Beer Market Competetion in India


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An analysis of competition in two major players in Indian Beer market i.e. SAB Miller and UB Spirits

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Beer Market Competetion in India

  1. 1. Project Report 2008 • Marketing Mix Analysis & Brand Extension Proposal for major national and international beer brand Arindam Das • P/MN/R/08/149 1 Page
  2. 2. Project Report 2008 Table of contents Topic Page no. Objective 3 Executive Summary 4 Methodology 5 Analysis 6-10 1.Comparing 4P’s of the chosen brands 2.Brand repositioning of local brand in presence of the international brand 3.Brand extension for both brands Limitations 11 Findings 12 Conclusion and recommendation 12 Appendix 2 Page
  3. 3. Project Report 2008 Objective: Objective of this report is to present a general idea of Indian beer market and get an inside feeling of the market by analyzing the marketing mix of the two most successful brands, Kingfisher, a home-grown brand and Foster's, an international brand. Before analyzing the brands let us get a feel of the Indian beer market which both brands have been able to capture. 3 Page
  4. 4. Project Report 2008 Executive summary: Alcoholic beverages market, especially beer market in India is growing with leaps and bounds. The beer market in India is estimated to be over Rupees 3000 corers. Annual consumption of beer is over hundred 10 million cases. CAGR of beer industry in the year 2008 is 14.3%, much higher than most of the countries. Rising income the Indian consumer, change in age profile and lifestyle as well as a reduction in beer prices are major factors pushing this growth. Traditional beer markets like Europe and USA are either flat or in a state of decline whereas consumption in the BRIC countries increased by almost 50% during 2002-2007. In India, beer sales grew at nearly 90% compared to, less than 60% growth for other alcoholic drinks and according to industry sources Indian beer market is expected to nearly double itself to 23.3 million hL by 2012 from 12.5 million hL at present. Another interesting fact is among non- Islamic countries India has the lowest per-capita consumption of beer. Consumption (lit/annum/adult) Czeck Rep Germany Australia UK US Japan China Global Avg India 156.9 115.8 109.9 99 81.6 47.6 27.4 22.1 0.9 Source: SAB Miller India For these reasons international beer companies are coming to India almost every quarter. Three big international brands Budweiser, Carlsberg and Heineken entered India in last 12-15 months. In February this year, Anheuser-Busch, makers of the legendary Budweiser, that calls itself the king of beers, announced its India entry through a 50:50 joint venture with the Hyderabad-based Crown Beers. Three months before that, Carlsberg, the beer brand for soccer fans, announced operations in India through its venture, South Asian Breweries. Last year, the Singapore-based Asia Pacific Breweries picked up a 76 per cent stake in Aurangabad Breweries, paving the way for the launch of Heineken into India. There are others like NRI entrepreneur Karan Bilimoria, who created waves in UK's Indian restaurants by marketing Cobra, a less-gassy beer, also eyeing the market. Even the big three brands have siblings. Apart from Heineken, Asia Pacific Breweries (APB) sells Canon, Baron's and Market Share Tiger; Crown Beers India unveiled Armstrong; while UB Gr. SABMiller Others South Asia Breweries has introduced Pallone.But Indian beer market is highly saturated and difficult to 14% break into. More than 80% of the market is 48% controlled by the two players, UB and SAB Miller. While UB with brands like Kingfisher, Zingaro and 4 38% Page Kalyani Black has a 48% market share, SAB’s bouquet
  5. 5. Project Report 2008 of acquired brands- Haywards, Royal challenge, Knock Out and Foster's deliver a combined market share of 37%. According to market analysts international brands excepting Foster's have made little impression in India till date but according to these new entrants Indian beer market just started to evolve and has a huge growth potential. Till now the new entrants are looking at encashing equity with a premium pricing strategy and they cater to only 30% of the market- the mild beer segment. For remaining 70% market this players launched multiple new brands that are competitively priced. However some of the consultants are not confident about the success of this marketing mix since Indian scenario is widely different from other growing markets because of its immense and diversified geography, huge variety of social and cultural setup, differential tax regime across states, are to name a few. Taxes imposed on alcoholic beverages are very high which make the competition tougher for new entrants. Currently spirit manufacturers trying to push forward a policy change which will exempt beer (especially mild variety) from high alcoholic tax regime and accept it as normal refreshment beverage but in Indian socio-cultural and political scenario this proposal has only a few takers. Classification of beer: Lager: It is stored for a specified period before being bottled or canned. Pilsner: A type of lager beer, it is light with 3.0 - 3.8% alcohol and has a medium hop flavor. Ale: Top fermented, this kind of beer has distinct hop aroma. The alcohol content is around 4 - 5%. Stout: Dark with burnt flavor and strong malt aroma; it is heavily hopped and contains 5 - 6.5% alcohol. Porter: This is less dark than stout, even less hopped and is somewhat sweet. Alcohol content is around 5%. Creamy Ale: A highly carbonated beer that is produced by a combination of Ale and Lager. Malt: A strong flavored, high alcohol content beer that ranges in flavor and colors. Methodology: Due to lack of time and resources collection of primary data has not been done and the entire project depends on the secondary data’s collected from different web pages, online research papers, etc.Analysis and others parts are done on the basis of these secondary data and knowledge collected from the marketing lectures and text books. 5 Page
  6. 6. Project Report 2008 Analysis: Marketing Mix Analysis: Kingfisher History: Parent company of Kingfisher, United breweries was established in 1857 with the name Castle breweries. It was renamed to United Breweries in 1915 and started manufacturing beer from the year 1944 under the label Exports Beer. UB group started exporting beer to Middle-East from 1974 and in the year 1978 it launched Kingfisher brand. Market Position: It is the largest selling brand in India and commands more than 30% share in the beer market. In 2005-2006 it recorded 28% growth. Target markets: Kingfisher has two different products for different market segments. Kingfisher Mild (Alcohol<4%) Kingfisher Strong (Alcohol>4%) • Youth who drink for fun • Those who want to light beer to • First-time drinkers who drink for something stonger experience • Regular drinkers who prefer stronger • Urban women who prefer to drink light flavour Product No. 1 selling product in its segment. Good quality raw material is used to maintain the quality standards. Consistency of product quality is high. Always tastes fresh due to good quality and well developed distribution network. Hangover due to heavy consumption is very mild. Place It is available throughout India, and is dominant particularly in South and West India. UB has 16 company-owned breweries apart from nine contract breweries in 20 different locations across the country. Kingfisher also has a presence in 60 countries. Kingfisher also has an online marketing system. Any consumer can go to and get their beer- a mini mum of six bottles home delivered. This move has been a big draw with info tech professionals and district women drinkers. It also has some sixteen hundred shops apart from pubs and bars. Better retailing outlets are also 6 to be opened under the Kingfisher Brand. Page Kingfisher also has tie-ups with large department stores like ‘Foodworld’ for retailing its Beers.
  7. 7. Project Report 2008 Kingfisher also has association with number of Very Classy, Up-market & Stylish bars & lounges which goes hand in hand with its brand image. Price In both mild and strong beer segment Kingfisher uses competitive pricing strategy. 650ml • Rs.65 330ml • Rs.35 Promotion Kingfisher tagline ‘King of good times’ is one of the most popular and most successful tagline in India. Since advertising of liquor is banned in India, Kingfisher uses surrogate advertising methods like using mineral water and sodas. Aggressive advertising at Outlets & Pubs. Recently it also started merchandizing sports goods and trendy clothing and accessories under Kingfisher brand name. Each year Kingfisher brings out new calendars featuring top models in swimwear. Kingfisher also promotes itself by sponsoring events like fashion shows, sportspersons like Narain Karthikeyan, East Bengal soccer team. UB promoter also acquired a Formula- One team (Force India). Kingfisher also deals in sports merchandising starting with an ad featuring Sourav Ganguly and Ajay Jadeja in 1997. With the launch of Kingfisher airlines combined promotion is possible which helps the brand promotion a lot. Kingfisher also ventured into other businesses with same brand name making the brand more visible and publicity easier. Kingfisher recently tied up with NDTV for their new lifestyle channel NDTV Good Times for five years And finally the Sultan himself, Dr. Vijay Mallya, the Big Daddy of all brands, the flamboyant Czar of the liquor industry who is the youth icon of a million hearts. His sole presence outweighs all other competitors taken together. 7 Page
  8. 8. Project Report 2008 Foster’s History: Foster's was established by two brothers W M and R R Foster’s in the year 1986. SAB Miller is the parent company which runs Foster's group, a premium global multi-beverage company delivering a total portfolio of beer, wine, spirits, and cider non-alcohol beverages. In the 70s Foster's started exporting to USA and UK and entered the Indian market in a 1998. Foster's is considered as a consumer driven brand. Market Position: Foster's belongs to the SAB Miller stable which is the second largest beer company in India, in terms of market share. Till now it is the only international beer brand which successfully captured a significant share in the Indian market. Target markets: The main target markets of Foster's in India youth. But targeting strategy of Foster's can be presented as Occupational:Working Age:20-30 Class Behavioural:Regular & Sex: Male & Female first-time users Foster’s is promoted as a light beer for the sophisticated consumers who drink beer just for experience and not for getting drunk. For regular user and other consumers SAB Miller promotes Hayward’s 5000, a strong beer. Product Premium Lager beer Fresh taste Among the two sizes (330ml and 650ml) pint size (330ml) is more aggressively promoted and 70% of Foster’s sales today come from the pint-sized market. The product is a light beer - highly carbonated with low bitterness and no aftertaste. It has fewer calories and lower alcohol content. 8 Page
  9. 9. Project Report 2008 Price Foster's unlike Kingfisher follows a premium pricing strategy for its products. The prices of widely available Foster’s product are Beer Cans 375ml • Rs.79 Beer Pints 355ml • Rs.75 Place SAB Miller has 10 breweries in nine states and contract manufacturers in two other states. Foster's has 24 distributors serving over 5,000 outlets, including over 2,300 outlets in Mumbai. General distribution structure of Foster's is shown here- Company Distributor Retailer Consumer Source: Promotion ‘Australianness’ is the essence of Foster's brand image is promoted in every market in the world. All Foster's lager theme advertising is consistent with an Australian positioning. The overseas advertising of the product often focuses upon the Australian connotations of the 9 beer, e.g. with reference to stereotypical Australian imagery such as kangaroos, exaggerated Page accents, and hats with corks on strings.
  10. 10. Project Report 2008 Since direct promotion is banned in India Foster's use surrogate advertising method using mineral water of the same brand name. Fosters promoted its brand by sponsoring various sports like cricket, to enter the Indian market. Afterwards it withdrew from cricket and started promoting sports like football, rugby, motorsport etc. Foster's is deeply committed to promoting responsible consumption. While Foster's does not provide medical advice, nor attempt to advise individuals on important and complex medical issues, the Company is committed to ensuring that consumers access the best available information regarding alcohol and their health. Steeping into Men’s Fashion apparels collections for better brand visibility. 10 Page
  11. 11. Project Report 2008 Brand repositioning of Indian brand in presence of international brand: The term “positioning” is widely used within the marketing and advertising communities today. Positioning is often used nowadays as a broad synonym for marketing strategy. Positioning should be thought of as an element of strategy, a component of strategy, not as the strategy itself. The term “positioning” is, and should be, intimately connected to the concept of “target market.” That is, a brand’s positioning defines the target audience. The correct positioning of a brand is basic and fundamental to its success; an incorrect or suboptimal positioning can doom a brand to underperformance or failure. Kingfisher, since its origin proved to be the marketing savvy brand. Even though it was the largest selling beer brand, but when Fosters entered the Indian market, Kingfisher sniffed possible competition and invested heavily in brand visibility and positioning. During 2003-04 Kingfisher again repositioned itself by changing the logo. Instead of the sitting kingfisher bird, the picture of a flying kingfisher was used during creation of new logo because the company wanted to promote itself as an aspirational brand which always wants to go high. This change was made mainly to maintain the distinctive positioning and to create a stronger emotional bond with the aspiring Indian youth. This repositioning was so successful that even today Kingfisher uses this logo. After the entry of international brand Fosters, Kingfisher repositioned itself into a lifestyle brand adopting jingles like ‘Oola la le lo’ and tagline ‘King of good times’. Kingfisher tried to position itself as a brand for the successful and professional individuals who are always ready to take a break, have a party or just chill out. This positioning was promoted using Indian cricketers such as Ajay Jadeja and Sourav Ganguly, West Indies cricket team (At that time Kingfisher was the official sponsor of WI cricket team) and various other means. The notable thing during this repositioning process is that during this process Kingfisher kept the original message of the brand intact while adopting strategies (including advertising, logo designing, etc.) to communicate better with the consumers and to create a stronger emotional bond with them.The strategies of Kingfisher paid off well and as a result Kingfisher maintained the leadership position and added more dimensions into the brand making it stronger than before. 11 Page
  12. 12. Project Report 2008 Brand Extension: Kingfisher is one of the most recognized brand in India and SAB Miller’s foster’s has also positioned itself as a unique brand so extension of both brands is possible without much hassle. Kingfisher: Kingfisher is widely known among large number of consumers and its brand presence increased after diversification into airlines business. Kingfisher brand can be extended in following ways- Line Extension: Ultra Premium Beer: Though Kingfisher has a huge presence in both light and strong beer segment but from the beginning it followed strategic pricing policy and that made the brand very popular. But with the increasing income level of the Indian youth and the entry of international spirit majors like Carlsberg, Budweiser, etc. Kingfisher should introduce a high-priced premium beer that would compete against these brands effectively. In this way the company could extend its customer base and their strategy would also help the company to tap the high income aspiration group and since company could apply ‘skimming the cream’ policy for this segment, it could be assumed that revenue generation would be high enough to maintain profitability. This move may also help the company if it wants to transform itself into a legendary brand not only in India but also across the globe. Category extension: Energy drinks: Kingfisher always maintained itself as a lifestyle brand and associated the brand image with the youth. With the increasing per-capita income and westernisation of the Indian society, people are getting ready to spend more and more. On the other hand they are more conscious about health issues. Energy drinks are very popular in Western countries and some of them also entered into the Indian market but they failed to make an impact. If a company like Kingfisher with huge brand popularity and strong self and distribution network introduce energy drinks it could be a success. It will also go hand in hand with the current image of the brand. Film production and distribution: Every year Indian film industry release a lot of movies and it is the largest film industry in the world considering the number of release per year. Still in India same production and distribution has not reached professional level. Only a few companies at present do things in a methodical way. But international production majors are entering in the Indian cinema space and Indian multinationals are also taking interest in this field. Kingfisher as a lifestyle brand always maintained a close relationship with the film fraternity and also has a presence in the television space in a joint venture with NDTV. So it would be a natural extension for the brand to start a movie and television production house. With this move Kingfisher would bring in its corporate expertise and financial muscle. This will also help the brand to increase the brand visibility. And just like Adlabs Kingfisher will have the opportunity to create its own multiplex chain and it will also help the current lifestyle apparels and accessories business a lot. Apparels and accessories retailing: Even though Kingfisher is already present in the apparel and accessories 12 space but its presence is very limited. According to industry estimates organised retailing is the next big thing. Page In this scenario Kingfisher could easily use its huge brand presence and popularity by investing more into the
  13. 13. Project Report 2008 apparel and accessories retailing. In this way Kingfisher could transform itself into a complete lifestyle brand and that would open new horizons for the brand. Fosters Fosters always maintained its Australian identity throughout the ups and downs of the spirit industry. It is the only well-known international spirit brand in India and Foster's can use this very easily to extend the brand Line extension: Low-price beer: From the beginning Foster's maintained high pricing strategy and that helped the brand to grow. Now since the brand is already popular they could introduce a localised version of the brand in lower price. That would help Fosters (SAB Miller) to strengthen its market presence and to compete against Kingfisher. This new brand will be a unique mixture of Australian characteristics of Foster's and local characteristics and the target segment will be the Indian youth with low disposable income. Using the current infrastructure and distribution network, SAB Miller would make the process easy and less costly and that would increase the profitability of success. Category extension: Sports merchandising: Foster's always maintained its position as the Australian brand and Australia is a multisport country where most of the sports are very popular and as the country Australia is very successful in these sports. Fosters previously maintained its relationship with cricket and other sports and is now also responsible for different sporting events. So they could use this to enter sports merchandising business in India using cricket as the entry point and then extending into other sports. They could also use the Australian image to relate the sporting fraternity of India and Australia and by this way they could popularise the currently unpopular sports like boxing, shooting, etc. If this strategy could be implemented properly it would make Foster's unique and give the brand a head-start. 13 Page
  14. 14. Project Report 2008 Limitations: Our study is based on secondary data, mainly from newspapers and websites and we had no access to primary data. As a result the report may not contain the latest data about the present market scenario which could otherwise have made it far better and relevant. Findings: Traditional beer markets in Europe and USA are either flat or are in a state of decline, whereas India still has a huge untapped market. For these reasons international beer companies are coming to India almost every quarter. Kingfisher, since its origin proved to be the marketing savvy brand and even though it was the largest selling beer brand but when Fosters entered the Indian market Kingfisher sniffed possible competition and invested heavily in brand visibility and positioning. Kingfisher changed its logo and adopted a new logo and tagline, sponsored the West Indian cricket team and also used the Indian cricketers to sponsor its product. It went into airlines, lifestyle and even started a television channel with NDTV. From our study we have also suggested some brand extension methods under, line extension and process extension. Conclusions: India is a growing economy and its market is opening up. The per capita income of the people of the country is rising daily and so is the beer consumption rate. The stigma associated with the consumption of alcoholic drinks has also gone down; as a result the beer companies are trying to get more associated with everyone’s life. 14 Page
  15. 15. Project Report 2008 Appendix Kingfisher’s overseas promotion drives - 2004-2007: 1. Abu-Dhabi to Goa: A promotion at all the six stores of Spinney’s, Abu Dhabi took place where customers were entitled to a raffle coupon to win an all expense paid holiday to Goa on purchase of any case of Kingfisher or Kingfisher Strong. Two lucky winners were to fly to Goa, for an exclusive Taj resort, sightseeing and excursion including visit to the production unit and lots of complimentary Kingfisher to ensure that happy times stay with our valued customers forever. 2. Tie up with Sony: Kingfisher had an exclusive deal with Sony consumer electronics raffle and instant scratch and win promotion wherein the customers on purchase of any case of Kingfisher Lager or Kingfisher Strong stood a chance to win by way of instant scratch and win rewards free Kingfisher Lager / Kingfisher Strong goodies like T-shirts, Caps, Desktop Calendars, free bottles. 3. Alliance with Bollywood: Keeping in mind the popularity of Hindi movies outside India Kingfisher was a part of the souvenir programme for the Shah Rukh Khan show in Hong Kong on 1 December 2004 as a part of Diwali celebrations in Hong Kong. With other high profile stars like Preity Zinta, Saif Ali Khan, Zaid Khan, etc for the event. 4. Test market in South Africa : It received very positive test market results for Kingfisher Premium Lager Beer and Kingfisher Strong Premium Beer in 330 ml cans for the African markets. 5. Launching new products in the market: A trial for 2 cases of Taj Mahal 330 ml bottles in June 2004 for Australia generated a lot of interest and enthusiasm for the country of the origin brand, which spoke of eternal love and passion. With successive orders for the past 3 months, Taj Mahal Premium Lager Beer is now available in 6 packs: the most preferred pack size down under. 6. New merchandizing schemes started: Keeping in tune with the times and constantly updating our merchandise portfolio, Kingfisher offered its customers practical and useful merchandise, which are of very high quality and designed to meet the high expectations, which include premium travel bags, sling bags, waist pouches and foldable shopping bags, windcheaters and luggage tags, premium embroidered aprons and Polo T-Shirts. 15 Page