Grolsch growing globally beer case study


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Grolsch growing globally beer case study is all about the their strategic decision, marketing strategies, their evolution and falls & down.

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Grolsch growing globally beer case study

  1. 1. MUSTAHID ALI MBA-3 ROLL NO. 1334 [Grolsch: Growing Globally] Case analysis
  2. 2. Grolsch: Growing Globally Q.1 Why did Grolsch Globalize and how well has it performed internationally? Reasons for Global Expansion: Grolsch faced less demand in Netherland (Home) to its products in 1970’s. At the same time its rivalry Heineken was moving impressive in an international market. Grolsch acquired German brand called as Wickuler due to which the capacity of Grolsch was doubled. Grolsch also bought Ruddles, UK brand to create distribution network for its own brands. In 1990, Eastern Europe started opening up which resulted an investment in Poland & Russia. Although Gorlsch acquired aforesaid brands Wickuler was sold to to another German brand while Bass bought Ruddles for its distribution in UK. In Poland Gorlsch took over one brewery which had to be sold due to less profitability. Asian financial crisis & devaluation of Ruble in Russia forced Gorlsch to focus on developed markets. Gorlsch entered France by setting up its own distributorship. Around 51% of the total volume of Gorlsch was from international market. Overall Gorlsch did better internationally although not best. Q.2 What are the Key Elements and Limitations on its emphasis on Adaptation? The key elements of the Grolsch adaptation strategy were in:  Pricing  Promotion  Operations  Distribution channels Grolsch wanted to position their brand as a premium lager and charged a higher price in comparison to the Netherland standard lager cost. However, Grolsch priced its products at a discount in 3 of its 6 largest foreign markets (US, Canada, and Australia) in comparison to competing imports in order to build market share. In France and Russia, Grolsch premium Lager was priced significantly higher because the Amsterdam was the key volume producer in these areas. Grolsch also adapted their advertising and promotion strategy to maximize their presence in their host country. They relied on the attractive image of beer from Northern Europe for most of their promotion but the company realized that a good portion of consumers from other countries (like the US) may not relate to or understand this concept. For example, in the US, Grolsch used the swing top bottle accessory in a “Got that swing” commercial during NFL football games. This theme made more sense than using the edgier UK commercials. Grolsch
  3. 3. also consolidated their operational cost by closing down two old export and import breweries in the Netherlands and built a new modern brewery. Grolsch estimated the new plant would save 1 million euros annually in operational cost. Limitation: The limitation of having only one plant is the potential that the plant could suffer a setback or disaster and production could be halted for period of time, resulting in lost revenue. The company also set up distribution relationships in many countries with joint venture partners including the fore mentioned Molson Coors in the UK. However, Grolsch had suffered setbacks in distributor turnover in the US, Canada, Australia, and New Zealand. These distribution relationships with foreign markets proved to be complex because Grolsch had to embrace the concept of losing control over operations across country borders. Q.3 Lessons and MABA Process? According to Grolsch’s history the lessons learnt are 1) A company should expand in a market which has enough overlaps with the home country in terms of culture, geography, economy and administration. 2) Ananlyze and assess before entering. 3) Establish Distribution Network and local help. 4) Companies think about growing globally on maturity in domestic market. 5) Communicating value is crucial. MABA is a tool used by the employees to judge the ranking/standing of a country in terms of investment priority after assessing various factors to judge the distance between the new market and the home market. For eg: Language difference (Cultural), EU Membership (Administration), cost of transport (Geography) and GDP (Economic) are factors for Market Assessment and total volume growth, variable commercial contribution Q.4 How to compete in the Markets Targeted, particularly in modes of entry? According to Grolsch the best way to enter a market is in cooperation with importers,
  4. 4. distributors, brewers and retailers. A change suggested in Grolsch’s historic strategy is not to adapt the market completely in this case because it is an industry that gives importance to the country-of-origin. Markets Targeted: South Africa: Monopoly Market, No.1 SABMiller (Market Share: 98%) Brazil: Occupied by major Brewery Groups. China: Competitive Market. How to Compete: South Africa Additional Line with SABMiller Co-Promotion with SABMiller Brazil License out to Local Companies Intensive Promotion Support China Marketing Research Co-promotion with JV Q.5 What other changes would you suggest to Grolsch’s historical Strategies?  I suggest that Grolsch use a global strategy in the future. They should continue to offer the standard products of the Grolsch premium Lager and the non-premium brand, Amsterdam. The premium lager accounts for 90% of the company’s domestic volume and 2/3 of all exports. The unique green swing top bottle packaging and unique taste separates the product from the rest of premium imports.  In addition, the Amsterdam is a quality, non-premium option to supplement the premium lager brand and has gained traction in France, Russia, Australia, and Africa. I think branching out to different products and making them popular in global markets would be too costly and time consuming  . The global strategy has been hard for firms in the past because they have to adapt their product to the local market and have to coordinate operating decisions and strategies across country borders. However, the Grolsch premium lager brand is globally recognizable for packaging and taste, standardized, and has a consolidated corporate strategy. In addition, the company has adapted their pricing, promotion, and distribution relatively well in foreign markets.
  5. 5.  I also think they have to reengineer their MABA framework. For example, they need to incorporate analyzing distributor relationships in future markets in order to lower turnover and conflicts of interests. Q.6 Will the merger with SABMiller add value? Merger with SAB Miller will definitely add value to Grolsch. It will help in making their distribution routes more strong. I also help in global production of Grolsch. SAB Miller is a 160 years old brand. It has developed good trust and has notable brands in market for bear. Association for such brand will definitely add to Grolsch’s status. It has strong build up in Latin America and hence will be easy for Grolsch to foray in this market. Due to their own strong financials and the backing of SAB Miller, I think Grolsch should consider building a large brewery in the United States or Hong Kong to help the company take advantage of economies of scale, increase presence, reduce transport cost, and decrease reliance on distributors. It will also give Grolsch more ability to attack markets in Asia and Central/South America, where total consumption grew rapidly from 2000 to 2005.