1. BEER INDUSTRY –
ABINBEV & BIRA
Group B8
Rohith Nambisan
Udit Sharma
Suneha Sharma
Vaidy
Harshal Pande
2. GLOBAL BEER INDUSTRY
• Beer is the most widely consumed alcoholic beverage in the world (75%)
• The beer industry is an important global business, with annual revenues of $593
billion and is expected to reach $805 billion by 2024 with a CAGR of 6.2%. Hence it
is crucial for economy of many countries across the world.
• Owing to its great variety, styles and flavors, craft beer is now beating the big beer
maker
• Cultural changes, rapid urbanization, rise in disposable income, surge in female
drinkers, rise in youth population fuel the growth of this industry
• China is the leading producer worldwide, followed by US and Germany
• Largest Market – Asia Pacific, accounts for 33.33% of global market share
• Fastest growing market – South Africa
• The big 4 brewers – ABInBev, SABMiller, Heineken & Carlsberg dominate 47% of
global volumes and control 74% of industry’s global profits
3. ANHEUSER-BUSCH INBEV
- ABInBev is the world’s largest brewing company with annual
turnover of $54.6 bn
- Enjoys 28% global market share
From local crafted brews to beloved classics to historic recipes,
ABInBev brews it all with well over 500 brands and countless beer
varieties: Budweiser, Corona, Stella Artois, Hoegaarden, Beck’s,
Leffe, Brahma and many more…
- It has focused on acquisitions to grow and expand and this strategy
has maintained its momentum of growth along with financial stability.
- Its core values are passion for winning, customer satisfaction,
percolative work culture and cost minimization
4. BIRA 91
- Bira 91 is an Indian craft beer produced by B9 Beverages Pvt Ltd in
2015 and is well known for its thirst for massive global opportunities.
- It is now in the top 25 craft beer brands worldwide with respect to sales
volume and is one of the fastest growing beer brand in the world (5x
growth in FY 2017-18)
- It has quickly become a fad amongst the young millennials owing to its
delicious beers, bold identity and a strong draft network.
- It has established its presence in US (2017) and Singapore markets
(2018)
- It is driven by core values such as high performance, ownership,
consumer experience, agility, passion to build and irreverence
5. BIRA91 IN THE US – EAF
Environmental Factors
Economic Political Cultural Demographic
• Natural resources
• US 10th largest producer of
barley - 4.34 tonnes of barley /
year
• US ranks number one in
production of hops - 44,324
tonnes in 2017
• Stability
• Indo-US relationship is a
prominent partnership both for
India and for the strategic
benefit of the US in the Asia-
pacific region.
• The US mainly had a western culture
having European roots. However, the
population of the US is built through
migration of people from across the
world, becoming one of the more
culturally diverse countries.
• Population growth – The US is the 3rd
most populated country in the world
having a population more than 328
million.
• Labour - Craft beer industry employs
2.23+ million skilled people.
• Skilled labours are easily available.
• Technology - The US is one of the
most technologically advanced
countries.
• Current US administration has made
bilateral trade policies more stringent.
• The US administration has put
sanction on new craft beer launch in
2019.
• It is imperative for Bira91 to target the
regions which have culture similar to
where Bira91 has positioned
themselves.
• The US have a large number of
African American and Latino American
population who invented hip-hop
culture and Bira91 also calls itself a
brand for hip-hoppers.
• Age structure – Younger working age
population, ages 18 to 44, constitutes
112.8 million persons which is 36.5%
of the total population - Bira91’s
target.
• Capital – The US is the richest
economy in the world and per capita
income of its citizens is very high.
• Beer belongs to the favourites of
Americans and thus they readily
spend money for it.
• Ideology - Both India and the US
shares common values of democratic
government, global security, economic
well-being through cross-nation trade
and open market policies.
• “Our brand is in the middle of extreme
hipster Dom and extreme
mainstream”
- Ankur Jain, CEO Bira91
• Urbanization – Around 80% of the
total US population is urban.
• Highly urbanised demography of
America sets a very favourable
ground for Bira91 to launch its mid-
premium craft beer.
• Infrastructure – The US ranks in the
top 5 countries for ease of doing
business.
• The US has a very streamlined 3-tier
distribution system which allows
• American has very inclusive political
institutions for the growth and
development of businesses.
• Bira91 has positioned itself in
between hipsterdom and mainstream.
6. BUSINESS ENVIRONMENT
International level National level Industry level Company level
America and India share membership of
many international organisations like
ASEAN, WTO, IMF and UN.
The Craft Beverage Modernization & Tax
Reform Act recently has made the rules
less stringent, reducing excise tax rates
and regulatory burdens.
America is home to more than 4000 craft
breweries making it a $22 billion
industry. This provides stiff competition
in the market.
Capital requirement in terms of setup of
brewery is fulfilled by Sofina – a Belgium
investment firm – which has invested
$50m in Bira91 in its 3rd round of
funding.
According to Gallup's annual World
Affairs survey “India is perceived
by Americans as their 6th favourite
nation in the world, with 74% of
Americans viewing India favourably in
2017.
Recently the US administration has put a
shutdown for craft beer brewers i.e. they
can’t be issued permit to flow new beers.
This has bought some turbulence in beer
industry.
The US market is already captured by
giants like ABInBev, MillerCoors,
Heineken, Craft Brew Alliance. However
the industry is highly concentrated with
few large players capturing entire
market.
Bira91 has already started exporting its
craft beer to New York and New Jersey.
This investment would help Bira91 open
its own brewery there.
The bilateral trade is rapidly expanding.
India recently conferred STA-1 status –
putting India as one of the closest US
allies.
The production, sales and distribution
has to go through extensive rules and
regulations.
Thus brewers has to be very cautious
while operating in the US.
The size of the players is so large that
they generate economies of scale selling
at low cost and attaining cost leadership.
Bira91 has learned the art of beer craft
in Belgium which is a renowned
producer of top-class beer in the world.
Thus, Bira91 has all the necessary
technological advantages to prosper.
7. ANHEUSER-BUSCH INBEV IN THE US
• AB InBev was formed when InBev acquired Anheuser-Busch of the US.
• AB InBev acquired SABMiller in 2005 in an all cash bid.
• It is the leading American brewer having 47% of the total beer sales.
• It has 12 breweries around the united states and the system is highly efficient.
• It has fully dedicated and primarily exclusive wholesale network which provides high
foundation for its growth.
• It has very diverse product portfolio with star brands like - Stella-Artois, Budweiser and
Becks, Bud Light - which are very strongly positioned.
• It has attained high cost reduction though streamlined operations, supply chain and
implementation of AI.
• Very strong complementary between Anheuser-Busch’s and InBev’s operations helps
attain cost leadership further.
• Sports sponsorship, philanthropic outreach, top class wholesale management and
commercial program.
8. CAGE FRAMEWORK-VIETNAM
Cultural Distance Admins& Political
distance
Geographic
Distance
Economic
Distance
Attributes
of
Vietnam
• The high-context
culture of Vietnam
aligns with Indian
culture
• The organisations are
hierarchical, similar to
India.
• Cultural linkages with
India and Vietnam
dates back 2nd century
• India supported
Vietnam during the war
and supported the
unification of Vietnam
• India and Vietnam
• Vietnam is a single
party state ruled by
Communist party
• Considered stable
compared to its
neighbouring
countries.
• India will maintain a
strong political
relationship to
counter China’s rise
in S-E Asia
• India is a supplier of
military equipment
and military training
• India doesn’t
share
geographical
borders with
Vietnam.
• The major mode
of import/export
transportation is
by sea.
• The weather is
tropical and
there are 2350
rivers in
Vietnam.
• Vietnam is
developing
market economy
• Vietnam is
attracting foreign
investments after
opening its
markets to
foreign players
in 2004
• The FTAs and
ASEAN
cooperation will
boost Indian
companies in
9. CAGE FRAMEWORK FOR SINGAPORE
Cultural Distance Admins& Political
distance
Geographic
Distance
Economic Distance
Attributes
of
Singapor
e
• Indians constitute 7.5%
of total population.
• Enjoys extensive
cultural relations with
India.
• Singapore is
cosmopolitan nation
with a work culture mix
of Asian and western
influence.
• Singapore ranks 1
in ease of doing
business in South-
east Asia.
• Country has a
stable political
governance.
• The corruption is
low.
• Singapore is India’s
hub to political and
economic
relationship with S-E
Asian countries.
• India doesn’t
share
geographical
borders with
Singapore.
• India is well
connected to
Singapore by Air
and Sea.
• Singapore ranks
1 in ease of
doing business
in South-east
Asia.
• Singapore is
India’s 9th largest
trading partner.
• Both countries
have bilateral
collaboration on
aviation, space
programmes etc.
Vietnam offers B9 Beverages an attractive proposition for investment in manufacturing. The low cost of
entry and developing beer market leads to exciting potential. Vietnam also open new doors to ASEAN
countries like Singapore, Malaysia and Pacific countries like New Zealand and Australia.
10. Firm Strategy, structure
and rivalry
Factor Conditions Demand Conditions Related and supporting
industries
• The beer industry in
Vietnam is highly
competitive.
• Companies like
Thaibev are
investing in Vietnam
through M&A.
• Young people are
driving the beer
industry in Vietnam.
• Competitors
compete by
aggressive
advertisements,
promotional and
marketing activities,.
• People are getting
richer and spending
more.
• Growing presence of
manufacturing and
alternate industries
like craft beer, media
start-ups etc.
• Vietnam’s increased
focus will increase
the investments in
the country.
• Abundance of water
and fav. Monsoon
gives Vietnam its
competitive
advantage.
• High beer
consuming nation –
3rd largest beer
consuming nation in
Asia.
• Beer market
revenue expected to
grow by 5.6%
• Forecasted to see
largest volume
growth.
• Growing demand for
craft beer.
• Per capita beer
consumption at 47.6
L
• Major components of
beer are: Malt, Hops,
Yeast and Water.
• Interflour- An
Australian company
set up its largest
Malt manufacturing
plant (S-E Asia) in
Vietnam.
• The boom of Craft
beer market in
Vietnam led to
several auxiliary
industries for supply
of yeast and hops in
Vietnam.
VIETNAM COMPETITVENESS: PORTER DIAMOND
MODEL
11. AB INBEV- ASIA MARKET GROWTH
1995
• Interbrew
technology
transfer to
Zhujian
Brewery.
1998-2000
• Acquisitions
and
partnerships
with local
leaders
• E.g.. Jinling,
KK, Double beer
2004-2006
• Acquisitions of
giants like
Shillang and
Sedrin beer.
• Company
doubled its
business by
100%
acquisition of
Fujian Sedrin
Brewery
2008
• Merger
Anheuser-
Busch and
InBev.
• Improved China
footprint
through both
companies
complimentary
footprints.
2010-2014
• Acquires 4
breweries in
China- Increase
capacity of 9
million
hectolitres
• Acquires
Oriental
Brewery –
largest in South
Korea 2014
2015-
• Increased
company share
in Zhujian
Brewery.
• Partnership with
Japanese
brewer Sapporo
to improve
sales in japan
12. WHY ASIA-PACIFIC FOR AB INBEV
• World’s largest beer industry(35%) and
fastest growing market
• Fragmented beer industry and untapped
opportunities in APAC.
• Increasing urbanization and disposable
incomes.
• Changing cultural and spending habits.27%
30%
35%
8%
% of Volume of beer
produced
Europe
Americas
Asia-Pacific
Africa
https://www.statista.co
m/statistics/270270/wo
rldwide-beer-
production-by-region/
13. HOFSTEDE’S CULTURAL
DIMENSIONS
6 - Cultural Dimensions Analysis
Power Distance (Degree of power inequality)
Similar score Better brand communication & reach
Singapore +1, Vietnam +1
Individualism (Strength of interpersonal connection)
Lower score Higher respect for socialisation in groups
Singapore +1, Vietnam +1
Masculinity (Distinction of gender roles)
Lower score Healthier opposite gender relationship
Singapore +1, Vietnam +1
Uncertainty Avoidance (Flexibility on rules)
Similar score Closer legal implications
Vietnam +1, USA +1
Long term Orientation (Traditionality for change)
Higher score More futuristic and evolutionary
Singapore +1
Indulgence (Controllability of desires / impulses)
Higher score Extra socialisation and less inhibitions
USA +1
Result: Singapore & Vietnam=4/6, USA=2/6
0
20
40
60
80
100
Hofstede's 6D Model
India Singapore USA Vietnam
14. GLOBALISATION DRIVERS FOR BEER INDUSTRY IN
INDIAN CONTEXT
Driver Indicators Pressure for
Globalisation
Pressure for Localisation
Market • CUSTOMERS
• CHANNELS
• MARKETING
• COUNTRIES
• Increasing disposable income of
people across globe.
• Standardized marketing can be used.
• High growth in craft beer demand
• High Shelf life of beer
• Lead countries like Belgium push for
competitiveness
• Different geographies have distinct
taste and alcohol preference.
• Huge market potential in India with
huge demographic dividend.(62.5% of
total population in age grp 15-59)
Cost • Economies of scale
• Experience Curve
• Sourcing
• Logistics
• Highly competitive but product
differentiation can earn premium
• Govt. controlled alcohol distribution
systems
• Transportation costs may out weigh
the cost advantage: Need local
production
• Economies of scale not required;
hence lot of niche breweries
Government • Trade policies
• Technical standards
• Marketing regulations
• Government ownership
• Host Govt. concerns
• Concerned about Binge Drinking &
anti social behaviour.
• Complete Alcohol BAN in many
states.
• Ban on promotion & advertisement of
alcohol.
• No government control competitor.
Competitive • Volume of Exports and imports
• Interdependence of countries
• Global competitors present in the beer
market.
• High demand of imported premium
beer brands in market.
• India : globally connected market place
Local competitors like Kingfisher,
Haywards, Zingaro, Cobra making mark
in domestic market.
15. RECOMMENDATION
• The factors pushing for globalization of a local Indian beer brand appears more compelling as the global demand, competition,
government policies and cost drivers indicates high potential of globalisation for BIRA, thus increasing the top line figures and setting
BIRA on path of becoming a global beverage brand.