An entry strategy for AB InBev's Stella Artois into Myanmar

1. From Burma to Myanmar
A Reintroduction of AB InBev’s Stella Artois
JACO B RUSO FF
1

2. Introduction
• Anheuser-Bush InBev
– (NYSE: BUD, Euronext:
ABI)
– Founded in 2008
• Stella Artois
– Belgian Pilsner
– Introduced in 1926
• Myanmar (Burma)
– Transition to Democracy
(2011-Present)
– Evolving Economy
2

3. Myanmar (Burma)
• Population: 56,320,206
• GDP / Capita: $4,700
(170th in the world)
• Socialist Military
Dictatorship (1962-2011)
– Global economic sanctions
and embargos
• Transition to Democracy
– Multi-party elections
– Economic liberalization
• Currency: Myanmar
Kyat (MMK)
– 1247.65 Kyat per USD 3
Political Risk
• Civil Unrest / Conflict
– Ethnic and religious tension
leading to civil war and
terrorism
– Kachin and Rakhine states
• Possible return to a
military state and
subsequent expropriation
Currency Risk
• Trade deficit
• Inflation
• Low natural gas prices
– 37% of total exports
– Source of investment

4. Anheuser-Busch InBev
• “Bringing people together for a
better world”
• Largest Brewing Company in
the World
– 20% of global share
– 30% if AB InBev SAB Miller
M&A goes through
– Top 5 Consumer Goods Companies
• Focused Branding
• Distributes Products in over 110
Countries
• Emerging Markets make up 53%
of AB InBev’s total revenue in
2014 4
31.1% 28.7% 26.4%
30.3% 28.0% 27.3%
9.4% 8.7% 8.0%
13.0% 11.2% 9.7%
14.3% 15.4% 18.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014
AB InBev Volume by
Region (% of Total)
Global Export & Holding Companies
Asia Pacific
Europe
Latin America South
Latin America North
Mexico
North America

5. Historical Entry Strategies
5
Distribution Channels
• Brewery to customer (Belgium)
• Wholesalers to customers
– Legal reasons (USA & Canada)
– Historic market practice (China & Russia)
• Third-party distributor (Brazil &
Mexico)
2015
Acquisition History
Mergers &
Acquisitions
Joint-Ventures
Equity Based
Partnerships
Cooperative Export
Model
Licensing

6. Entry Strategy For Myanmar
• Acquire Mandaly Brewery to immediately gain
4% of the market share
– Approximately 150 Million USD
– Assuming continued 4% market share, and current
growth of market, the acquisition would generate 150
million in revenue by year 5
– Use plant to start brewing Stella Artois
– Gaining more market share
• Construct a larger more advanced plant outside
of Yangon within the first year
• Combining AB InBev’s industry knowledge
and economy of scale with Mandalay
Brewery’s local know-how
6

7. Myanmar Beer Market
• Market Size
– 265 million USD market in 2013
– 80% of adults in Myanmar drink beer
• Market Growth
– Projected to grow to 675 million USD in 2018
– A CAGR of 16.9%
• Market Needs
– A pilsner
– A premium international beer brand
• Market Trends
– Growth of foreign beverage companies
– Coca-Cola now controls 50% of the
carbonated beverage market, before 2012 the
drink was only available if smuggled
7
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
0
100
200
300
400
500
600
700
800
900
1000
2013 2014 2015 2016 2017 2018 2019 2020
Myanmar Beer Industry (Million USD) Liters per Capita
Year 1
(2016)
Year 2
(2017)
Year 3
(2018)
Year 4
(2019)
Year 5
(2020)
Estimated
Market Size
(Annual
Revenue
Million US$)
464.38 559.87 674.99 813.79 981.13
Estimated
Market Share
4% 5% 6% 8% 10%
Estimated
Revenue
(Million USD)
18.58 27.99 40.50 65.10 98.11

8. Understanding AB InBev’s Edge
Strengths
-Economy of Scale Advantage
-Brand Recognition
-History of distribution channel
design
Weaknesses
-Government Presence in Beer
Industry
-Low income per capita
-Large marketing required
Opportunities
-High projected annual growth rates
in the market
-Early entrance
Threats
-Downward currency pressure
-Political risk (military government,
human rights violations)
-Expropriation
SWOT
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9. Competitor Analysis
• Myanmar Brewery Limited
– 45% owned by the Government
– 55% owned by Kirin Holdings after buying
shares from F&N for 560 million USD
• Dagon Beverage Company
– Joint-venture between the State, Myanmar
Golden Star Company and Bermuda
Brewinvest
• Mandalay Brewery
– Founded in 1859
• Heineken
– 2015 60 million USD investment
• Carlsberg
– 2015 70 million USD joint-venture
• Chang (2013)
9
83
4
13
2013 Market Share
Myanmar Brewery Limited
Mandalay Brewery
Dagon Beverage Company Limited
International Market Entrants
(Thailand) (Netherlands) (Denmark) (Japan)

10. Customer Analysis
• Beer makes up 82% of alcohol
consumption in Myanmar
– Most of which is consumed at
“Beer Stations” during European
soccer matches
– Or in cities, purchased for home
consumption from small stores
• Males make up a vast portion of the
Myanmar beer market
– Men who drink consume roughly
10.3 times more then women who
drink
• Tourists
– Restaurants, resorts, and newly
emerging nightlife
– Increase in tourism 10
791505 816369 1058995
2044307
3081412
7000000
2010 2011 2012 2013 2014 2020
(Projected)
Annual Tourism in Myanmar

11. Marketing Mix
• Price
– Average domestic draught (.5 lt) $1.00
– Average imported bottle (.3 lt.) $1.3-2.50
• Promotion
– Electronic Billboard
– Soccer partnership (Man U)
– Cap Rewards
– Marketing to Women
• Place
– Domestic Consumers (Yangoon and
Mandalay)
– International Consumers
– Hotels, restaurants, clubs, tourist sights, etc.
• Product
– Stella Artois bottles and kegs 11

12. Conclusion
• Myanmar is economically liberalizing and politically
democratizing at a fast rate
– Political and currency risks still remain
• State owned joint-ventures control a large majority of the
market
– High marketing costs required in order to gain market share
• Logistical constraints
• A largely untapped international beer market with projected
exponential market growth
• Acquisition of Mandalay Brewery and construction of a new
plant will have immediate impact on AB InBev’s top-line and
local market success.
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13. Questions
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