The purpose of this report is to critically evaluate the coherence of Grolsch Beer strategy of being acquired by SABMiller and to assess its approach to internationalization till date. The report will also reflect recommendation after critical evaluation and assessment of its strategies and approaches.
Grolsch produces a variety of pale lager beers. It also produces the Amsterdam brand of low-priced with strong lagers for the European market which is also sold in Australia.
Grolsch has a rich heritage in brewery. In 1615 this brewery was started. In 1897 Grolsch’s iconic – and trademarked – ceramic swing top bottle. This bottle was promoted as an easy to open and allowing storage of beer for later consumption. In 1922, its operation was merged with a local brewery to have effective and efficient operations. By 1960, Grolsch was a national brand . The main competitor then was Heineken and is also now. Before the takeover by SABMiller , Grolsch had emphasized on faster growth with good profits. In November 2007, SABMiller acquired Grolsch as its subsidiary. Before takeover it was world’s 51st largest brewer. After acquisition its world’s 21st largest global brand (Jones, 2007).
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Identification and Analysis of Grolsch’s strategy
Even though Grolsch started in 1615, only in the middle of 20th century it started concentrating apart from Dutch market. Grolsch set up its import organisations in countries like USA, UK. The company also started distribution deals in Canada, Australia and New Zealand. In order to increase its capacities it had acquired a local German brewer. It had also bought a small brewer in UK for distribution purpose. With the main concentration in Eastern Europe , Grolsch had also invested in the countries like Poland and Russia.
Grolsch had developed a MABA ( Market Attractiveness, Business Assessment) frame work to analyse and assess international opportunities. Grolsch has hugely invested in marketing and branding to reposition its products as a premium product. In Netherlands Grolsch was priced as that of Heineken. In international markets, its products were positioned at premium prices. In promotion and advertising Grolsch has promoted the brand by a wide ranges of promotional activities like other competitors. The differentiation in promotion with creation of responsive design for the website so that it works seamlessly across mobile devices. The design of the new site focuses heavily on the iconic Grolsch bottle, making it relevant in key international territories, including the UK, Europe, Africa, the US and Asia(Conray,Julia 2012). Placement/ Distribution in the domestic market were done by the cooperation with importers, distributors, brewers and retailers. In international markets, Grolsch had either made a joint venture with local distributors or owned local distributors for better distributions.
Hambrick and Fredrickson’s strategy content model
How did Grolsch drive its vehicle to internationalise its brand? – A detailed analysis of approaches and strategies a based on Hambrick and Fredrickson’s strategy content model is required.
There are five vehicles required to discuss to evaluate the coherence and consistency of Grolsch’s strategy to date.
Arenas
Until mid 20th century Grolsch was national beer, only in Netherland. After that it moved its brand to UK, USA, Australia, and New Zealand. As per the forecast below Africa, Asia, Middle East and Latin America are huge potential markets. Grolsch with utilization of SABMiller’s resources , infrastructures, skills, knowledge, global presence, brand/loyalty etc can easily enter into these markets to internationalise its brands. Grolsch being acquired by SABMiller has an advantage to go global.
Global Beer Consumption Forecast Growth by Region, 2009 – 2015
Region
CAGR* 2009-2015
Africa
5.0%
Asia
5.0%
Australasia
1.0%
East Europe
1.5%
Latin America
3.0%
Middle East/North Africa
5.5%
North America
0.5%
West Europe
0.0%
TOTAL
3.0%
Compound annual growth rate, rounded up to the nearest 0.5.
Vehicle
In the past as well Grolsch had bought local distributors or had a joint venture with local company or acquired some brewers to increase its capacities. Now being part of SABMiller , Grolsch use SABMiller’s resources , infrastructures, skills, knowledge, global presence, brand/loyalty etc can easily enter into these markets to internationalise its brands.
Differentiators
Grolsch’s iconic – and trademarked – ceramic swing top bottle. This bottle was promoted as an easy to open and allowing storage of beer for later consumption. The differentiation in promotion with creation of responsive design for the website so that it works seamlessly across mobile devices. The design of the new site focuses heavily on the iconic Grolsch bottle, making it relevant in key international territories, including the UK, Europe, Africa, the US and Asia(Conray,Julia 2012).
Staging
Grolsch can focus on its existing market, utilizing SABMiller’s platform to grow and also to position the brand well enough. Grolsch acquisition by SABMiller gave the company accessibility of resources like infrastructures in Latin American, Central and Eastern European, African and Asian markets. With the help from SABMiller, Grolsch can be introduced to global market.
Therefore, Grolsch’s staging strategy seems carefully planned which based on “global” participation approach.
Economic logic
Sharing of innovations, marketing strategies, people, skills, knowledge and product development is an important economical benefit for both Grolsch and SABMiller. Both of these companies can use each other’s resources to be profitable. For example – Grolsch can use SABMiller’s market position to promote or introduce its products to new market whereas inclusion of Grolsch in the product portfolio of SABMiller has filled the gap of Eastern European brand.
Critical Assessment
Resource-based review
Resource based review is an approach to assess the effectiveness of approaches and strategies used to internationalise Grolsch brand. It helps to analysis the relationships among resources, capabilities, competitive advantage and profitability. There are seven elements of resource based sustainable review model for analysing the competitive advantage (Grant et al. 1991)
Prior or acquired resources – Grolsch after being a subsidiary of SABMiller has access to SABMiller’s existing markets, existing partners (suppliers, buyers, distributors, promoters etc). SABMiller has a significant infrastructure like South Africa, and countries in Latin America, Central and Eastern Europe, Africa and Asia: SABMiller would work with Grolsch to identify appropriate portfolio opportunities to introduce Grolsch as a premium North European beer (Jones, 2007).
Innovative Capabilities – SABMiller is world’s 2nd largest brewery. Being a part of company of such a magnitude and market presence is definitely an advantage. The research and development and other facilities can be used by Grolsch ; which cannot be used before Grolsch being independent company.
Truly Competitive – Grolsch’s iconic – and trademarked – ceramic swingtop bottle. This bottle was promoted as an easy to open and allowing storage of beer for later consumption. The differentiation in promotion with creation of responsive design for the website so that it works seamlessly across mobile devices. The design of the new site focuses heavily on the iconic Grolsch bottle, making it relevant in key international territories, including the UK, Europe, Africa, the US and Asia(Conray,Julia 2012).
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Imitability – Grolsch has invested hugely in branding to reposition its brand in market. It has come up with very innovative web designs and the website has been instrumental in spreading the brand information. As per the preference of customers it has changed the size of the bottle. The innovation in the corks of the bottle turned out to be key differentiator. This has also provided company with a competitive advantage. The design of cork has brought easy and convenient to use mindset among customers.
Substitutability – The uniqueness of Grolsch bottle has developed mindset in people that it is very convenient and easy to use. This has also helped to lessen the environmental impact because of the cork. This puts the company into a good picture among investors, suppliers and customers.
Apropriatibility – The resources and capabilities after acquisition should bring competitive advantage to both of the companies. It should be 2+2=5 not 2+2=4. Grolsch being an independent subsidiary of SABMiller provides it independence at the same time association with SABMiller brings lots of advantages like sharing of knowledge, skills, research and development, people, market presence, global brand etc.
Durability – In 1897, Grolsch introduced iconic and trademarked – ceramic swingtop bottle, which was advertised as easy to open and allowing storage of beer for later consumption. Today as well it is an iconic and trademarked providing competitive advantage to the company (Pankaj Ghemawat & Jordan Mitchell,2007)
Evaluation and Assessment
There is a decline in the volumes of lager beer in Europe. Poland and Romania are the countries where there is significant fall in volume. Beer market in Europe is continuously affected by consumer downgrading. Beer industry is also affected by the recession in Europe. As per the Global Beer Consumption Forecast Growth by Region, 2009 – 2015, there is no increase in the consumption beer.
With this situation and conditions, Grolsch’s attempt to internationalise by being a subsidiary of a bigger player in the market makes sense and logical. Being an independent subsidiary of SABMiller , Grolsch with utilization of SABMiller’s resources , infrastructures, skills, knowledge, global presence, brand/loyalty etc can easily enter into these markets to internationalise its brands. Grolsch being acquired by SABMiller has an advantage to go global. Grolsch can capture new markets like Middle East, Africa, Asia and Latin America where the beer market is emerging.
In November 2007, SABMiller acquired Grolsch as its subsidiary. Before takeover it was world’s 51st largest brewer. After acquisition its world’s 21st largest global brand (Jones, 2007). Grolsch after takeover has been available to different countries not only limited to European market.
Recommendation
For growth in full grown beer market
Adapted focus and growth target in core market – Grolsch should focus on its domestic market and European market as well so that they don’t lose their market share to competitors. Grolsch should set a target and draft and implement strategies to reach target. The strategies could be local acquisition for capacity increment or innovation of products or even better distribution/placement.
Adapted market position – Grolsch should try to beat the competitors like Heineken in terms of sales to position better in the market. This can be done by innovating products or cutting down the price of the products. The quality of products and bottling of beer can also be significant in doing this.
Adapted brand strategy – Advertising the products keeping in mind the culture and adopting local strategy in brand strategy would be beneficial for the company.
Adapted product proposition – Coming up with easily assessable and convenient shape and size of bottle could attract customers. New designs and a new concept in presentation of product is also a key in growing in mature beer market.
Investment in marketing activities – Creating awareness about the product and able to convey a message why the product is better than that of competitors is very important is gaining market share.
Investing in R&D – Innovation, product differentiation is very important to provide customers with better quality products.
For growth in emerging market – The choice of supplier, distributor, buyer etc plays an important role in the success of product in new market. Grolsch being a subsidiary of SAPMiller has given it access and reach to new market in terms of facilities, infrastructure, its distributors, promoters etc.
Focus on cost structure and efficiency –
Adapted production and internal logistics – Reaching of raw materials and finished products in right place and right time help the business deliver products and services in right time. This will increase investor and customer confidence in the company and its product. Grolsch should look for a better logistics for better product delivery.
Decrease in overhead expenses
Decrease in prime cost; through cost cutting in procurement, economic alliances etc.
Enhancing the efficiencies of new facilities; Efficiency in brewing process and efficiency in filing lines are very important. (Pankaj Ghemawat & Jordan Mitchell,2007)
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