Marketing Strategies for establishing Guinness beer in India

A project on

Beer Industry

Presented by

Ajay Sharma

123/2016

Industry overview

Organization overview

Marketing strategies

Feedback & control

Contingency plan

Flow of presentation

Industry Overview

Introduction• Beer is the world's most widely consumed and probably the oldest

alcoholic beverage

• It is the third most popular drink overall, after water and tea.

• The production of beer is called brewing, which involves thefermentation of starches, mainly derived from cereal grains—mostcommonly malted barley, wheat, maize (corn), and rice are widelyused.

• The strength of beer is usually around 4% to 6% alcohol by volume(abv).

• Beer forms part of the culture of beer-drinking nations and isassociated with social traditions such as beer festivals, as well as arich pub culture, in the form of micro-breweries

• The brewing industry is a global business, consisting of severaldominant multinational companies and many thousands of smallerproducers

Industry sizeBeer Industry- Worldwide

• Total Available Market - Global Alcoholic Drink Market $1,198.6billion (2014).

• Serviceable Available Market : Global Beer Market $485.3 billion(2014).

71%

29%

Global alcohol sales by revenue (2014)

Spirits

Beer

Beer Industry- India

• Total Available Market - Indian Alcoholic Drink Market $35.96billion , 730 million cases (2014).

• Serviceable Obtainable Market : Indian Beer Market $4.13billion , 240 million cases (2014).

70%18%

12%

Indian alcohol sales by revenue (2014)

IMFL

CS

Beer

36%

31%

33%

Indian alcohol sales by volume (2014)

IMFL

CS

Beer

Growth• Global beer sales targeted at $688.4 billion by 2020.• Indian beer sales targeted at $10.34 billion by 2020.

Market Predicted CAGR by 2020

World - alcohol 3%

World – beer 6.5%

India - alcohol 11%

India - beer 16%

Important markets

14%

11%

9%

9%

8%7%

6%

4%

3%

29%

Indian state-wise beer market share (2015)

Maharashtra

Telangana

Karnataka

Tamil Nadu

Rajasthan

Uttar Pradesh

Andhra Pradesh

Madhya Pradesh

Kerala

Organizational overview

Mission statement

To document the beauty, majesty, elegance,wonder... of filling a glass with the finestbeverage on Earth.

Introduction• The Guinness business model began in 1759 and through various

acquisitions and mergers, has developed into the current parentcompany, Diageo, Ltd.

• The Guinness brand is recognizable in nearly every country, and hasbeen gaining momentum internationally since the late 1800’s.

• The first exportation of Guinness occurred in 1769. By 1870, exportshad branched out to Guernsey, Barbados, Trinidad, Sierra Leone,Lisbon, New York City and New Zealand.

• In 1886 the Guinness brewery became the first major brewery tobe incorporated as a public company on the London StockExchange, and was now, the largest brewery in the world.

• The first independent brewery built outside of Ireland and GreatBritain was in Nigeria in 1963.

Macro influences

PESTEL Analysis

Political• Some states like Gujrat, Manipur, Nagaland and Bihar are dry

states where the sale of liquor is completely banned.

• The age limit is state-dependent, ranging from 18 to 25.

Economic• There is a rise in per capita income (6.3%) and as a result the

disposable income of people specially living in urban cities is alsoincreasing rapidly.

• Targeting only the urban cities of India in their early stage topenetrate the market.

Social• As India is said to be the land of diverse culture, we can’t categorize

India under one segment.

• Per capita income is rising, but at the same time the gap betweenthe haves and have-nots is also widening.

Technological issues• Importing beer attracted heavy taxes from the government

resulting in higher prices of the same.

Environmental issues• As the climate here is generally warm, Guinness intends to

increase the promotions during summer time.

• Loss of market share to spirits like Rum in Winters.

Legal Issues• The Indian beer industry is plagued with a myriad of taxes & levies

that vary from state to state. In fact no two states or UTs have asame or even a similar policy.

Micro influences• Suppliers

• Market intermediaries

• Customers

• Competitors

Drivers and challengesDrivers

• India has an emergingupper-middle class.

• 36.3% of the country’spopulation is between theages of 20-44 (2011).

• Astounding forecasted CAGRof 16%

Challenges

• Brewers must create a senseof brand loyalty.

• Utilization of brewing capacity– to keep manufacturing costslow, in order to maximizeprofits.

• Clever advertising – to inducebeer drinkers to buy ourbrand.

Our products

Guinness

Draught

Guinness

Black LagerGuinness

Blonde

Guinness

Dublin PorterGuinness

Foreign Extra Stout

Guinness

Golden Ale

Guinness

Smooth

Guinness

Hophouse 13 Lager

Guinness

Nitro IPA

Guinness

OriginalGuinness

Special Export

Guinness

W. Indies Porter

Guinness book of World records• The idea of the Guinness book of world records was laid down by

Sir Hugh Beaver in 1951, the then M.D. of Guinness, after a drunken hunting trip.

• The first issue was published in 1955 by twins Norris and Ross McWhirter.

Largest business

Guinness Original accounts for 55% of all Guinness beer sales globally.

Competition overview

• The beer industry is relatively less fragmented compared to theIndian-made foreign liquor (IMFL) segment, with top two playerscontrolling more than 70% of the market share whereas top fourplayers account for more than 60% market share in the IMFLsegment.

• United Breweries Ltd (UBL), owner of the Kingfisher brand,accounts for almost 51% market share of the beer market.

Top 10 selling beers in Indianmarket1. Kingfisher

2. Royal Challenge

3. Hayward’s

4. Heineken

5. Budweiser

6. Carlsberg

7. Kalyani Black Label

8. Foster Lager

9. Corona

10. King’s

50%

20%

10%

3%

1%

2%

14%

Market share by volume (2015)

United Breweries

SAB Miller

Carlsberg India

AB-Inbev

Mohan Meakins

Mt. Shivalik

Others

Trend in volumes and net sales of UBL

SWOT analysisStrengths

• Global brand image and

awareness.

• Regarded as one of the

healthiest beer because of

presence of antioxidants.

• Good distribution and

availability owing to parent

company

Opportunities

• Youngsters prefer beer

over any other liquor

• Sponsorships and

advertisements

Weaknesses

• Complexity of taste - new to

market

• New entrant in already

established market

Threats

• Alcohol regulations(tax and

prohibitions)

• More expensive than

domestic beers.

Marketing Strategies

Demographic• Age group : 22 – 35.

• Income : Middle and upper income groups

Geographic• Area: Urban

• Cities: Metropolitan

Psychographic• Working class

• Hectic lifestyle

Behavioural• People drink beer when they are happy, in parties, outings etc.

• People drink even more beer when they are sad, alone.

Marketing Mix

4P’sProducts

• Guinness Original/Extra Stout – Our prime product.

• Guinness Draught—Most Popular in U.S.A.

We offer premium products.• Primary feature of the product :

*Chocolate and roasted coffee flavor healthier than otherbeers in the category.• Brand association- Roasted coffee flavor beer

Place• Targeting metropolitan cities namely Delhi, Mumbai, Bengaluru,

Kolkata, Hyderabad, Pune, Ahmedabad, and Chennai.

• Launch party at Striker’s, Gurgaon, a prominent pub/brewery in one of the most happening cities of India, attracting higher-middle class beer lovers from all over Delhi NCR.

Promotion• Proposal to be the official sponsor for ‘GO HARDWELL OR GO

HOME’ at New Delhi, 1st October 2016.

• Proposal to be the official sponsors at IPL 2017.

• Tie-ups with prominent pubs around Delhi NCR, in order to get adetailed report of gradual increase in sales.

Pricing• Projected price Rs. 160-170 per bottle (650 ml).

• Guinness is sold with premium price because it gives to its consumers more than a product, it delivers an experience, a lifestyle model.

Feedback & Control

• Customer feedback with an introductory 10% discount on the bill.

• Ensuring standard manufacturing procedures.

• Ensuring beverage safety and nutritional standards.

Financial analysis• Hardwell 2016 official sponsorship

10 crore (estimated return 140%)

• Various small EDM concert’s sponsorship in 20175 crore

• IPL official sponsorship for 1 year100 crore (estimated return 125%)

• Brewery rent for two years10 crore

• Provision for miscellaneous advertisements and other expenses25 crore

AssumptionsParticulars Amount

Total advertisement/sponsorship cost

150 crore

Cost of raw material/unit 57

Factory overheads/unit 9

Direct wages/unit 4

Office overheads/unit 4

Miscellaneous overheads/unit 3

Total cost/unit 77

Profit calculation for initial two yearsParticulars Amount

Expenses 160 crore

Cost price/unit 77

Selling price/unit 140

Profit/unit 63

Estimated units sold in two years 45 lakh

Revenue from sponsorships 139 crore

Revenue from sales 30 crore

Total profit 9 crore

Contingency plan

• Exports to USA, UK, Nigeria.

• Cheap labor and land available in India.• Already established market all over the world.• Outsourcing.

Thank you, have a chilled Guinness.