Burma to Myanmar - A Reintroduction of AB InBev Stella Artois
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This document discusses Anheuser-Busch InBev's (AB InBev) plans to introduce its Stella Artois brand to the growing beer market in Myanmar. AB InBev sees opportunity for growth in Myanmar as the country transitions to democracy and liberalizes its economy. The document outlines AB InBev's proposed two-pronged entry strategy of acquiring the local Mandalay Brewery and constructing a new, larger plant. It analyzes the Myanmar beer market, competitors, customers, and makes the case that an established brand like Stella Artois could succeed with the right marketing approach.
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Burma to Myanmar - A Reintroduction of AB InBev Stella Artois
- 1. From Burma to Myanmar A Reintroduction of AB InBev’s Stella Artois JACO B RUSO FF 1
- 2. Introduction • Anheuser-Bush InBev – (NYSE: BUD, Euronext: ABI) – Founded in 2008 • Stella Artois – Belgian Pilsner – Introduced in 1926 • Myanmar (Burma) – Transition to Democracy (2011-Present) – Evolving Economy 2
- 3. Myanmar (Burma) • Population: 56,320,206 • GDP / Capita: $4,700 (170th in the world) • Socialist Military Dictatorship (1962-2011) – Global economic sanctions and embargos • Transition to Democracy – Multi-party elections – Economic liberalization • Currency: Myanmar Kyat (MMK) – 1247.65 Kyat per USD 3 Political Risk • Civil Unrest / Conflict – Ethnic and religious tension leading to civil war and terrorism – Kachin and Rakhine states • Possible return to a military state and subsequent expropriation Currency Risk • Trade deficit • Inflation • Low natural gas prices – 37% of total exports – Source of investment
- 4. Anheuser-Busch InBev • “Bringing people together for a better world” • Largest Brewing Company in the World – 20% of global share – 30% if AB InBev SAB Miller M&A goes through – Top 5 Consumer Goods Companies • Focused Branding • Distributes Products in over 110 Countries • Emerging Markets make up 53% of AB InBev’s total revenue in 2014 4 31.1% 28.7% 26.4% 30.3% 28.0% 27.3% 9.4% 8.7% 8.0% 13.0% 11.2% 9.7% 14.3% 15.4% 18.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2012 2013 2014 AB InBev Volume by Region (% of Total) Global Export & Holding Companies Asia Pacific Europe Latin America South Latin America North Mexico North America
- 5. Historical Entry Strategies 5 Distribution Channels • Brewery to customer (Belgium) • Wholesalers to customers – Legal reasons (USA & Canada) – Historic market practice (China & Russia) • Third-party distributor (Brazil & Mexico) 2015 Acquisition History Mergers & Acquisitions Joint-Ventures Equity Based Partnerships Cooperative Export Model Licensing
- 6. Entry Strategy For Myanmar • Acquire Mandaly Brewery to immediately gain 4% of the market share – Approximately 150 Million USD – Assuming continued 4% market share, and current growth of market, the acquisition would generate 150 million in revenue by year 5 – Use plant to start brewing Stella Artois – Gaining more market share • Construct a larger more advanced plant outside of Yangon within the first year • Combining AB InBev’s industry knowledge and economy of scale with Mandalay Brewery’s local know-how 6
- 7. Myanmar Beer Market • Market Size – 265 million USD market in 2013 – 80% of adults in Myanmar drink beer • Market Growth – Projected to grow to 675 million USD in 2018 – A CAGR of 16.9% • Market Needs – A pilsner – A premium international beer brand • Market Trends – Growth of foreign beverage companies – Coca-Cola now controls 50% of the carbonated beverage market, before 2012 the drink was only available if smuggled 7 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 0 100 200 300 400 500 600 700 800 900 1000 2013 2014 2015 2016 2017 2018 2019 2020 Myanmar Beer Industry (Million USD) Liters per Capita Year 1 (2016) Year 2 (2017) Year 3 (2018) Year 4 (2019) Year 5 (2020) Estimated Market Size (Annual Revenue Million US$) 464.38 559.87 674.99 813.79 981.13 Estimated Market Share 4% 5% 6% 8% 10% Estimated Revenue (Million USD) 18.58 27.99 40.50 65.10 98.11
- 8. Understanding AB InBev’s Edge Strengths -Economy of Scale Advantage -Brand Recognition -History of distribution channel design Weaknesses -Government Presence in Beer Industry -Low income per capita -Large marketing required Opportunities -High projected annual growth rates in the market -Early entrance Threats -Downward currency pressure -Political risk (military government, human rights violations) -Expropriation SWOT 8
- 9. Competitor Analysis • Myanmar Brewery Limited – 45% owned by the Government – 55% owned by Kirin Holdings after buying shares from F&N for 560 million USD • Dagon Beverage Company – Joint-venture between the State, Myanmar Golden Star Company and Bermuda Brewinvest • Mandalay Brewery – Founded in 1859 • Heineken – 2015 60 million USD investment • Carlsberg – 2015 70 million USD joint-venture • Chang (2013) 9 83 4 13 2013 Market Share Myanmar Brewery Limited Mandalay Brewery Dagon Beverage Company Limited International Market Entrants (Thailand) (Netherlands) (Denmark) (Japan)
- 10. Customer Analysis • Beer makes up 82% of alcohol consumption in Myanmar – Most of which is consumed at “Beer Stations” during European soccer matches – Or in cities, purchased for home consumption from small stores • Males make up a vast portion of the Myanmar beer market – Men who drink consume roughly 10.3 times more then women who drink • Tourists – Restaurants, resorts, and newly emerging nightlife – Increase in tourism 10 791505 816369 1058995 2044307 3081412 7000000 2010 2011 2012 2013 2014 2020 (Projected) Annual Tourism in Myanmar
- 11. Marketing Mix • Price – Average domestic draught (.5 lt) $1.00 – Average imported bottle (.3 lt.) $1.3-2.50 • Promotion – Electronic Billboard – Soccer partnership (Man U) – Cap Rewards – Marketing to Women • Place – Domestic Consumers (Yangoon and Mandalay) – International Consumers – Hotels, restaurants, clubs, tourist sights, etc. • Product – Stella Artois bottles and kegs 11
- 12. Conclusion • Myanmar is economically liberalizing and politically democratizing at a fast rate – Political and currency risks still remain • State owned joint-ventures control a large majority of the market – High marketing costs required in order to gain market share • Logistical constraints • A largely untapped international beer market with projected exponential market growth • Acquisition of Mandalay Brewery and construction of a new plant will have immediate impact on AB InBev’s top-line and local market success. 12
- 13. Questions 13