A Preliminary Analysis
of
International Expansion
Opportunities
Top 10 Markets Cross Border Consultants
Identified for Beer Exports
US Beer Exports
2012 ($)
US Export Growth
from
2008 - ...
0
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10,000
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VolumeofConsumption(thousandkiloliters)
Red = 2010 ...
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140
Per-CapitaVolumeofConsumption(liters)
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Per-Capita Beer Consumption by Country in 2010
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Sales Volume in American Dollars ($) from 2008 - 2012
Top 20 Importers of American Brewed Beer
Country 2008 2009 2010 2011...
Sales Volume ($) of US Brewed Beer in Top Growth Markets
Top 20 Growth Markets from 2005 - 2012
Country 2005 2006 2007 200...
Target Market Demographics
Population
Population growth
rate (%)
Literacy (%)
Unemployment
(%)
GDP (trillion)
GDP growth r...
Target Market Business Climate
Business climate Coface*
Index of
Economic Freedom**
Economic Freedom
of the World^
World B...
*Evaluating the business environment involves measuring the quality of a country’s private sector governance
– in other wo...
Why Use Economic
“Freedom” indexes?
The relationship between economic
freedom and prosperity is
strong. Using the Index of...
Australia Opportunities and Challenges
• Favorable tariff schedule under U.S.-Australia Free Trade Agreement (AUSFTA)
• Au...
Canada Opportunities and Challenges
Opportunities
• The top selling style of beer in Canada, by far, is the pale lager
• R...
China Opportunities and Challenges
Opportunities
• In 2010 China eased trade finance by relaxing its trade credit rules
• ...
Colombia Opportunities and Challenges
Opportunities
• The growing popularity of beer among Colombia's middle classes is pr...
France Opportunities and Challenges
Opportunities
• High savings level, low household debt
• Most beer sold in France is m...
German Opportunities and Challenges
Opportunities
• A 2010 report showed that Germany ranked second in terms of per-capita...
Mexico Opportunities and Challenges
Opportunities
• Mexican beer is distinctive for its lager-like properties, being gener...
Spain Opportunities and Challenges
Opportunities
• Spain’s trade policy is the same as that of other members of the Europe...
United Kingdom Opportunities and Challenges
Opportunities
• The financial situation of businesses has improved
• English b...
Turkey Opportunities and Challenges
Opportunities
• Beer is a very popular alcoholic beverage in Turkey. Commonly lager ty...
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Whyexportyourbeer.ppt [autosaved]

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US brewed beer exports have consistently grown for years now. Cross Border Consultants LLC, a trading and distribution company, takes a look at recent trends and which countries are the most promising for US brewers looking to sell their beers abroad.

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Whyexportyourbeer.ppt [autosaved]

  1. 1. A Preliminary Analysis of International Expansion Opportunities
  2. 2. Top 10 Markets Cross Border Consultants Identified for Beer Exports US Beer Exports 2012 ($) US Export Growth from 2008 - 2012 (%) Total Beer Imports 2012 ($) US Market Share GDP (trillion) GDP Per Capita ($) Population Beer Consumption Per Capita 2010 (liters) Australia 15,299,920.00 39 254,540,000.00 6% 1.542 43,300.00 22,262,501 81 Canada 144,508,026.00 40 594,121,000.00 24% 1.819 43,400.00 34,568,211 68 China 2,923,635.00 1,479 144,173,000.00 2% 8.227 9,300.00 1,349,585,838 32 Colombia 4,188,835.00 333 16,594,000.00 25% 0.366 11,000.00 45,745,783 37 France 153,035.00 3,533 703,990,000.00 0.02% 2.609 36,100.00 65,951,611 35.5 Germany 1,089,908.00 358 553,992,000.00 0.10% 3.401 39,700.00 81,147,265 107 Mexico 102,010,139.00 19 129,947,000.00 78% 1.177 15,600.00 116,220,947 57 Spain 455,415.00 704 255,874,000.00 0.10% 1.352 15,600.00 47,370,542 70 UK 6,372,011.00 -15 676,348,000.00 0.90% 2.441 37,500.00 63,395,574 74 Turkey 3,992,224.00 29,472 3,651,000.00 109% 0.794 15,200.00 80,694,485 13
  3. 3. 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 VolumeofConsumption(thousandkiloliters) Red = 2010 Blue = 2009 Top 20 Countries in Beer Consumption
  4. 4. 0 20 40 60 80 100 120 140 Per-CapitaVolumeofConsumption(liters) Country Per-Capita Beer Consumption by Country in 2010
  5. 5. 0 500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 4500000V a l u e i m p o r t e d i n 2 0 1 2 ( U S D t h o u s a n d ) Country Top 20 Beer Importers in 2012
  6. 6. Sales Volume in American Dollars ($) from 2008 - 2012 Top 20 Importers of American Brewed Beer Country 2008 2009 2010 2011 2012 Canada $103,575,431.00 $177,515,501.00 $188,386,611.00 $132,514,399.00 $144,432,007.00 Mexico $85,973,894.00 $84,809,727.00 $84,566,930.00 $95,585,638.00 $101,973,639.00 Paraguay $7,744,703.00 $6,215,744.00 $15,629,851.00 $26,788,415.00 $38,619,858.00 Chile $2,489,218.00 $3,489,566.00 $8,966,939.00 $14,381,455.00 $31,800,116.00 Panama $6,966,764.00 $9,228,348.00 $11,412,217.00 $11,937,601.00 $16,134,426.00 Australia $10,962,986.00 $14,602,100.00 $5,899,784.00 $6,603,786.00 $15,299,920.00 Sweden $2,704,562.00 $3,037,015.00 $3,619,651.00 $5,525,515.00 $8,359,367.00 Taiwan $10,876,939.00 $9,584,705.00 $8,312,904.00 $8,217,569.00 $8,052,005.00 United Kingdom $7,478,150.00 $3,755,665.00 $5,087,142.00 $4,770,087.00 $6,405,923.00 Korea $9,128,615.00 $5,013,181.00 $5,304,875.00 $5,170,384.00 $5,714,585.00 Honduras $1,701,531.00 $2,942,796.00 $2,405,043.00 $3,380,291.00 $5,340,423.00 Colombia $967,763.00 $1,515,665.00 $2,050,875.00 $2,776,919.00 $4,188,835.00 Turkey $13,500.00 $15,120.00 $38,296.00 $275,528.00 $3,992,224.00 UEA $3,944,184.00 $3,272,454.00 $3,752,878.00 $4,025,083.00 $3,619,354.00 Japan $1,524,212.00 $1,795,359.00 $2,161,214.00 $2,868,938.00 $3,330,751.00 Guatemala N/A N/A N/A $728,553.00 $3,012,753.00 China $185,122.00 $168,136.00 $546,417.00 $4,033,338.00 $2,923,635.00 Bahamas $3,125,855.00 $3,086,930.00 $2,475,883.00 $2,666,051.00 $2,853,801.00 Singapore $1,473,983.00 $679,604.00 $759,015.00 $1,080,148.00 $2,633,976.00 Hong Kong $2,890,149.00 $2,357,984.00 $2,558,468.00 $2,646,272.00 $2,489,753.00
  7. 7. Sales Volume ($) of US Brewed Beer in Top Growth Markets Top 20 Growth Markets from 2005 - 2012 Country 2005 2006 2007 2008 2009 2010 2011 2012 Turkey $0.00 $101,554.00 $59,223.00 $13,500.00 $15,120.00 $38,296.00 $275,528.00 $3,992,224.00 Brazil $12,759.00 $51,596.00 $46,282.00 $24,858.00 $84,604.00 $377,326.00 $3,172,353.00 $1,654,882.00 France $0.00 $0.00 $2,617.00 $4,212.00 $11,186.00 $61,478.00 $14,494.00 $153,035.00 Thailand $40,546.00 $36,325.00 $14,208.00 $6,521.00 $51,194.00 $106,293.00 $158,253.00 $211,890.00 China $91,168.00 $221,426.00 $430,666.00 $185,122.00 $168,136.00 $546,417.00 $4,033,338.00 $2,923,635.00 El Salvador $177,724.00 $231,076.00 $128,157.00 $53,193.00 $44,141.00 $4,756.00 $136,330.00 $762,076.00 Uruguay $0.00 $0.00 $2,606.00 $25,123.00 $92,193.00 $153,507.00 $292,827.00 $356,026.00 Chile $0.00 $0.00 $186,648.00 $2,489,218.00 $3,489,566.00 $8,966,939.00 $14,381,455.00 $31,800,116.00 Costa Rica $42,636.00 $64,694.00 $66,992.00 $197,346.00 $365,179.00 $659,789.00 $1,404,205.00 $1,952,158.00 Malta $0.00 $0.00 $37,542.00 $18,891.00 $75,176.00 $61,771.00 $69,816.00 $163,894.00 Spain $0.00 $107,530.00 $3,300.00 $56,634.00 $112,696.00 $41,559.00 $248,133.00 $455,415.00 Italy $56,813.00 $29,045.00 $112,642.00 $152,586.00 $281,670.00 $258,111.00 $423,236.00 $1,009,768.00 Philippines $0.00 $4,200.00 $26,091.00 $41,109.00 $129,978.00 $169,993.00 $312,126.00 $250,423.00 New Zealand $205,492.00 $61,467.00 $62,889.00 $216,821.00 $418,683.00 $676,902.00 $941,871.00 $1,255,793.00 Paraguay $246,211.00 $508,491.00 $2,127,738.00 $7,744,703.00 $6,215,744.00 $15,629,851.00 $26,787,115.00 $38,537,818.00 Israel $98,031.00 $72,364.00 $47,065.00 $40,304.00 $68,296.00 $1,029,216.00 $169,707.00 $194,200.00 Germany $422,860.00 $470,515.00 $1,114,378.00 $238,081.00 $362,194.00 $1,881,009.00 $990,065.00 $1,089,908.00 Colombia $261,214.00 $1,021,911.00 $1,531,235.00 $967,763.00 $1,515,665.00 $2,050,875.00 $2,776,919.00 $4,188,835.00 Anguilla $10,600.00 $10,080.00 $10,800.00 $23,936.00 $25,133.00 $32,632.00 $82,747.00 $88,741.00
  8. 8. Target Market Demographics Population Population growth rate (%) Literacy (%) Unemployment (%) GDP (trillion) GDP growth rate (%) GDP per capita Inflation rate (%) Country Risk* Australia 22,262,501 1.11 99 5.2 1.542 3.6 $43,300.00 1.8 A2 Canada 34,568,211 0.77 99 7.3 1.819 1.8 $43,400.00 1.5 A1 China 1,349,585,838 0.46 95.1 6.5 8.227 7.8 $9,300.00 2.6 A3 Colombia 45,745,783 1.1 93.6 10.4 0.366 4 $11,000.00 3.2 A4 France 65,951,611 0.47 99 10.3 2.609 0 $36,100.00 2.2 A3 Germany 81,147,265 -0.19 99 5.5 3.401 0.7 $39,700.00 2.1 A2 Mexico 116,220,947 1.07 93.5 5 1.177 3.9 $15,600.00 4.1 A4 Spain 47,370,542 0.73 97.7 25.1 1.352 -1.4 $31,100.00 2.4 B UK 63,395,574 0.55 99 8 2.441 0.2 $37,500.00 2.8 A3 Turkey 80,694,485 1.16 94.1 9.2 0.794 2.6 $15,200.00 8.9 A4 * Based on a scale of A1, A2, A3, A4, B, C and D. Coface's estimate of the average credit risk on a country’s businesses. This is giving an indication of a country’s potential influence on businesses’ financial commitments. Of course, there may be some very solid businesses in high-risk countries, just as there may be some risky ones in reliable countries. The overall risk is thus a combination of business-specific factors and factors relating to the country in which the business operates.
  9. 9. Target Market Business Climate Business climate Coface* Index of Economic Freedom** Economic Freedom of the World^ World Bank Doing Business~ Australia A1 3 10 10 Canada A1 6 8 17 China B 136 123 91 Colombia A4 37 96 45 France A1 62 40 34 Germany A1 19 19 20 Mexico A4 50 94 48 Spain A1 46 32 44 UK A1 14 12 7 Turkey A4 69 68 71
  10. 10. *Evaluating the business environment involves measuring the quality of a country’s private sector governance – in other words businesses’ financial transparency and the effectiveness of the courts in settling debts. This assessment relies on Coface’s worldwide network and the expertise deriving from its experience in underwriting risks, investigating companies and managing receivables. Coface's business environment evaluations use a seven-level ranking. In ascending order of risk these are: A1, A2, A3, A4, B, C and D. **The Index of Economic Freedom, an annual guide published by The Wall Street Journal and The Heritage Foundation, measures liberty, prosperity and economic freedom by creating 10 benchmarks that gauge the economic success of 185 countries around the world. The rankings are on a scale of 1 - 185. ^The index published by the Fraser Institute's Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property. Forty-two data points are used to construct a summary index and to measure the degree of economic freedom in five broad areas: (1) size of government: expenditures, taxes, and enterprises; (2) legal structure and security of property rights; (3) access to sound money; (4) freedom to trade internationally; and (5) regulation of credit, labor and business. The rankings are on a scale of 1 - 152. ~The World Bank's annual Doing Business Project. Economies are ranked on their ease of doing business, from 1 – 185. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2012.
  11. 11. Why Use Economic “Freedom” indexes? The relationship between economic freedom and prosperity is strong. Using the Index of Economic Freedom where economies are scaled on a range from 80 – 100 which are “most free,” 70 - 79.9 , which are “mostly free,” 60 – 69.9, which are “moderately free,” 50 – 59.9, which are “mostly unfree,” and 0 – 49.9, which are “repressed.” Looking at the bar chart we can determine countries that tilt toward market economics have healthy GDP per capita figures. For example, US consumer spending accounts for 70 percent of GDP and has a ranking of 76. We can assume similar markets’ consumers’ purchasing power are in a better position than their lower ranked, international peers to buy foreign goods. $0.00 $5,000.00 $10,000.00 $15,000.00 $20,000.00 $25,000.00 $30,000.00 $35,000.00 $40,000.00 Least Free Third Second Most Free GDPpercapitaPPP(US$2011) Economic Freedom Quartile
  12. 12. Australia Opportunities and Challenges • Favorable tariff schedule under U.S.-Australia Free Trade Agreement (AUSFTA) • Australia was ranked fourth internationally in per capita beer consumption, at around 110 litres per year • The overwhelming proportion of beer produced is lager (approximately 95%), the most popular among Australian beer drinkers. Opportunities • Strong Australian dollar will translate into cheaper imported goods Challenges • Company bankruptcies accelerated in the first eight months of 2012 and payments could continue to be delayed • Household consumption will continue to drive growth in 2013, but the rise in spending will be less sustained • In World Bank’s Doing Business report Australia ranked 44 out of 185 in terms of trading across borders • Discretionary spending will remain tight with households preferring to build up their precautionary savings
  13. 13. Canada Opportunities and Challenges Opportunities • The top selling style of beer in Canada, by far, is the pale lager • Regarding spending, Canadians in 2013 and 2014 will reduce their savings to compensate for modest increase in real wages. • Many factors will help sustain business spending: U.S. QE3, lower taxes, and competitive prices for imported products thanks to strong Canadian dollar • By volume, imported beer more than doubled its market share in past decade. In 2009, imported beer captured 13% of market, up from six per cent in 1999 Challenges • Per-capita beer sales have dropped 28 per cent from their peak of 115.2 litres in 1976 to 83.5 litres in 2009 • High household debt level • Canadian customs documentation, bilingual labeling, packaging requirements, and Canadian federal and provincial sales tax accounting can be surprisingly challenging • Increasing competition in a number of sectors translates into a need for competitive pricing, aggressive, flashy marketing, and deep discounts for agents and distributors
  14. 14. China Opportunities and Challenges Opportunities • In 2010 China eased trade finance by relaxing its trade credit rules • Gradual move up-market • Household consumption continues to grow moderately • By 2020, China‘s middle class is expected to account for around 45 percent of the population, or approximately 700 million people. Challenges • Share of consumption in GDP remains weak: rebalancing China’s growth model remains a medium term challenge • Overcapacity in industry and trade • China often lacks predictability in its business environment. China‘s current legal and regulatory system can be opaque, inconsistent, often arbitrary, and corrupt • While the outright prohibition of foreign invested firms to import, export and distribute goods in China has improved, the licensing and approval process remains difficult, time consuming and highly opaque
  15. 15. Colombia Opportunities and Challenges Opportunities • The growing popularity of beer among Colombia's middle classes is predicted to increase volume sales by about 14% between 2012 and 2017. The growing appreciation of international premium varieties means that sales are expected to grow at a slightly faster rate • Leading international brands are gradually finding markets in wealthy metropolitan areas, which will lead to an increase in consumption • Beer receives immediate duty-free treatment since May 2012 • A strong Colombian peso against the U.S. dollar is favoring U.S. exports Challenges • Many other trade agreements has increased competition for U.S. products • Internal transportation costs from ports of entry are costly due extremely poor infrastructure • Colombia’s bureaucracy still constitutes a barrier to trade for both local and foreign companies • U.S. suppliers should be aware that their ability to compete in Colombia could be hampered by unfair business practices such as contraband, counterfeiting, intellectual property rights violations, under- invoicing, money laundering, and dumping.
  16. 16. France Opportunities and Challenges Opportunities • High savings level, low household debt • Most beer sold in France is mass-produced, with major breweries having control of over 90% of the market and pilsner lagers predominating • An increasing interest in American culture, younger consumers, and changing lifestyles contribute to France’s import demand for American food and beverage products • In 2009 France speeded up and simplified its customs clearance procedures by introducing an electronic customs declaration and eliminating certain documents Challenges • The rise in unemployment, low business profitability, loss of confidence, and the significant fiscal shock suggest that there will be a fall in domestic demand • Household consumption will continue to slow in response both to more job losses and lower purchasing power • Business profit margins are at their lowest levels since 1985 • Overall beer consumption was down 14% between 1991 and 2010
  17. 17. German Opportunities and Challenges Opportunities • A 2010 report showed that Germany ranked second in terms of per-capita beer consumption, behind the Czech Republic and ahead of Austria (third) and Ireland (fourth) • Germany is the 5th largest U.S. trading partner globally and the top importer of U.S. goods in the EU (in 2011) • Price is not necessarily the determining factor for the German buyer, given the German market’s demand for quality • The strong growth of sales to non-European countries will only partially offset declining or weak growth in European countries. At the same time, imports could accelerate slightly in line with household demand. Challenges • While not directly discriminatory, government regulation by virtue of its complexity may offer a degree of protection to established local suppliers • GDP grew by 0.7% in 2012. Forecasts show annual growth of 0.4 percent in 2013 • Demographic decline • Some German entrepreneurs with selective experience with U.S. companies are skeptical about their long-term commitment and after-sales support
  18. 18. Mexico Opportunities and Challenges Opportunities • Mexican beer is distinctive for its lager-like properties, being generally light- bodied with a mild taste and is meant to be drunk cold. Most beer is sold in 325ml bottles and certain brands often sold in cans • Consumption will benefit from a healthy labor market, credit growth and the moderation of food and energy prices • Vast market (112 million inhabitants) • World players in cement, beer, telephony Challenges • Most Mexican microbrews are exported to the U.S., as it is difficult for small breweries to compete in the Mexican market • Competition will be tough. Mexico displaced Holland in 2003 as the worldwide leader in beer sales. Grupo Modelo and FEMSA send more than 80% of their exports to the U.S. Mexican beer's growth is coming largely at the expense of U.S. brands. • High crime level linked to drug trafficking • Strong domestic demand has led to high import flows, but the peso’s exchange rate, which floats fairly freely though on a long-term slight devaluation trend against the dollar, is favorable to exports
  19. 19. Spain Opportunities and Challenges Opportunities • Spain’s trade policy is the same as that of other members of the European Union, with the common EU weighted average tariff rate standing at 1.6 percent • Spain has improved the procedural requirements for exporting and importing goods • More and more Spaniards are beginning to drink beer instead. Most attribute it to the country experiencing a large number of microbreweries opening, particularly in areas like Catalonia. These microbreweries are helping the industry to grow and transform Challenges • Very high unemployment, especially among the young • Consumption is expected to be badly affected by the fall in household disposable income • Momentum for deeper economic and structural reforms appears to largely stalled. • Businesses are confronted not only with a fall in domestic sales but also with a shortage of finance, higher taxes and the ending of subsidies
  20. 20. United Kingdom Opportunities and Challenges Opportunities • The financial situation of businesses has improved • English beer styles include bitter, mild, brown ale and old ale. Stout was also originally brewed in London. Other developments include consolidation growth of beer consumerism; expansion of microbreweries and increased interest in bottle conditioned beers • Imported beers are increasingly popular, especially brewers from Eastern Europe • With few trade barriers, the United Kingdom is the entry market into the EU for over 41,000 U.S. exporters Challenges • Household consumption should remain weak especially as the level of debt remains high •Imports will grow only slightly due to household and business caution • Weak consumer confidence and broadly static wages continue to dampen retail sales • As UK and third-country suppliers represent strong competition, U.S. exporters need to offer differentiated products at competitive prices
  21. 21. Turkey Opportunities and Challenges Opportunities • Beer is a very popular alcoholic beverage in Turkey. Commonly lager type beers are popular • The Turkish beer market experienced 20% growth from 2001 to 2005 with many international brands gaining popularity. • The food and beverages industry will perform well in 2013 and beyond • In 2008 Turkey eased trade by introducing an Electronic Data Interchange, improving IT infrastructure and training of some 2500 customs officers and 14,000 traders Challenges • The lira continues to depreciate against the dollar and euro, it even reached a historical low point in August 2013, making imports more expensive • The government intends to boost its revenues by increasing taxes paid by motorists, and by raising alcohol and tobacco prices • The country is now in open crisis with Syria while tensions with the Kurd minority remain high • U.S. exporters face many challenges, such as contradictory policies, regulations and documentation requirements, lack of transparency etc.

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