year ending April
THE MAJOR PLAYERS: VOLUME RANKING

In terms of volume sales, Anheuser-Busch is again the world's largest brewer, followed by
Heineken, Miller Brewing and then Brahma.
Anheuser-Busch, Miller and Brahma are the dominant players in the Americas (North and South).
The global strength of all three players is principally based on the sales in their home markets (ie
the US and Brazil). This indicates the extent to which the American brewers are still mainly local or
regional brewers and have been relatively late in seeking global expansion.
In contrast, the major European brewers among the world's largest brewers, are more international
in scope. This is especially true of Heineken, Interbrew and Carlsberg.
Euromonitor Page 6
TABLE 6 MAJOR BREWERS RANKED BY VOLUME SALES 1997
Billion litres
Anheuser-Busch 11.34
Heineken 7.38
Miller Brewing 5.13
Brahma 4.10
South African Breweries 3.80
Interbrew 3.80
Carlsberg 3.37
Kirin Breweries 2.92
Foster's Brewing Group 2.88
Asahi Breweries 2.77
Diageo 2.67
Coors 2.42
Danone 1.96
Bass 1.70
Scottish & Newcastle 1.40
Whitbread 0.90
San Miguel 0.65
Source: Euromonitor
RETAIL MARKET SHARES: BY EMERGING MARKET

A notable feature is the comparative lack of strength of the major brewers in markets that can be
classified as emerging beer markets.
Euromonitor Page 7
TABLE 7 BREWERS' RETAIL BEER VOLUME SHARES IN EMERGING MARKETS 1997
Market Local brewer Global brewer interest % share
Brazil Brahma 28.3

Antarctica 25.5
Skol Brahma (100%) 20.3
Kaiser Heineken (14.2% stake) 16.7
Skincariol 5.4
Others 3.8
Czech Republic Plzensky Prazdroj 24.6
Prazske Pivovary (Bass 55%) 14.0
Radegast (Bass 33%) 11.2
MSP 8.0
JIP 7.1
Budvar 3.5
Others 31.6
China Yanjing Co Ltd 4.0
ZhongCe Co Ltd 3.1
Qindao Co Ltd 1.6
Huarun Snow Flow 1.6
Zhujiang Co Ltd 1.5
Others 88.2
Colombia Bavaria SA 58.3
Aguila 13.3
Leona 6.5
Cervunion 6.0
Malterias de Colombia 5.9
Private label 0.2
Others 9.8
India United Breweries 43.0
Mohan Meakins 21.0
Shaw Wallace and Co 17.0
Mysore Breweries 10.0
Associated Breweries 4.0
Inertia Industries 2.0
Others 3.0
Continued
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Table 7 Cont
Market Local brewer Global brewer interest % share
Mexico Grupo Modelo Anheuser-Busch (minority stake) 54.0
FEMSA Interbrew
(minority holding in CCM) 46.0
Poland Brewpole BV 20.0
Tichy SAB (100%) 12.0
Zywiec Heineken (100%) 11.0
Lech SAB (100%) 10.0
Okocim SA Carlsberg (minority owned) 9.0
Piast 5.0
Lublin 5.0
Zabrze 4.0
Warsaw 3.0
Others 21.0
Romania SAB 1 18.0
Interbrew 2 12.0
Bere Timisoara SA 6.0
Bere Satv Mare 5.0
Arbema SA 5.0
Haber 4.0
Others 50.0
Russia Sun Brewing 6.0
BBH 4.0
Others 90.0
Thailand Boonrawd 80.0
Carlsberg Thailand Carlsberg (minority stake) 8.0
Thai Asia Pacific Heineken (minority stake) 7.0
Beer Thai Co 2.0
Thai Amarit 2.0
Others 1.0
Ukraine AT Ukrpivo 60.0
Desna 6.0
Obolon 5.0
Slavutich 5.0
Santar 2.0
Others 22.0
Source: Euromonitor
Notes: Brewers in bold are major brewers or linked to major brewers
1 Owns 100% of Ursus and Pitber
RETAIL MARKET SHARES: BY DEVELOPED MARKET

Major brewers hold dominant positions in the major developed beer markets, except the fragmented
German market. The domination of major brewers in the largest and most sophisticated markets
shows that manufacturers trying to sell into them must either: acquire a brewer (eg Labatt by
Interbrew); or use licensed manufacturers.
Euromonitor Page 9
TABLE 8 BREWERS' RETAIL BEER SHARES IN DEVELOPED MARKETS 1997
Market Local brewer Global brewer interest % volume
Australia CUB Foster's (100%) 55.2

Lion-Nathan Kirin (45% owned) 42.7
Others 0.3
Belgium Interbrew 56.0
Alken-Maes Danone (100%) 18.0
Private label 15.0
Haacht 4.0
Others 7.0
Canada Labatt Interbrew (100%) 46.0
Molson Foster's (50% owned) 45.4
Stroh 5.0
Private label 0.8
Others 2.8
France Kronenbourg Danone (100%) 45.0
Heineken 28.0
Interbrew 11.0
Private label 7.0
Others 9.0
Germany Binding Braurerei AG 9.7
Brau und Brunnen AG 9.5
Holsten Brauerei 6.3
Warsteiner Brauerei 5.9
Brauerei Beck & Co 5.7
Private label 2.0
Others 62.9
Italy Heineken Italia 35.0
Peroni Danone (minority owned) 30.0
Poretti Carlsberg (100%) 12.4
Forst 5.0
Private label 5.0
Others 12.6
Continued
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Table 8 Cont
Japan Kirin 42.6
Ashai Breweries 34.4
Sapporo Breweries 16.8
Suntory 5.2
Orion 0.9
Others 0.1
Netherlands Heineken 52.0
Grolsch 12.0
Oranjeboom Interbrew (100%) 12.0
Bavaria 8.0
Private label 2.0
Others 14.0
South Africa 1 South African Breweries 99.0
Others 1.0
Spain Cruzcampo Group Diageo (100%) 19.9
Mahou Danone (minority owned) 14.9
SA El Aguila Heineken (100%) 13.5
Damm 9.5
San Miguel Danone (100%) 9.4
Private label 2.6
Others 30.2
UK Scottish Courage 28.0
Bass 23.0
Whitbread 15.0
Carlsberg Tetley Carlsberg (100%) 14.0
Guinness Diageo (100%) 4.0
Private label 8.0
Others 8.0
US Anheuser-Busch 45.8
Miller 21.8
Coors 13.0
Stroh 8.2
Pabst 3.2
Private label 1.1
Others 6.9
Source: Euromonitor
1 considered mature by many brewers given SAB’s virtual monopoly
HORECA MARKET SHARES: BY EMERGING MARKET

Like the retail market, the horeca market in the key emerging beer markets is led mainly by local
companies, although some of these do have links with the world's major brewers.
Emerging markets like China are still open to global brewers and offer major opportunities for
expansion. Their diversity means global players still have the opportunity to enter by building their
own production plants. In contrast, markets like Brazil and India have strong domestic players and
are best entered by forging alliances with established brewers or by taking equity stakes.
Euromonitor Page 11
TABLE 9 BREWERS' HORECA BEER SHARES IN EMERGING MARKETS 1997
Brazil Antarctica 31.9

Brahma 31.4
Skol Brahma (100%) 15.2
Kaiser Heinken (14.2% stake) 14.6
Skincariol 5.4
Others 1.5
China Qingdao Co Ltd 2.9
Yanjing Co Ltd 2.8
Zhujiang Co Ltd 1.3
ZhongCe Co Ltd 1.3
Huarun Snow Flower 1.0
Others 90.7
Colombia Bavaria SA 60.0
Aguila 15.0
Leona 7.0
Cervunion 5.0
Malterias de Columbia 4.4
Others 8.6
India United Breweries 48.0
Mohan Meakins 26.0
Shaw Wallace & Co 17.0
Mysore Breweries 5.0
Inertia Industries 1.0
Others 3.0
Continued
Euromonitor Page 12
Table 9 Cont
Mexico Grupo Modelo Anheuser-Busch
(minority owned) 54.0
FEMSA Interbrew
(minority holding in CCM) 46.0
Thailand Boonrawd 80.0
Carlsberg Thailand Carlsberg (minority owned) 7.0
Thai Asia Pacific Heinken (minority owned) 6.0
Beer Thai Co 5.0
Thai Amarit 2.0
Source: Euromonitor
Note: Brewers in bold are major brewers or linked to major brewers
HORECA MARKET SHARES: BY DEVELOPED MARKET

The horeca sector in mature markets, like the retail sector, is controlled by the major brewers (the
exception again being Germany).
Given the importance of horeca as a means of marketing new brands and concepts, this shows:
The power of the major brewers in their core markets.
The problems a major brewer from overseas would have trying to penetrate the domestic market of
a rival.
As a means of market entry, it is easier and cheaper to cooperate with an entrenched major brewer
in a mature market (via licensing deals), rather than trying to set up a rival brewing operation. The
only alternative is to buy out a potential rival.
Euromonitor Page 13
TABLE 10 BREWERS' HORECA BEER SHARES IN DEVELOPED MARKETS 1997
Australia CUB Foster's (100%) 58.0

Lion-Nathan Kirin (45% owned) 38.0
Others 4.0
Belgium Interbrew 52.0
Alken-Maes Danone (100%) 16.0
Others 32.0
Canada Labatt Interbrew (100%) 46.2
Molson Fosters (50% owned) 46.1
Stroh 4.0
Others 3.7
France Kronenbourg Danone (100%) 37.0
Heineken 36.0
Interbrew 15.0
Others 12.0
Germany Holsten Brauerei 3.0
Others 97.0
Italy Heineken Italia 33.8
Peroni Danone (minority owned) 31.0
Poretti Carlsberg (100%) 13.0
Forst 4.0
Others 17.9
Japan Asahi 53.4
Kirin 38.2
Others 8.4
Netherlands Heineken 55.0
Grolsch 15.0
Oranjeboom Interbrew (100%) 10.0
Bavaria 8.0
Amstel Heinken (100%) 6.0
Others 6.0
South Africa 1 South African Breweries 99.0
Others 1.0
Spain Cruzcampo Group Diageo (100%) 27.0
Damm 19.7
Mahou Danone (minority owned) 18.8
SA El Aguila Heineken (100%) 16.0
San Miguel Danone (100%) 12.6
Others 5.9
Continued
Euromonitor Page 14
Table 10 Cont
UK Bass 23.0
Scottish Courage 19.0
Whitbread 15.0
Carlsberg Tetley Carlsberg (100%) 8.0
Guinness Diageo (100%) 3.0
Others 32.0
US Anheuser-Busch 45.5
Miller 21.0
Coors 13.0
Stroh 8.4
Pabst 3.3
Others 8.8
Source: Euromonitor
1 considered mature by many brewers given SAB’s virtual monopoly
STRATEGIC ANALYSIS: OVERVIEW

The world's beer market in increasingly competitive and increasingly global. Faced with slow,
stagnant or negative volume growth of beer in most developed markets and a race to capture
potentially fast-growing markets in emerging regions, the world's major brewers are jostling for
competitive advantage in the world's major beer markets.
National boundaries are no longer being recognised as the largest brewers in the world try to break
into new markets.
Traditionally, brewing in the world had been centred on several distinct areas, eg the US, Canada,
the UK, Germany and Belgium. These markets have generally been self-contained, and the amount
of cross-trading has been largely negligible (with the exception of one or two truly global brands
such as Heineken, Carlsberg and Guinness.
However, in recent years several of these markets have hit troubled times. In the UK, the beer
market has been in decline since the Beer Orders of 1989. In Germany, the industry is running at
severe over-capacity and the more than 1,000 existing brewers are undergoing a savage bout of
mergers and take-overs, in an attempt to capture a larger share of an ever-decreasing market.
In the US also, the beer market is in decline, and the biggest brewers (Anheuser-Busch, Miller and
Coors) are all facing a new competitive threat from microbreweries.
However, it is only the traditional beer markets that are having problems. Other areas are
performing much better: East Asia, Eastern Europe, Central and South America are proving much
more buoyant.
The large brewers are therefore looking to break into these areas, and gain a foothold in (if not a
stranglehold on) these markets.
Consequently, major brewers worldwide with the financial resources, technological prowess, and
skilled workforces necessary to compete outside their home markets are looking abroad for
opportunities to accelerate volume sales growth.
A company's competitive position within the brewing industry in one country is becoming
increasingly interdependent with that in another country.
Competitive advantages in the beer market are focusing on four areas:
Euromonitor Page 15
• The exploitation of scale advantages – minimise the cost base and improve profitability and
cash flow;
• Exploit premium core brands – focus on product/service differentiation, or brand equity;
• Exploit growth markets – growth segments of mature markets and emerging markets;
• Invest heavily in brands and new product development.
More succinctly the above can be summarised as:

• Attain critical mass in the global beer business, ie increased scale and efficiencies in mature
markets;
• Drive aggressively into emerging markets.
STRATEGIC ANALYSIS: COMPETITIVE ADVANTAGE

Compared with other fmcg markets, beer is much less global in operation. There are only four truly
global brewers in the world – Carlsberg, Heineken, Guinness and Interbrew. However, their ranks
are being joined by the likes of Anheuser-Busch, Miller, South African Breweries, Kirin and Bass
who are actively seeking to exploit overseas growth opportunities.
As such, a growing number of the world's major brewers are aiming to exploit competitive
advantage on a global scale. This essentially means:
• Targeting specific national markets which offer the best potential for growth;
• Exploit the target market by bringing worldwide resources to bear on these operations;
• Focus global development on a core of brands which have the potential to become global in
nature (eg Carlsberg, Foster's, Heineken, Budweiser, Miller, Asahi Super Dry). Note this policy
is not pursued by Interbrew, Danone and Bass which have tended to exploit local brands;
• Develop consistent positions of strength across national markets, eg build a global
manufacturing, distribution and marketing network to exploit global brands, or to provide
economies when producing local brands.
Most of the above strategic moves are related to two fundamental issues:
• The scale of a company's brewing operation – become a global brewer or a dominant brewer in
one country/region;
• Ownership of, or licensed ownership of the world's major beer brands.
STRATEGIC ANALYSIS: THE IMPORTANCE OF SCALE

Brewers, which remain small in world terms, risk being isolated in product or spatial terms. In some
markets they may prosper reasonably, but it will increasingly be the case that they will be unable to
challenge the international players.
The big brewers, either through their own distribution networks or via alliances with other large
brewers, will make their products available through many distribution channels. Distribution (ie
product availability) will be a vital plank in their market dominance.
The major brewers essentially operate a network system of production. They focus their own scale
and efficiency effects on their home markets and on the brewers in which they have a direct control.
They rely on other overseas brewers to employ the same policies in their home markets, to ensure
Euromonitor Page 16
their licensed products or exported products are efficiently produced and distributed in other
markets.
Isolated in markets and facing a massive marketing and cost disadvantage, challengers to major
groups will struggle. This fact has been exacerbated in the 1990s by a systematic concentration of
production and distribution facilities and activities either in the hands of, or under the control of, the
major players.
STRATEGIC ANALYSIS: SCALE ADVANTAGES

Increasing scale provides brewers with three clear advantages., increase scale generally implies:
• Increased sales via:
expansion into emerging or untapped markets (eg expand production capacity and sales);
taking a growing share of mature markets.

• Increased long-term cash flow – to provide the finance for business expansion and marketing
activities.
• Improved economic profit and value-added, via:
exploitation of economies of scale that exist through vendor relationships, common infrastructures
and shared computing resources;
globalised management reduces the hidden costs incurred when local staff spend time duplicating
each other's efforts instead of brewing beer;
greater ability to invest opportunistically in new businesses that will strengthen current operations
and offer attractive longer-term growth;
greater ability to provide financial incentives to staff to improve the company's economic value
creation.
For a brewer to exploit scale advantages it must be able to effectively:

• Grow business and adapt to changing markets (both geographically and within a specific
national market);
• Acquire other brewers and merge them into a coherent global/national network;
• Handle joint ventures with brewers in newly targeted markets;
• Develop profitable business partnerships with other major brewers;
• Use strategic partnerships and alliances where necessary, ie seize entrepreneurial business
opportunities.
EXAMPLE 1 GROLSCH: THE COMPETITIVE DISADVANTAGE OF SMALL SCALE
In 1998, the Dutch brewer Grolsch decided to pull out of Poland. The move immediately triggered
speculation that the company, Netherlands' second biggest brewer, might become a take-over target.
Grolsch announced it was selling its 25% stake in Brewpole, which handled its brands in Poland, to
the Australian majority owners. This was an important step, because Grolsch had always said it
considered Poland its second home market.
The move fuelled speculation that Grolsch could be taken over because essentially Grolsch, like
many national brewers, is now only a strong company in the Netherlands. Its overseas activities are
mainly distribution agreements.
Euromonitor Page 17
Example 1 Cont
Grolsch's problems highlight those of smaller brewers trying to expand overseas. In Poland, it faced
the combined competitive challenges of Heineken, which recently announced plans to raise its stake
in Polish Zywiec to 75% from 31.8%, Carlsberg and South African Breweries (SAB).
Continuing market concentration in Poland, inspired by the activities of international brewing

groups, meant prospects for profitable development of Brewpole were slim and huge investments
would be necessary, squeezing a small player like Grolsch.
With big players moving into the market and with competition getting stronger, Grolsch was too
small to survive the competitive battle.
Source: Euromonitor
STRATEGIC ANALYSIS: SMALL PLAYERS' ACTIVITIES

To counter the global brewer, smaller manufacturers will have to focus on new niche sectors and
areas that the big players have so far shown comparatively little interest in penetrating. For
example:
• Microbrews;
• Speciality beers;
• Local brews.
If a brewer is to survive in a world where global brewers are on the increase, it must become:
• Focused on specific target markets;
• Focused on specific market sectors and markets.
If focus can be obtained, the small brewer has the option to offer some of its beer to a major brewer
for national distribution, rather than larger brewers having to develop such niche products
themselves.
The only alternative is to pull out of brewing and move into an associated line of business, such as
beer retailing and horeca management (eg Allied Domecq).
One worry for the smaller operators is that many of the major brewers are now moving to exploit
fast-growing niches. Anheuser-Busch, Whitbread and Kirin, for example, have all moved into
microbrews and speciality beers. Many of the largest brewers are also actively acquiring or have
acquired beer retailing and leisure interests.
CASE STUDY: THE UK BREWING INDUSTRY: INDUSTRY

CONSOLIDATION
The last 10 years have seen dramatic shifts in the balance of power in the UK brewing industry. The
same pressures affecting most mature beer markets have caused these shifts, for example:
• Sluggish beer sales;
• The drive for economies of scale;
• The growing internationalisation of brewing.
Euromonitor Page 18
What the UK experience has shown is that the pressures on brewers in mature markets will force
further consolidation through mergers or other means.
In the mid- to late-1980s the British brewing industry was dominated by the so-called Big Six –
Bass, Scottish & Newcastle, Courage, Allied Lyons (now Allied Domecq), Grand Metropolitan
(GrandMet) and Whitbread. Of these, Bass was the biggest, commanding some 23% of total
volume market share.
The late 1980s, however, saw the start of major reshaping of the industry. Key changes included:
• Courage exchanged its pubs for GrandMet's breweries;
• Allied Domecq merged its brewing interests with Carlsberg to form Carlsberg-Tetley;
• Scottish & Newcastle bought Courage from Foster's to form Scottish Courage.
Each of the aforementioned deals reduced the number of breweries in the UK and increased
industry concentration. The result is that Britain has been ushered into an era of mega-breweries,
with the brewing industry now being dominated by the Big Three – Bass, Scottish Courage and
Carlsberg-Tetley – with Scottish Courage now market leader.
CASE STUDY: THE UK BREWING INDUSTRY: RECENT

ACTIVITY
Having led the UK industry for many years, Bass sought to regain its market leadership lost to
Scottish Courage. In August 1996, it announced plans to merge with Carlsberg-Tetley, the third-
placed brewer.
Under the proposed deal, Bass would purchase the 50% of Carlsberg-Tetley owned by Allied
Domecq; Carlsberg would then pass its 50% onto Bass, along with a £20 million one-off cash
payment, in return for a 20% stake in the enlarged Bass Brewing operation.
The rationale behind the deal was simple:

• It would allow Bass to make significant cost savings. The administration and distribution
organisations of both companies could be merged, saving an estimated £50 million a year;
• Bass would be able to pass some of its production currently contracted out due to its own
undercapacity to Carlsberg-Tetley's breweries, which are running at below full production;
• Bass would gain control over several high-profile brands, such as Carlsberg, Castlemaine
XXXX and Tetley Bitter;
• Bass would regain the position as the UK's biggest brewer, taking a full 38% volume share of
the beer market.
The result would be an industry in which the two largest brewers controlled around 70% of the
market and the almost certain culling of a range of competing brands and the closure of a number of
breweries and distribution centres.
In view of the degree of control exercised by the two market leaders, an investigation into the deal
by the competition authorities was launched. In June 1997, the UK competition authorities
officially rejected Bass' bid for Carlsberg-Tetley.
The main losers from the deal are Bass and Carlsberg. Carlsberg had been hoping to withdraw from
the British brewing industry. Instead, it now owns an even greater share in a company it wants no
part of.
Euromonitor Page 19
CASE STUDY: THE UK BREWING INDUSTRY: FUTURE

OUTLOOK
There is now doubt that Carlsberg is still on the lookout for prospective buyers, although these may
be hard to find. Unlike most breweries in the UK Carlsberg-Tetley does not have a tied estate for its
beers. Instead, the company has to rely for profitability on an agreement to supply Allied Domecq's
tied estate with 1.35 million of barrels a year at over-inflated prices. This agreement ended in
December 1997. However, following the blocking of the Bass deal by the MMC, a new 10-year
agreement to do the same has been announced.
Despite the failure to consolidate the industry further, the result of the deal's lack of success will be
similar to the result of the proposed merger. Carlsberg-Tetley is embarking on a cost-cutting
exercise aimed at bringing profitability back to the group. This will result in more brewery closures
and job losses – exactly the things that would have resulted from the merger. Carlsberg-Tetley's
Alloa brewery and the Wrexham brewery have been closed. In addition, a further 20 distribution
depots and administration sites are due to be closed in an attempt to drive down costs – something
which may well have happened had the deal gone through in the first place. Some analysts also
expect Carlsberg-Tetley to sell some of its lesser brands to smaller, regional breweries.
Interestingly, this last plan is one of the options that was originally tabled by Bass as a possible
move to allow the deal to go through.
GLOBAL BRAND STRATEGIES: REVIEW

When a brewer decides to expand into non-domestic markets, it must decide between globalising its
entire portfolio simultaneously or using a subset of its product line as the launch vehicle. The latter
choice is invariably made, given the fact that global expansion poses a high risk.
A feature of the beer market is the tendency for major brewers to focus on one or two global brands
for their success. These key brands are then stretched to cover various sectors of the market.
It should be noted that the global brand strategy is not followed universally by the large brewers
(see Marketing Strategy for more details).
In terms of corporate strategy, building global brands effectively means:

• The formation of a network of wholly-owned, minority-owned or strategically-linked
companies worldwide to brew and distribute the global brand;
• The creation of a global brand that is highly accessible. Accessibility, ie efficient and effective
distribution involves:
setting up systems and networks to ensure quality customer service;
the development of profitable business partnerships with trade customers;
creating alliances with other major brewers.
GLOBAL BRAND STRATEGIES: STRATEGIC FOCUS BY

MARKET
In highly developed or home markets, the primary focus of most brewers is to make their products
the beverage that consumers prefer. Hence, companies tend to dedicate the bulk of their efforts
towards improving their production and operational efficiencies and marketing activities.
Euromonitor Page 20
In these markets cost cutting and the freeing of resources for increased marketing activities are
priorities.
In developing and emerging markets (including mature beer markets a brand is trying to penetrate),
where increasing the penetration of their beverage products is a primary goal, brewers tend to
dedicate the bulk of their investment and effort to infrastructure enhancements, ie developing
production facilities, distribution networks, sales equipment and technology. These investments are
made by acquiring or forming strategic business alliances with local brewers and by matching local
expertise with their experience and focus.
GLOBAL BRAND STRATEGIES: BROADER PRODUCT

PORTFOLIOS
In most of the beer markets, new products, often foreign imports or niche products (such as
microbrews) are showing above-average growth, although it is still true that established products
form the bulk of the market. The changing internal dynamics of beer markets means that
manufacturers are having to adopt a broad-market approach in terms of product portfolios.
Manufacturers must offer a complete range of products. This offers the following advantages:
• It covers the entire customer base, thereby reducing the possibility of being locked into a
narrowly defined customer base;
• It allows manufacturers to draw in sales from a new audience, without abandoning sales from
existing users who are already committed beer drinkers;
• It makes product migration easier;
• It allows manufacturers to capture the strategic high ground in the distribution chain, by
offering wholesalers and retailers a full range of drinks;
• It includes manufacturers developing local beer brands, at a price which will appeal to the mass
of consumers in emerging markets, rather than the affluent sections of society who are the main
consumers of international beer brands.
Consequently, the major brewers in their home markets will tend to offer:
• Their own standard, flagship product – Heineken in the Netherlands;
• Their own premium flagship product – Amstel in the Netherlands;
• An imported or made under licence beer which is positioned as a premium beer – Heineken in
North America.
Premium brands are of growing importance to brewers. Faced with market maturity in many home
markets, the aim is to shift demand to higher value-added products, thereby protecting profits in
slow-growing markets.
To develop premium product portfolios, many brewers find it easier and cheaper to introduce a new
overseas brand into their range rather than develop their own. This strategy offers the following
advantages:
• It is cheaper – a new product is not developed from first principles;
• It shares the risk – the foreign brewer will share some of the costs of introduction, including
marketing expenses;
• Overseas brands – even those like Heineken which are positioned in the mid-market in their
domestic market – often have added kudos in overseas markets and acquire a natural premium
positioning;
• It enlivens the product range.
Euromonitor Page 21
GLOBAL MARKET STRATEGIES: MANUFACTURER

ACTIVITY
To deal with the size of the global economy companies are:
• Consolidating through mergers and acquisitions to reach the scale required to compete in the
global arena, eg formation of Diageo;
• Globally rationalising operations and seeking world standards for efficiency, eg Heineken;
• Selling off incompatible businesses and seeking global leadership in global segments and niche
productivity, eg Foster's strategic sales of assets in the 1990s.
GLOBAL MARKET STRATEGIES: MARKET ENTRY

STRATEGIES
Many of the major brewers tend to follow a two-stage strategy for market entry:
• Option 1: export beer to the new market;
• Option 2: consider local activities, for example:
2a: brew locally via a licensed operation;
2b: brew locally by setting up a company-owned brewery;
2c: acquire a local brewer.
The decision on which strategy to follow, is based principally on expected profitability. The further
away a market is from the home market and the more distinct the local market culture and customs,
the more likely option two will be chosen. In some instances, brewers will opt straight for option
two and by-pass option one.
The choice between options 2a, 2b and 2c is based on profitability, managerial and marketing
considerations. Option 2a or 2c is the usual route for entry into a well-developed beer market as
these methods exploit a local company's existing distribution and marketing operations.
Route 2b is only practical in newer underdeveloped markets, and is often only undertaken along
with a local joint venture partner, who has local knowledge.
In most developed and mature beer markets, the major players have sought to improve their
positions, via establishing stronger distribution networks with local brewers or via outright purchase
of existing local brewers.
In emerging markets, acquisitions are often on a smaller scale and are focused on South America,
Eastern Europe, Africa and Asia (mainly China).
Euromonitor Page 22
TABLE 11 EXAMPLES OF MERGERS & ACQUISITIONS IN MATURE MARKETS 1995-1998
Company Date Activity
Miller Brewing/ 1997 Miller Brewing, Foster's Brewing

Group and The
Foster's Brewing Molson Companies Ltd restructured
their
Group/The Molson partnership. The Molson Companies
Ltd
Companies Ltd and Foster's bought Miller's 20%
equity stake in Molson Breweries.
At the same time, the three
brewers agreed to create a new
three-way joint venture to manage
Molson and Foster's brands in the
US. The formation of the new
joint venture replaced Miller's
former 100% ownership of Molson
USA. Under the terms of the new
arrangement, The Molson Companies
Ltd and Foster's Brewing Group
each assume a 24.95% ownership
position in the new joint venture
while the remaining 50.1% is held
by the managing partner, Miller
Brewing Company.
Scottish & Newcastle 1995 Bought UK brewer Courage Ltd from
Foster's Brewing Group.
Allied Domecq 1996 Merged its brewing interests with
those of Carlsberg in the UK, to
form Carlsberg-Tetley.
Subsequently, Bass bought out
AD's 50% stake in C-T, in a deal
designed to merge the brewing
interests of Bass and C-T.
Whitbread 1997 Acquired the UK beer business
interests of Labatt, which will
see Whitbread brew and market
Labatt under licence in the UK.
Continued
Euromonitor Page 23
Table 11 Cont
Anheuser-Busch 1997 Purchased the remaining 50%
interest in its brewing joint
venture at the Stag Brewery in
Mortlake, London, England from
its joint venture partner,
Scottish & Newcastle, Plc. The
Stag Brewery brews Budweiser
primarily for the UK.
Carlsberg 1997 Become the sole owner of
Carlsberg-Tetley in the UK,
following a rejection by the UK
Department of Trade and Industry
of the merger between Bass and
Carlsberg-Tetley.
Heineken 1996 Acquired the Fischer group and
its subsidiary Societe
Adelshoffen, as well as a 66%
interest in Groupe Saint-Arnould,
and have bought the Italian
brewery Moretti.
Interbrew 1995 Acquired Labatt of Canada, with
gave it entry into the North and
South American markets.
Danone 1996 Increased its stake in the
Spanish brewer San Miguel.
Bass 1997 Bought the Burton Brewery from
Carlsberg-Tetley in the UK.
Kirin 1998 Took a 45% stake in Lion Nathan,
the New Zealand brewer which is
major player in Australia.
Source: Euromonitor
Euromonitor Page 24
TABLE 12 EXAMPLES OF MERGERS & ACQUISITIONS IN EMERGING BEER MARKETS 1992-

1998
South African 1993-1998 Series of strategic investments

in breweries in
Breweries Eastern and Central Europe,
Africa and Asia.
Asahi 1994-1995 Made a series of strategic
investments in China.
Anheuser-Busch 1993-1998 In 1993, acquired a 17.7%
interest in Diblo, the operating
subsidiary of Mexico's largest
brewer, Grupo Modelo SA de CV
("Modelo"). In 1997 this was
increased to 37% and in 1998 a
majority ownership position is
the target.
1995 Made two investments in Chinese
breweries.
Coors 1992 Took a 33% stake in Jinro-Coors
Brewing Company in South Korea.
Carlsberg 1997 Acquired a further 50% stake in
the Finnish brewer, Oy
Sinebrychoff, taking its total
stake to 60%. Carlsberg has the
option to take the remaining 40%
of the company in the next 3 to 4
years. This acquisition is seen
as central to Carlsberg's move to
operate in the Baltic markets as
well as Russia, where
Sinebrychoff has acquired a brewery.
1996 Carlsberg increased its
shareholding to 51% in Carlsberg-
Brewery Hong Kong Ltd.
Foster's Brewing
Group 1997 Invested about A$78 million in
two operational breweries in
Vietnam, following the receipt of
regulatory approval.
1997 Acquired a 51% stake in a joint
venture in India, based in the
state of Maharashtra with the
Kotharis Industrial Corp.
Heineken 1996 Took a 15% stake in Argentina's
largest brewery Quilmes, and a
66% share in the Czech brewer
Zlaty Basant.
1995-1997 Has increased its interests in a
number of African breweries in
Zaire, Nigeria, Chad, Sierra
Leone, Ghana and Reunion. In
1997, Heineken purchased a 90%
stake in the fourth largest
brewery in Ghana – Achimota
Brewing Co.
Continued
Euromonitor Page 25
Table 12 Cont
Interbrew 1997 Joined with the Venezuelan
Cisneros Group in a US$2 billion
push into the South American
market. The aim is the create a
company that will take a
leadership role in the brewing
industry throughout South America.
1995-1997 Continued to expand into Central
and Eastern Europe, and entered
into partnerships with breweries
in Romania and with Zagrebacka
Pivovara, the first brewery in
Croatia. At the end of 1997 it
also was negotiating to take a
60% stake in Niksic brewery, the
state-owned brewery of the
Yugoslav republic of Montenegro.
1996 Set up a joint venture agreement
in China with the Zhu Jiang Brewery.
Kirin 1998 Took a 45% stake in Lion Nathan,
the only brewer to have set up a
brewery in China without a local
partner.
Danone 1996 Acquired the Chinese brewer Haomen.
1996 Acquired the Chinese brewer Wuhan.
Bass 1995-1997 It has been building up a
portfolio of shares in Eastern-
European Breweries, particularly
Czech operations. In 1996, Bass
strengthened its Eastern European
beer interests by acquiring
majority holdings in Vratislavice
as and Ostravar as in the Czech
Republic and by increasing its
existing stake in Prague Brewing.
Bass has also set up the Bass
Ginsber Business in China.
Source: Euromonitor
GLOBAL MARKET STRATEGIES: FINANCE FOR MARKET

ENTRY
Many companies have restructured their operations in recent years, the financial benefits of which
have been ploughed back into beer operations, either to finance overseas expansion or to improve
marketing activities.
Restructuring has taken three very distinct paths:

• Business re-engineering: altering the way companies are managed and organised to improve
internal processes and operating efficiencies;
• Portfolio restructuring: changing the asset base through divestments and spin-offs;
• Financial re-engineering: altering the capital base and cashflow to improve resource allocation
and finances.
Euromonitor Page 26
GLOBAL MARKET STRATEGIES: BUSINESS RE-

ENGINEERING
Business re-engineering has been a major feature of corporate activity. Business re-engineering is
usually designed to improve:
• Control or significant changes in core assets, eg acquisitions;
• Senior management control of all operations;
• Operating procedures.
Newly re-engineered companies become operationally more flexible and more nimble and,
importantly, more customer-driven. The newly engineered company benefits from:
• Upgraded management techniques;
• Improved information systems;
• Specific corporate objectives.
EXAMPLE 2 HEINEKEN
Heineken has radically streamlined its operations, both abroad and at home in the last decade. In the
last 10 years, the cost of raw materials has been cut from 11.8% to 7.2% of sales, personnel costs
have dropped from 23% to 19.1%, and packaging costs have been trimmed from 15% to 13%.
The result has meant that Heineken earns higher profit margins than its rivals, part of which is re-
invested in marketing and distribution.
Source: Euromonitor
GLOBAL MARKET STRATEGIES: PORTFOLIO

RESTRUCTURING
One problem faced by many of the world's brewers is finding the right balance between their
business operations. The problem faced by many of the groups in the industry is finding a long-term
strategy that will tread the fine line between a group, operating as either:
• A conglomerate – in which brewing activities become submerged in the corporate haze – a
danger now facing Diageo;
• A portfolio manager – in which the company has no synergies between its operations – a
potential danger for groups like San Miguel and Danone.
Increasingly the major groups want to operate only those businesses about which they have some
special knowledge, expertise and long-term commitment. Increasingly, companies are seeking to
operate as a globally focused company.
This implies operating within a group structure but freeing the brewing operations, so that it has the
managerial and financial freedom to focus on its core activities.
This has led to corporate demergers, spin-offs and sales of businesses designated as non-core, and
in important cases purchases of assets seen as of strategic importance for expansion into a particular
market or market segment.
EXAMPLE 3 FOSTER'S BREWING GROUP
Euromonitor Page 27
In the last few years, FBG has sought to rationalise its operations and pull back from operations it
classified as "low-yielding, non-core assets". This has included its brewing interests in the UK. In
1997, FBG managed to sell the Inntrepreneur Pub estate in the UK to Nomura. It also sold its shares
in Scottish & Newcastle. The sale of these assets was achieved without harming its global branding
ambitions, given that Scottish Courage takes on responsibility for the Foster's brand in the UK and
Europe.
Source: Euromonitor
GLOBAL MARKET STRATEGIES: FINANCIAL

ENGINEERING
In many respects, business re-engineering came first for many companies. Today, financial re-
engineering has somewhat replaced business process re-engineering as a brewer's main business
strategy. Of course, the financial re-engineering activities can only prove successful if the
company's marketing and operating strategies succeed.
Financial engineering has two advantages for companies:

• It prevents investment in low-return businesses or activities – if companies have spare financial
resources they hand them back to shareholders rather than feeling they have to invest them
somewhere, when profitable investment opportunities are not immediately apparent;
• It improves business focus – partially floating subsidiaries on stock exchanges, engaging in
management buyouts etc force the managers of the spun-off operation to focus more clearly on
their operation.
EXAMPLE 4 CARLSBERG
Carlsberg has sought to restructure its capital structure via the sale of bonds and shares and the
taking on of loans. This has been done to reduce its cost of capital and to generate the resources
required for investment in operating activities, principally the restructuring of Carlsberg-Tetley in
the UK and marketing/infrastructure investment in new growth markets.
Euromonitor Page 28

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List of Contents and Tables

Global market strategies: financial engineering.................................................................................. 28

CORPORATE STRATEGIES IN BEER

INTRODUCTION & DEFINITIONS

The major players

Retail market shares

Horeca market shares

Case study: UK brewing industry

Global brand strategies

Global market strategies

THE MAJOR PLAYERS: GLOBAL REACH

TABLE 1 THE WORLD'S MAJOR BREWERS BY TYPE 1997

Company Country of origin Type

THE MAJOR PLAYERS: PRODUCT REACH

TABLE 2 PRODUCT FOCUS OF THE MAJOR BREWERS 1997

Company Standard Home market Premium lager lager Ale Stout

THE MAJOR PLAYERS: FOCUS ON BEER

TABLE 3 THE MAJOR BREWERS BY BUSINESS ORIENTATION 1997

Company Home market Type of operator

TABLE 4 CHANGING STRATEGIC FOCUS OF MAJOR BREWERS 1995-1998

Company Country of origin Strategic changes

Reduced focus on brewing

THE MAJOR PLAYERS: VALUE RANKING

TABLE 5 MAJOR BREWERS RANKING BY NET BEER SALES 1997

US$ million msp

THE MAJOR PLAYERS: VOLUME RANKING

TABLE 6 MAJOR BREWERS RANKED BY VOLUME SALES 1997

RETAIL MARKET SHARES: BY EMERGING MARKET

TABLE 7 BREWERS' RETAIL BEER VOLUME SHARES IN EMERGING MARKETS 1997

Market Local brewer Global brewer interest % share

Brazil Brahma 28.3

RETAIL MARKET SHARES: BY DEVELOPED MARKET

TABLE 8 BREWERS' RETAIL BEER SHARES IN DEVELOPED MARKETS 1997

Market Local brewer Global brewer interest % volume

Australia CUB Foster's (100%) 55.2

HORECA MARKET SHARES: BY EMERGING MARKET

TABLE 9 BREWERS' HORECA BEER SHARES IN EMERGING MARKETS 1997

Market Local brewer Global brewer interest % volume

Brazil Antarctica 31.9

HORECA MARKET SHARES: BY DEVELOPED MARKET

The power of the major brewers in their core markets.

TABLE 10 BREWERS' HORECA BEER SHARES IN DEVELOPED MARKETS 1997

Market Local brewer Global brewer interest % volume

Australia CUB Foster's (100%) 58.0

STRATEGIC ANALYSIS: OVERVIEW

Competitive advantages in the beer market are focusing on four areas:

More succinctly the above can be summarised as:

STRATEGIC ANALYSIS: COMPETITIVE ADVANTAGE

STRATEGIC ANALYSIS: THE IMPORTANCE OF SCALE

STRATEGIC ANALYSIS: SCALE ADVANTAGES

taking a growing share of mature markets.

For a brewer to exploit scale advantages it must be able to effectively:

EXAMPLE 1 GROLSCH: THE COMPETITIVE DISADVANTAGE OF SMALL SCALE

Continuing market concentration in Poland, inspired by the activities of international brewing

STRATEGIC ANALYSIS: SMALL PLAYERS' ACTIVITIES

CASE STUDY: THE UK BREWING INDUSTRY: INDUSTRY