Carslberg Case Study Presentation


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Calrsberg Case Study - " Entering Emerging Markets "

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Carslberg Case Study Presentation

  1. 1. Entering Emerging Markets “ C h i l l Te a m ”
  2. 2. IntroductionBrief History :4th Largest Brewery worldwide Founded : 1987 by Jacob Christian Jacobsen Products : Beers & Soft Drinks Employees : 45,000 Profit : 5,31 billion (2010)
  3. 3. Emerging Markets• Top 5 Emerging Markets:- Russia- China- India- Mexico- Turkey
  4. 4. New Opportunities in New Markets• Motives: Low Cost of Services Cheap Labor or Raw Material Local Taxation & Regulations Market Size
  5. 5. Key Risks Market Risk Political Risk Cost Risk Management Risk
  6. 6. Risk Management Take Pro-Active measures : Research Before enter a new market Understand the differences between markets and people Monitor Political environment Establish partnerships with Locals Asses the Risk and create a Strategy Plan
  7. 7. The entry of Multinational enterprises inemerging markets• Goal : Expand Sales -> Maximize Long-term Profit• 5 Basic Steps Before Expansion research about : 1) Local History, Tradition, Culture and Ethics 2) Currency Value 3) International market trends 4) Local Laws & Regulations 5) Local competition and try to differentiate
  8. 8. The entry of Multinational enterprises inemerging markets• Going From Local to Global : 1) Exporting 2) Licensing 3) Franchising 4) Partnership• Preparation, curiosity ,Hard work, Failure & Luck
  9. 9. Porter’s Five Forces Porters five forces analysis : is a framework for industry analysis and business strategy
  10. 10. Porter’s Five Forces• Threat of Rivalry – Brewery in Guangdong (China) is the best in terms of quality• Bargaining Power of Buyers/Suppliers – Highly respected globally, strong brand• Threat of Substitutes – Somersby – Beo *• Threat of new Entries – Economies of scale
  11. 11. Western Vs New Emerging Markets Lack of Amenities Vs Pay Extra for Safe Strategies Insufficient resources, lower-budgets, poorer quality Understand different cultures, develop breakthrough designs Consumerism, willingness to pay extra for convenience e.g. super- size Predicable trends allow for safe planning, but stagnant?
  12. 12.  Fragmented Vs well Structured Market nation is not just one market but consists of multiple markets Take the market to the people Technology-intensive industries, integrated and broad network Specialize in various areas of expertise, exploit distribution channels
  13. 13.  Underdeveloped Technology Vs Developed Banking System Fast-urbanization - lack of media, roadways and coordination No switching costs, Room for development and convenient solutions Central Bank as the leading authority in the economy Take advantage of the well-organized banking system e.g. free movement of lenders/borrowers
  14. 14.  Markets Are Changing Rapidly Vs Political Stability Rapid change affects consumer habits Develop with the market – meet the changing needs Stable political conditions, international trade, integrated structure Be as efficient as possible due to the high levels of competition
  15. 15. Carlsberg In China• Carlsberg officially began its businessIn China in 1978.• Competitive environment: – Dominated By big four players: • CRB • Tsingtao • AB InBev • Yanjing – Grew from 18,9% in 2000 to 54,1% in 2009
  16. 16. Carlsberg’s Investments in Emerging Markets 2008-Aqcuisitions of significant breweries• Scottish & Newcastle together with Heineken• Baltic Beverage Holdings (BBH) joint ventures• French Brewer Brasseries Kronenbourg• Greek beer Mythos• Equity shares in Chinese brewer Chongqing 2008-Economic Performance Overall• World’s 4th largest Brewer• Progress in all geometric segments• Full control over key parts of business and clearer growth profile DKK Million 2007 2008 Sales of beers 115,2 126,8 Operating Profit 5,262 7,979 Net profit 2,297 2,631 Net Revenue 44,8bn 59,9bn
  17. 17.  2008-Economic Performance in 3 Regions:Northern and Western Europe (47% of total volume)• Second largest brewer• Region consists 62% of Group revenue DKK Million 2007 2008 Total beer 44,4m 51,0m Volume(hl) Operating Profit 3,383 3,953 Net Revenue 32,087 37,128Eastern Europe (43% of total volume)• Region accounts 32% of Group revenue• Russian market accounts 85% of net revenue• In Russia and Ukraine, very strong market position• Investment undertaken resulted in growth• Full control over former BBH business• Company outperforms from rest market (Baltika)• 69% increase in total beer volumes comparing to 2007• Increase in net revenue
  18. 18. Asia (10% of total Volume)• 6% of Group Revenue• China: major growth engine• Leading international brewery /Leading brewery group in West China• Although Asian economies slowed down, strong growth continued• Beer volumes increased (16% )/Net revenue climbed 23%• 40% increase in operating profitCarlsberg’s Financial Position and Performance in Last 4 years:• Fourth largest brewer in the world /Large portfolio of beer and other beverage brands• Brand of Carlsberg : one of best-known brands in world• Baltika,Carlsberg and Tuborg : among biggest brands in Europe• In 2011 :rising input costs and challenging Russian Market.• Northern & Western Europe and Asia: stable growth• Eastern Europe :decline in market of beer (loss of market shares in Russia)• Increased revenues compared to previous years DKK million 2008 2009 2010 2011 Net Revenue 59,944 59,382 60,054 63,561 Operating Profit 7,978 9,390 10,249 9,816 Sales 149,1 159,2 159 162 Volume(million hl) Total Assets 142,639 134,515 144,250 147,714
  19. 19. Carlsberg Advertisements "Summer" Group
  20. 20. Carlsberg Ad (Video)