Kirin breweries india entry strategy

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Kirin breweries india entry strategy

  1. 1. This report is a result of my own work which was an integral part of my full time MBAprogram. Prior permission must be taken from the author before copying orreproducing this work.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 1
  2. 2. ContentsExecutive Summary ............................................................................................................................. 3Introduction............................................................................................................................................ 4Company analysis ................................................................................................................................ 5Target country selection ...................................................................................................................... 8Strategic Plan...................................................................................................................................... 11 Entry strategy – Entry mode ......................................................................................................... 11 Segmentation, targeting, and positioning decisions ................................................................. 12 Segmentation .............................................................................................................................. 12 Target market.............................................................................................................................. 13 Positioning ................................................................................................................................... 14 Analysis of potential competitors in the market ......................................................................... 15Marketing Plan .................................................................................................................................... 16 Product strategy and rationale ..................................................................................................... 16 Promotion strategy and rationale ................................................................................................. 17 Price strategy and rationale .......................................................................................................... 18 Distribution strategy and rationale ............................................................................................... 18Conclusions ......................................................................................................................................... 20References .......................................................................................................................................... 21Appendix A: Kirin Group .................................................................................................................... 24Appendix B: Beer Categories ........................................................................................................... 26Appendix C: Indian Beer Industry: ................................................................................................... 27Appendix D: Labelling rules .............................................................................................................. 29Appendix E: Beer Importers in India................................................................................................ 29Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 2
  3. 3. Executive SummaryDespite of varied range of several documentations about market entry strategies, includingentry mode, selection of distributor and promotion plans, firms have failed to achieve thedesired goal. Several firms often underestimate the complexity of the new market and oftenend up wasting time, money and effort. These complexities sometimes make firm to roll backfrom the plan of internationalization. These failures can completely destroy the brand andcan close all the doors of future entry. There are several minute details which can’t becaptured by studies or research; hence companies must get their hand dirty.Here in this paper I have proposed a new market entry strategy for a famous Japanese beerbrand. The paper not only talks about what strategy or steps to follow to enter the market butalso puts across the justification of these steps. The paper has also laid out a marketingplan for the company for the proposed market and at the end concludes with suggestiontowards the future steps after entering the market.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 3
  4. 4. IntroductionThe world is internationalizing at a very fast rate and alcohol industry is no exception to thisphenomena. The rapid consolidation of alcohol industry is acting as catalyst to this process.Majority of players are coming closer to become big and taking over each other. Thisconsolidation is making this industry more and more global and international.The process of entering to new countries or boundaries can be exciting and challenging bothat the same time. The unknown behavior of countries, their governments, and their societiescan place a lot of challenges. There are several variables like culture, religion, language,social behavior, economic conditions that can add to this complexity. Companies have todevice a thorough researched plan and strategy based on their market research and study toenter any new market.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 4
  5. 5. Company analysisKirin Brewery Co., Ltd (KB) a subsidiary of Kirin Holding Company Ltd enjoys the secondlargest brewery status in Japan. It has 30.7% of total Japanese beer market share. Company Shares (by Global Brand Owner) | Historic | % breakdown Geographies Categories Companies 2006 2007 2008 2009 2010 2011 Japan - Total Volume Beer Asahi Breweries Ltd 35.7 32.4 33.4 32.2 32.0 33.6 Japan - Total Volume Beer Kirin Holdings Co Ltd 34.3 33.0 32.3 32.9 32.4 30.7 Japan - Total Volume Beer Suntory Holdings Ltd 9.3 10.0 10.9 11.5 11.3 11.4 Japan - Total Volume Beer Sapporo Holdings Ltd 11.4 10.7 9.8 9.6 10.3 10.9 Japan - Total Volume Beer Others 7.7 12.2 12.0 11.6 11.3 10.7 Japan - Total Volume Beer Private Label 0.1 0.1 0.2 0.9 1.3 1.3 Japan - Total Volume Beer Orion Breweries Ltd 0.9 0.9 0.8 0.7 0.7 0.7 Japan - Total Volume Beer AB- InBev NV - - 0.3 0.3 0.3 0.3 Japan - Total Volume Beer Diageo Plc 0.1 0.1 0.1 0.1 0.1 0.1 Japan - Total Volume Beer Heineken NV 0.0 0.1 0.1 0.1 0.1 0.1 Japan - Total Volume Beer Modelo SA de CV, Grupo 0.1 0.1 0.1 0.1 0.1 0.1 Japan - Total Volume Beer Carlsberg A/S 0.1 0.1 0.0 0.0 0.0 0.0Table 1: Japan Beer market share 2011.Source: Euromonitor International 2012The KB also ranked at 10th position in global brewery market share with 2.6% share. Company Shares (by Global Brand Owner) | Historic | Total Volume | % breakdown Geographies Categories Companies 2006 2007 2008 2009 2010 2011 World Beer Anheuser-Busch InBev NV - - 19.9 18.5 18.4 18.3 World Beer Others 16.0 15.4 15.3 15.2 14.7 14.4 World Beer SABMiller Plc 9.6 9.6 9.7 9.6 9.4 9.8 World Beer Heineken NV 5.9 6.0 7.0 6.6 8.6 8.8 World Beer Carlsberg A/S 2.6 2.6 5.9 5.8 5.7 5.6 World Beer China Resources Enterprise Co 3.1 3.9 4.0 4.5 5.0 5.4 World Beer Tsingtao Brewery Co Ltd 2.7 2.8 2.9 3.2 3.4 3.6 World Beer Modelo SA de CV, Grupo 3.0 2.9 2.9 2.9 2.9 2.9 World Beer Beijing Yanjing Brewery Co Ltd 2.1 2.2 2.3 2.5 2.7 2.9 World Beer Molson Coors Brewing Co 2.7 2.6 2.7 2.7 2.7 2.7 World Beer Kirin Holdings Co Ltd 1.4 1.3 1.3 1.8 1.7 2.6Table 2: Global beer market share – 2011Source: Adapted from Euromonitor International 2012. Molson Coors Kirin Holdings Co Ltd Beijing Yanjing Brewing Co 3% Brewery Co Ltd 3% 4% Modelo SA Anheuser- de CV, Grupo Tsingtao Busch 4% Brewery Co Ltd InBev NV 5% 24% China Resources Enterprise Co Ltd Others Carlsberg A/S 7% 19% 7% Heineken NV 11% SABMiller Plc 13%Figure 1: Global Market share beer 2011.Source: Author1 2012 complied from Euromonitor International 2012.1 Author i.e. Deepak ShrivastavaAuthor: Deepak Shrivastava (imdshrivastava@gmail.com) Page 5
  6. 6. KB is not only one of the biggest manufacturer of beer in Japan but also produces,distributes and sales many international brands. It produces markets and distributesHeineken, Budweiser and Guinness brands in Japan (Annual Report, 2010, p.08). It has alsoacquired and opened few subsidiaries outside Japan and extending its presence in Asia andOceana region (Annual Report, 2010, p.08).―Kirin’s vision as stated in its long-term strategic plan KV2015, is to be a leading company inAsia and Oceania‖ (Annual Report 2010, p.02). Due falling age of Japanese population Kirinbrewery is aggressively expanding in other parts of the world with a vision of ―30% of liqoursale from overseas market‖(Annual report 2010, p.02). For more details on group,subsidaries and product portfolio please refer Appendix A.SWOT AnalysisFigure 2: SWOT AnalysisSource: Author 2012 complied from Kirin Annual Report (2010), Euromonitor International 2011(Beer In Japan) andDatamonitor Jul-2011Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 6
  7. 7. Value Chain Analysis:Figure 3: Value chain analysis of Kirin Brewery Co Ltd.Source: Author 2012 complied from Annual Report (2010), Datamonitor (2011), Kirin Holdings Company Limited BusinessApproach (2012) and Kirin Group Medium term business plan (2009)Company has huge range of beer portfolio (Detail profile in Appendix A) and its best globalbrands are Kirin Ichiban Shibori and Kirin Lager Beer. Both these brands are sold inpremium lager beer category (For details on beer categories please see Appendix B).As per nine strategies windows model (Hollenson 2011, p.18) analysis, company can beplaced in either window 8 or 9 depending. Due to optimistic target goals for 2015 and lookingat the industry trends, company should look for global targets to acquire or alliances. Thebeer industry, as per many reports published by Euromonitor, is consolidating day by dayand the only way to penetrate the market is by acquiring or making alliances.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 7
  8. 8. Figure 4: Consolidation in global beer industry.Source: Adapted from Euromonitor International Feb 2010Target country selectionAs per the Kirin’s group vision of 2015 to be a leading company of Asia and Oceania regionand 30% sales from overseas operation can only be achieved by entering the Indian market.Reasons for why India?Kirin has subsidiaries or ties ups with every big and growing economy in Asia and Oceaniai.e. ―Emerging Asia and Industrial Asia‖ (IMF 2011, p.vi) which includes China, Hong Kong,Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, Vietnam, Australiaand New Zealand. The only country left to enter is India the 2nd largest economy of Asia and4th Largest in world in terms of GDP(Purchasing power parity) (CIA, 2011).Market Screening model described by Hollensen (p. 263,2011) or systematic or nonsystematic approaches to international market selection described by Anderson & Buvik(2002,pp349-350) cannot be used here as India is the obvious choice for Kirin Brewery toincrease its presence in Asia region.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 8
  9. 9. India Country Analysis: PESTEL • Largest Democracy of the world with federal government system(CIA,2011). • Stable government led by Indian National Congress • Few threats to terrorism, regional rebels active in few states, few political pressure parties (CIA 2011) • Many regional parties make government in states hence state givernment takes precedence over central. Political/Legal • Comprehensive legal & regulatory framework has enabled business entities in India to grow their business(DM,pp37,2011) • Cases decided by Judges and not by Jury. Fundamental right of freedom speech, expression, religion and association. • Common Laws Based English model; personal laws apply to Hindu, Muslims and Christians, Judiciary laws. • Liberal since 1991 but still highly regulated economy. Created Tax holidays in special economic zones. • India is developing into Open market economy. Yet few traces of autarkic policies remain. (CIA 2011) • Fourth Largest GDP with a real growth rate of 7.8% in 2011 Economic • Growing middle class and largest work force in the world. 5th Ranked in FDI attarctiveness Index (DM, 2011) • Growing per capita income at the rate of 10% per year. (Euromoney,2011) • Religious country with 4 major religions (Hindu 80.5%, Muslims 13.4% Christian 2.3% and Sikh 1.9%) • Very diverse people spread across 28 states and 7 Union territory. 65% people between 15-64 age group. Social • The people speaks 14 official languages with more 1600 dialects (Library oCongress,pp7,2004) • Very family oriented society where people still prefer to live with their parents. 30% population live in urban areas. f • Strong progress in telecoms, IT and IT enabled services(DM,pp33, 2011). Low internet penetration 6.9%. • Strong global reputation in Biotech sector. Strong government support on R&D. Technological • Huge talent pool of technical education.And low cost research talent cost. • Increasing number of patents every year.(Datamonitor,pp36 2011)Figure 5: PEST IndiaSource: Author 2012 complied from Datamonitor 2011, CIA 2011, Library of Congress, 2004, Asian Development Bank 2002.Beer Industry Analysis India:Highlights:  Beer industry grew by 14% in 2010 and reached to 1.7 billion liters and Expected to grow by 12% CAGR (Euromonitor 20112).  United Brewery Ltd largest company with 44.3% market share.  Imported beer accounts for 2 million liters in 2010. This market is growing at a rate of 35%. (Jacob,2011)  2.4 liters per capita consumptions by 2015 compared to global average of 30 liters. Further details can be seen about industry in the Appendix CFive Forces Analysis on Indian Beer Industry2 Full report on Euromonitor International http://www.euromonitor.com/beer-in-india/reportAuthor: Deepak Shrivastava (imdshrivastava@gmail.com) Page 9
  10. 10. Figure 6: Five Forces analysis of Indian beer industry.Source: Author 2012 compiled from Euromonitor 20113 and MCXIndia Threat To Entry 4 3 2 Internal Threat to Substitute Competition 1 0 Power of Customer Power of SupplierFigure 7: Spiderweb plot of five forces 4 highest and 1 lowest.Source: Author 2012 complied based on above five forces analysis3 Euromonitor reports on Beer In India, The BRIC Market In Alcohol Drinks, Alcohol Drinks in India.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 10
  11. 11. Strategic PlanEntry strategy – Entry modeAs per analysis of factors affecting the foreign market entry mode described in Hollensen(2011, p 322) i.e. internal factors, product factors and few external factors like market sizeand direct and indirect trade barrier (high import duty on alcohols4) favours in hierarchicalentry modes. However external factors like culture distance (due to different taste ofcustomer), country risk and intense competition favours for export modes.Location advantage (Agarwal & Ramaswami, 1992, p.05) of India like market size, India isone of the largest producers of alcohol in world and contributes to 65% of world production(Alcohol Atlas, 2009) also suggests that Kirin Brewery should go for Hierarchical mode ofentry. However for initial stage I propose to go with Intermediate mode of co-operative exportmode (Hollensen, 2011, p.336) with below mentioned reasons. But for future growth, a fasttrack mode of manufacturing JV or green field investment will be beneficial (India is 5 thranked in terms of FDI attraction index, CIA 2011).Co-operative export mode:In this mode I propose, as per Value chain analysis of Kirin in above section, I see that 2downstream capabilities can be transferable to international market due their experience ininternational market.1) Sale Capabilities – With close tie up with an importer in India.2) Marketing Capabilities. – Setting up the marketing division in India.Hence these capabilities can be moved to India to keep a close watch on distribution, and togain valuable market and customer insight.Why export?Currently in India imported beer market is growing a rate of 35% and it is the safest waybecause as per Mr Aman Dhal (MD Brindco importer of wines and beer in India) ―it takes abeer brand 6-7 years to gradually meet customer tastes‖ (Jaboc, 2011).As per article from Sarah (2011) there are many brands like Australian Victoria Bitter,Netherlands Amstel, Corona, and Chinese Tsingtao have exports partnership with manyimporters like Brindco, CUB, Bliquidz and now trying to set up manufacturing JV with various4 As per reports published by Euromonitor, Asian Development Bank and others.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 11
  12. 12. regional and local players. Australian Victoria Bitter which was launched in 2010 is nowlooking for a JV for manufacturing it domestically to save the cost.As per transaction cost analysis (Williamson 1981, p.72) cited in Anderson and Coughlan anentrant will be better off in choosing an independent distribution. As per CAGE analysis ofthe country there are several unknown factors which can add risk profile of the country. Thefactors like religion, language, legal issue, society unsaid laws have been considered whilechoosing this option.In terms of exporting beer the Kirin Brewery Singapore (Annual Report 2010) is the suitableoption to export. There are 2 basic reasons to propose Singapore as best place to export.1) Kirin brewery already have production unit for Kirin Ichiban brand in Singapore and due toit small geographical distance from India it be cost effective in terms of transportation cost.2) There are several importers in Indian importing beer from Singapore. As per reportSingapore is the second largest country from where the 25% of value of total imported beerarrives in India (Euromonitor, 2011). This will company a lot of flexibility in terms of choosingthe importer.Segmentation, targeting, and positioning decisionsSegmentationDemographic descriptors:Age: 21-35 YearGender: Men and WomenIncome: High disposable income preferable IT and other high profile jobs in various servicesectors.Behavioral descriptors: Individual who consider premium and international brands as apart of status symbol. And group of individual who enjoys hanging out with friends in pubsand outdoors events.This segment has majorly travelled abroad and has exposure to international brand andtaste. They consider prefer new premium segment consumption as a status symbol amongfriends.Geographical Descriptors: High end pubs, clubs, restaurants, 4-5 stars hotels and bars offollowing cities: Delhi (North India), Mumbai (West India), Pune (West India), ChennaiAuthor: Deepak Shrivastava (imdshrivastava@gmail.com) Page 12
  13. 13. (Southern India), Bangalore (Indian IT Hub), Hyderabad (Indian IT hub) Chandigarh and alsofew cities in east India due to high consumption (Alcohol Altas, 2004) of alcohol in this area.Target market  Indian urban youth of age 21-35 with high disposable income and spend their leisure time at outdoor at club, pubs, restaurant and bars.  Foreigners travelling from various countries staying in 5 stars hotels.  Japanese Tourist travelling to India.Why this Target market?As per report this segment is more adventures and always ready to taste something. Jabob2011 in her article says the well travelled youth with rising disposable income are rapidlydeveloping taste for international brand. One the interviewee the article said he will be readyto spend more for something new. Age group of 20-29 is expected to grow by 11% between2010 and 2020 and age group of 30-39 is expected to grow 20.9% between 2010 and 2020.As per statistic from NIMHANS, Bangalore (2004) published in Alcohol Atlas5, approx 32% ofincome spent on Alcohol by urban families. Also as per United Nations 2007 worldpopulation report (2007, p12) approximately 40.8% of Indian population will live in urbanareas by 2030.Table 3: Consumer segmentation by age.Source: Adapted from Euromonitor International 2012.There are lot of foreigners coming to India as tourist and stay at big 4-5 star hotels. Thesecustomers already have taste developed for international brands. As per Ambwani 2011,there were around 130,000 tourists from Japan in year 2009 and brand already have a greatmarket share in Japan. Not only Japanese tourists because of brand presence in othercountries like UK, US and southeast Asia.Kirin’s products at 5-Star hotels will target these foreigners as these hotels service largenumber foreigners who know the drink (Mansukhani, 2010).5 Alcohol Atlas of India – Current Patterns & Trends of Alcohol Use.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 13
  14. 14. PositioningThe product will positioned as imported premium lager and will sold by on-trade mode.As per reports from euromonitor about beer sales channel around world, on-trade is thebetter performing medium of sale in India.Figure 8: On VS Off trade performance by country in 2010.Source: Adapted from euromonitor report global performance and prospects for beerAs per euromonitor 2011 report on alcohol Indian consumer prefer ―premiumisation‖ andwhich is evident from data that premium segment lager is largest selling beer and has shownhighest growth in 2011 (Euromonitor, 2011).Report also says that on trade segment has shown highest growth in 2011 due to cricketworld cup and IPL seasons. Due to high import duty on imported alcohol retail price of beergets almost double. In-spite of high price the two international brands (Asahi and Peroni),currently imported in India have seen growth last year (Euromonitor, 2011).On the question of how we are going to compete we have to position our product onrefreshing and crisp taste. This will align with target customer who wants to spend somequality time with friends and revitalize him from a tiring day.As people at the age of thirties are generally married, 79% of Indian in their 30s considered30 as the right time to get married and hence 30-35 age groups is primarilymarried(Euromonitor,2010). To target these customers we have to position our product as aproduct preferred and drink by the responsible man.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 14
  15. 15. Analysis of potential competitors in the marketCompetitors:Figure 9: Company Shares of Beer by National Brand Owner 2007-2011Source: Adapted from Euromonitor International 2011Domestic Premium and Standard Lager - SegmentUB Group: - The largest market share is with United Breweries Ltd (UB Group) which hugeproduct portfolio from whiskey, wine, Champaign and beer. Its Kingfisher brand enjoyslargest selling brand status. It products are in two beer segments i.e. premium lager(Kingfisher Brand) and standard lager (Zingaro Brand). It also has products in strong i.e8%ABV and light beer of 5% ABV segments. UB Group has ties ups with Dutch Internationalbrand Heineken and gaining considerable amount of growth. UB group has strong tie upswith every level of supply chain and is capable of launching new brands due to goodcustomer insight gained in several years. Recently launched Kingfisher RED is classicexample catering to people who switches from Beer to brown drinks in winter (Euromonitor2011).SABMiller: Is the second largest brewery company which has brands like Haywards 5000(Premium) and Knockout (standard). The SABMiller’s long presence in India and its globalreach makes it a strong competitor. SAB also has strong tie ups with supply chain, in 2009 ithas made a contract with farmers from Rajasthan, India for growing barley for its beerindustry (Thottam, 2009).Imported Premium Lager Beer SegmentFollowing brands are currently imported in India: Geist, Chimay, Orval, Achel, Asahi,Christoffel, Amstel etc. All these brands are imported by 22 importers who have hugeAuthor: Deepak Shrivastava (imdshrivastava@gmail.com) Page 15
  16. 16. distribution network across the country. These brands constitute just 1% of the total Indianbeer market.Marketing PlanProduct strategy and rationaleProduct: Kirin Brewery promotes its Kirin Ichibori Shibori brand as global brand currently inJapan and at other places it is considered as a youth drink who enjoys refreshing beer (KirinIchiban TV Commercial 2009) with friends. This brand has the crisp, smooth and refreshingtaste (as per Kirin Brewery website) which is perfectly what most youth in hot country wants.Balanarayan NT reporter of news paper agency reported that youth like Chinmay and Achelcited in his report like crisp taste in beer like most youth as the taste is not overpowering.Packaging: Currently Kirin Ichiban is available in 330ml CAN & glass and 650ml glass bottlesizes like most of their competitors in global markets. For Indian market the size of thebottles are as per global standard. And due to our product positioning (i.e. Clubs, Pubs, andRestaurants) metal CANS will not work.Labels: I will divide labeling of beer in 2 parts: 1. Front label: I will propose it to keep it same as per global market, currently Kirin Ichiban Beer has, as it is written in English and has its Brand logo. The target group is educated group and capable of reading English.Figure 10: Kirin Ichiban Shibori 330mlSource: Google Images. 2. Back Label: There are few policies on labeling on Alcohol product and hence the labeling needs to change from Singapore labeling. Details of Labeling can be found in Appendix D.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 16
  17. 17. Promotion strategy and rationaleIn India any kind promotion related to alcohol is prohibited by any media and hence that’sthe big challenge in India. Hence all the promotions are done via surrogate promotiontechniques like mineral water or soda commercials.Figure 11: Alcohol promotion policy in India.Source: Author 2012 complied from WHO report and Alcohol Atlas of India – Policies and InterventionsThe only available way to promote the brand is via social media and point of purchase butonly bars, pubs, clubs, restaurants. Hence I propose 3 way promotion strategies: 1. Organize exclusive summer outdoors events and club event: Indian weather is quite hot and except for couple of months of winter majorly it is hot in almost all the cities we are targeting. Also most of the targeted customers prefer to spend their weekends with friends at clubs, events, and pubs. These events are generally covered by many lifestyle (local and national) TV channels, news papers and lifestyle magazines. 2. Educating the bar tenders, waiters about the brand: As per Sosa cited in Jacob 2011 article, customers always ask bar tender and waiters for something new, that means the brand awareness needs to be created not only to the end customer but also to the bar tenders and waiters. One of the big importer of beers in India explains in Mansukhani 2010 article that ―If the beer brand is a virtual unknown, then how well the bartender or waiter knows the beer will determine if it sells or not‖. 3. Creating social media pages for brand awareness via a) Educating people about health benefits of having beer. b) Educating people about Beer includes types, ingredients, process and other general aspect. c) Sending random invite to events talked above.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 17
  18. 18. The targeted audience is educated and is a social media users, hence this is the best way to reach out to customer. This will also help us in gathering lot of valuable information about the customer base. Our product placement is quite different from strong beer segment and other brands, our less alcohol content and crispness can be promoted by educating people about how other beers are different from our beer brand. Also health benefits education will also attract family oriented 30-35 age group to enjoy the beer with their near ones.Price strategy and rationaleDue to high import duty and additional state taxes the price of imported beer are alwaysmuch higher than normal premium beer. Due to high price of the imported beer they can onlybe placed in high street pubs, restaurants, clubs and etc. Currently import duty is 100% plusstate taxes which vary from state to state. This is mainly to control the consumption ofalcohols.From customer’s point of view, currently customers are ready to pay higher for internationalpremium brands as per interviews taken by few new agencies (Already mentioned above).A close analysis of various factors affecting the pricing decision mentioned in Internationalpricing framework in Hollensen (2011, p.519) tells that our product price is majorly impactedby external factors of tariffs and duties. As per price promotion framework from Sousa,(2012) ―Rapid Skimming‖ will be the pricing strategy. As our product is highly priced andrequires a lot of promotion for brand setup.Based on reports from Jacob, 2011 the imported beer in India costs around INR 120-150 fora 330ml bottle and at some places it is even costlier i.e. around INR 175-300 and getscostlier in restaurants (Manusukhani,2010).I propose to keep the price at par with its rival in this segment i.e. Asahi. Currently Asahi isalso positioned as imported premium lager beer in India. In home market also both thesebrands are rivals. Asahi price was INR 126 in 2009 (Ghosh, 2009) and now it will beapproximately INR 150-180 for 330 ml.Hence I will proposed to keep the price approx INR 150-180 range for 330ml and INR 300-400 for 650 ml bottle for pubs, clubs, restaurants plus additional taxes like VAT.Distribution strategy and rationaleDistribution Strategy: As per strategies of distribution in Hollensen (2012, pp555) I wouldselect exclusive distribution strategy.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 18
  19. 19. Why exclusive distribution?Our product positioning is a premium imported lager beer which will be served in high endpubs, clubs, 5-star hotels and restaurants hence we want exclusive coverage. Whilechoosing the channel width defined in Hollensen 2012, p555 the only place our product fitsin is exclusive distribution.Currently in India there are 25 alcohol importers as per International Beverage network fordetails please see Appendix E. There are few leading players in this segment like Brindco,Pearl Wines, BLiquidz and Aspri Spirits. Majority of the big players have good reach tovarious cities in India. As per Aspri Spirits director Arun Kumar cited in Jacob 2011 thedistribution dynamics and inventory management decides whether the brand is actuallyvisible in India.India is a vast country and we want to target few cities mentioned in the target marketsection above. These cities are widely spread across India (see the map is Appendix C) fromnorth to south and west to east hence to address promptness to the market we have to haveat least 2 importers:1) Especially covering high end pubs, clubs, restaurants and hotel where Japanese travelerspay visit. As per Ambwani 2011, Many Japanese especially in summer make religious trip toBuddhist circuit in India. India and Japan share a common link of Buddhism and it is secondlargest religion in Japan (CIA Fact file Japan, 2011).2) Covering rest of the cities in India.Partnership with these players will motivate these players for future and will providecompany a great deal of control. The company can set up its own marketing department fordesigning and executing marketing strategies and most importantly understanding the fastgrowing Indian market.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 19
  20. 20. ConclusionsIndia’s growing market will provide Kirin Brewery a great place to expand and establish theirbrand. However this fast growing tempting market is full of uncertainties like unknowncustomer taste and changing taste, constantly changing government laws (state and central)and strong presence and hold of big players.As per our analysis we have found that in this environment beer importing along withbringing marketing function in house will be beneficial. The selection of distributor must bedone carefully. Most the distributors are having good distribution network and are financialstrong. Most of them have a good experience in handling the international brand.Additionally option of choosing 2 different distributors will provide Kirin some flexibility.Where Kirin don’t have to do any change in product but have to change its strategy forpromotion completely due to Indian regulations. Pricing the product is a challenge, currentlyplacing the product in high price and making a luxury brand can hinder the future path ofmaking brand a common people brand.Gradually by gaining experience through its marketing function Kirin can find suitablemanufacturing partner and start the production locally. Due to rapid consolidation of brewingindustry around world and even in India, Kirin has to soon think of next step towardsexpanding in India. India’s thriving market is the way for Kirin brewery to achieve its 2015vision of becoming a leader in Asia and Oceania region.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 20
  21. 21. ReferencesAgarwal, S and Ramaswami, (1992). Choice of Foreign Market Entry Mode: Impact of Ownership,Location and Internalization Factors. Journal of International Business Studies 23(1), page 1-27.Akiraht (2009): Youtube channel: Kirin Ichiban Shibori CM 2009 Available from:http://www.youtube.com/watch?v=WS12nej4SiU&feature=related[01/03/2012]Akiraht (2009): Youtube channel: Kirin Ichiban Shibori CM 2009 Available from:http://www.youtube.com/watch?v=0-IMdmT4Y4o [01/03/2012]Ambwani, MV (2011), Many Japanese tourists cancel India trip (online). New Delhi, The EconomicTimes. Available from: http://articles.economictimes.indiatimes.com/2011-03-16/news/28697831_1_travel-firms-corporate-travel-japanese-travel [01/03/2012]Anderson, O and Buvik, A (2002). Firms’ internationalization and alternative approaches to theinternational customer/market selection. International Business Review 11(3), page 347-363.Anderson, E and Coughlan, AT (1987). International Market Entry and Expansion via Independent orIntegrated Channels of Distribution. The Journal of Marketing 51(1), page 71-82.Balanarayan, NT (2009), Bangaloreans say cheers to imported beer (online) Bangalore, DNA India.Available from: http://www.dnaindia.com/bangalore/report_bangaloreans-say-cheers-to-imported-beer_1290374[04/03/2012]Central Intelligence Agency (2011), World Factbook Title: Country Comparison:: GDP (PurchasingPower Parity). Available from: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html [07/03/2012]Central Intelligence Agency (2011), World Factbook Title: Southeast Asia: India. Available from:https://www.cia.gov/library/publications/the-world-factbook/geos/in.html [07/03/2012]Central Intelligence Agency (2011), World Factbook Title: East & Southeast Asia: Japan. Availablefrom: https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html [07/03/2012]Datamonitor, 2011. Kirin Holding Company, Limited. Company Profile, Available fromhttp://360.datamonitor.com/Product?pid=6C5E7DED-FA84-4DE3-BA33-47774C0A9174 [01/03/2012]Datamonitor, 2011. India. Country Profile, Available fromhttp://360.datamonitor.com/Product?pid=8D107C29-BD3D-4077-AC9C-E12672375C88 [01/03/2012]Dr. SARMA, JVM, Asian Development Bank (2002), AN OVERVIEW OF STATE TAX SYSTEM ININDIA: OTHER THAN SALES TAXATION, Available fromhttp://www.adb.org/documents/reports/consultant/tar-ind-4066/govtbudget/sarma.pdf [01/03/2012]Dr. Sousa, C (2012), Pricing in international markets [Lecture Slides], BUSI43A15 Global Marketing,Full-Time MBA Programme, (2011/2012), Durham Business School, Durham University, UK.Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 21
  22. 22. Euromonitor International 2012, Beer In Japan, Available from http://www.euromonitor.com/beer-in-japan/report [28/02/2012]Euromonitor International 2010,Consumer Lifestyles in India , Available fromhttp://www.euromonitor.com/consumer-lifestyles-in-india/report [28/02/2012]Euromonitor International 2012, Beer In India, Available from http://www.euromonitor.com/beer-in-india/report [28/02/2012]Euromonitor International 2011, Global Prerformance and prospects for beer, Available fromhttp://www.euromonitor.com/global-performance-and-prospects-for-beer/report [28/02/2012]Euromonitor International 2011, Strategies for growth in an increasingly consolidated global beermarket, Available http://www.euromonitor.com/strategies-for-growth-in-an-increasingly-consolidated-global-beer-market/report [28/02/2012]Euromonitor International 2012, Alcohol Drinks In India, Available from:http://www.euromonitor.com/alcoholic-drinks-in-india/report [28/02/2012]Euromoney Country Risk (2011), India, Available from:http://www.euromoneycountryrisk.com/Wiki/India [01/03/2012]Federal Research Division: The Library of Congress American Memory (2004). Country Profile: India,Available from http://lcweb2.loc.gov/frd/cs/profiles/India.pdf [01/03/2012]Ghosh, Abantika (2009), Imported Beer to cost more (online) New Delhi, The Times of India.Available from: http://articles.timesofindia.indiatimes.com/2009-06-11/delhi/28185910_1_imported-liquor-mrp-duty-structure [01/03/2012]. thHollensen, Svend, 2011: Global Marketing: A Decision-Oriented Approach. 5 edition. Harlow:Prentice Hall.International Monetary Fund (2011), World Economic And Financial Surveys, Regional EconomicOutlook: Asia and Pacific. Washington DC, HC412.R445. Available from:http://www.imf.org/external/pubs/ft/reo/2011/apd/eng/areo1011.pdf [07/03/2012].International Center For Alcohol Policies (2011). Beverage Alcohol Labeling Requirements byCountry. Available from: http://www.icap.org/table/alcoholbeveragelabeling [05/03/2012]Indian Alcohol Policy Alliance (2009), Download Alcohol Atlas of India. Available from:http://www.indianalcoholpolicy.org/alcohol_atlas_download.html [01/03/2012]International Beverage Network (2011), Available from:http://www.internationalbeveragenetwork.com/asp/searchkai3.asp [10/03/2012]Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 22
  23. 23. Jacob, Sarah (2011), Indian Cheer for Foreign Brands (online) Bangalore, The Economic Times.Available from: http://articles.economictimes.indiatimes.com/2011-02-21/news/28618056_1_indian-beer-beer-brands-beer-geek [01/03/2012]Kirin Holdings Ltd. (2010): Making a world of difference through qualitative growth: Annual Report2010: Available from: http://www.kirinholdings.co.jp/english/ir/library/annual.html [01/03/2012]Kirin Holdings Ltd. (2009): Management Plan, Available from:http://www.kirinholdings.co.jp/english/ir/pdf/2010_2012medium-term.pdf [01/03/2012]Kirin Holdings Ltd. (2009): Management Plan, Available from:http://www.kirinholdings.co.jp/english/ir/pdf/2011/4q_presentation.pdf [01/03/2012]Kirin Holdings Ltd. (2009): Kirin Group Sustainability Report, Available from:http://www.kirinholdings.co.jp/english/csr/report/pdf/csr_report2011e.pdf [10/03/2011]Kirin Ichiban and Kirin Light Beer 2008,Kirin Ichiban: Beer At Its Purest, Available from:http://www.kirinfirstpress.com/firstPress.html [01/03/2011]Kirin First Cut, Kirin Info. Available from: http://www.kirinfirstcut.co.uk/kirin-info.php [01/03/2012]Mansukhani, Bhisham (2010),Game for Gourmet beers? (online), New Delhi, Hindustan Times.Available from: http://www.hindustantimes.com/Entertainment/Food/Game-for-Gourmet-beers/Article1-595636.aspx [01/03/2012]Multi commodity exchange of India Ltd (2011), MCXMetal & Energy, Barely. Available from:http://www.mcxindia.com/SitePages/ContractSpecification.aspx?ProductCode=BARLEY [04/03/2012]Thotam, Jyoti (2009), Tapping into India’s Growing Alcohol Market (online), Mumbai, TIMEWorld.Available from: http://www.time.com/time/world/article/0,8599,1949796,00.html [04/03/2012]World Health Organization (2011). Management of substance abuse: India Socioeconomic context.Available from:http://www.who.int/substance_abuse/publications/global_alcohol_report/profiles/ind.pdf [04/03/2012]United Nations Population fund (2007). UFPA state of world population 2007: Unleashing thepotential of Urban Growth. Available from:http://www.unfpa.org/swp/2007/presskit/pdf/sowp2007_eng.pdf [07/03/2012]Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 23
  24. 24. Appendix A: Kirin GroupFigure 12: Various Businesses under Kirin GroupSource: Adapted from Kirin Holding Annual Report 2010.Kirin Brewery Co., Ltd.Figure 13: Business Details of Kirin BrewerySource: Adapted from Kirin Holding Annual Report 2010Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 24
  25. 25. Product Portfolio:Figure 14: Various products under Kirin Brewery and its subsidiary.Source: Author 2012 complied from Annual Report 2010, Business Strategy Report 2012.Subsidiary Details:Figure 15: Kirin Holding SubsidiarySource: Kirin Group Sustainability Report 2011Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 25
  26. 26. Appendix B: Beer CategoriesFigure 16: Beer Category.Source: Adapted from Euromonitor International 2011Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 26
  27. 27. Appendix C: Indian Beer Industry:Figure 17: India Beer ForecastSource: Euromonitor International 2010Figure 18: Global alcohol productionSource: Adapted from alcohol Atlas of India 2010Figure 19: Alcohol Consumption of India 2005-2010.Source: Adapted from Euromonitor 2010Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 27
  28. 28. Figure 20: Prevalence of alcohol use in adult men in India.Source: Alcohol Atlas of IndiaFigure 21: Sales of Beer by On-trade VS Off-tradeSource: Adapted from Euromonitor report beer in India 2011Figure 22: Domestic Lager beer price in IndiaSource: Adapted from Euromonitor report beer in India 2011Author: Deepak Shrivastava (imdshrivastava@gmail.com) Page 28
  29. 29. Appendix D: Labelling rulesCountry Basic Label Requirement Labeling of IngredientsSingapore - Product Name Ingredients should be listed in - Name and address of manufacturer, importer, packer, and descending order of proportions by distributor, Country of origin weight - Date marking of minimum duration (expiration date)Japan - Name of the product - Ingredients—other than additives— - The word "Imported" and country of origin, if applicable must be listed in descending order of - Name/address of the importer weight percentage - Alcohol content - Food additives must be listed in - Container volume (listed in milliliters or liters) descending order of weight on a - Net weight (in metric units only) separate line from other ingredients - "Best before" date - Special instructions for use, storage, or preparation (when established by the Minister of Health, Labor, and Welfare for the product or when their absence could cause confusion)China Labels must include the following information (may be done in NA English): - Brand name - Alcohol content by degree or percentage - Quantity or volume - Name and address of winery, factory, or importer - Symbol of product registration when applicableIndia - Name, trade name, or description of the product - Ingredients must be listed in - Net weight and gross weight descending order of their quantity - Date markings, including shelf life of the product and/or expiration dates - Special instructions for storage or use - Bar codes (if applicable) are issued by EAN (European Article Numbering) at New Delhi - Market retail price, including taxes, duties, transportation - Distinctive batch, lot, or code number - Month and year the product was manufactured or packed - Vegetarian food must have a symbol of a green color-filled circle inside a square with a green outline prominently displayed on the package, contrasting against the background on the principal display panel. Must be in close proximity to name or brand name of the foodTable 4: Alcohol Labeling regulation in few countries,Source: Author 2012 complied from http://www.icap.org/table/alcoholbeveragelabelingAppendix E: Beer Importers in IndiaAuthor: Deepak Shrivastava (imdshrivastava@gmail.com) Page 29
  30. 30. Figure 23: List of Alcohol Importers in IndiaSource: Adapted from International Beverage Network 2011Distribution network of Aspri Spirits a alcohol importer:Figure 24: Country wide presence of Aspri Spirits.Source: Adapted from http://www.aspri.org/network.phpAuthor: Deepak Shrivastava (imdshrivastava@gmail.com) Page 30

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