Posted: May 25th, 2022
Global Branding of Stella Artois
Interbrew’s centuries of experience in brewing, beer distribution and sales are all exemplified throughout their global dominance of worldwide beer consumption as presented in the case The Global Branding of Stella Artois (Beamish, Goerzen, 2012). With an exceptionally high price/Earnings ratio (P/E Ratio) indicating investor confidence in their brand, operations in 80 nations, with the top 10% of markets globally accounting for 86% of sales and 61% of volume production being generated by North America, Interbrew has a solid platform to build their future marketing, selling and product development strategies on. Despite a slow to no-growth level of performance for the global beer markets of just 1 to 2%, investor confidence continues for Interbrew and their performance over the time period of the case study, further signaling the strength of their operations and strategy execution (Marinov, Marinova, 1998). Interbrew faces the challenge of profitably growing over time however, and must decide whether to invest heavily in Eastern Europe (Hanon, 1996), which is projected to be a fast-growing market despite the political upheaval and uncertainty there (Beamish, Goerzen, 2012). The troubling performance of the company in Belgium and the difficulty in making their Canadian beers successful also has the potential to derail their long-term growth as well (Negrusa, Cosma, Dumbrava, 2007). Balancing these threats is the potentially high growth markets of Asia and throughout the Asia-Pacific region, combined with the potential of moving into wine and low calorie and health-conscious beers as well (Beamish, Goerzen, 2012). The core markets for revenue generation include the UK, USA, Canada (despite the challenges with local brands there), Mexico, Netherlands and France (Beamish, Goerzen, 2012). The potential high growth markets of Central and Eastern Europe along with South America have the greatest potential for growth according to the case (Beamish, Goerzen, 2012) yet are difficult to successfully create and run operations in according to investor analysis of the beer industry during this time period (Marinov, Marinova, 1998). Managing a global brand through unique regional and national strategies continues to be profitable for Interbrew, in large part supported by an excpeit9onal supply chain that over time has proven to be a valuable differentiator for the company across all divisions and regions (Beamish, Goerzen, 2012).
Interbrew’s continued success across a fragmented beer industry and its successful management of over a dozen brands during the time period of the case are held together by the company’s core value proposition of delivering excellent beer and supporting its distribution network better than competitors (Marinov, Marinova, 1998). As the industry continues to consolidate and the competition becomes fiercer not just for customers, but for channel partners as well, Interbrew must choose a pre-emptive strategy to retain its global market share strategy. It is evident from the case analysis that global competition will only increase as the top three beer providers rely on their brands to further force a fragmented market (Beamish, Goerzen, 2012). With the industry dynamics being more attuned to consolidation, the strategy of creating a global brand is one that will unify the company’s many other competitive strengths, galvanizing them all around a single value chain for the new brand. Compounding these aspect of the industry dynamics are the changing nature of customers as well, with the focus being more on healthy beverages over the traditional high-calorie ones of the past (Beamish, Goerzen, 2012).
Given these many constraints of the market it makes sense for Interbrew to create a global brand. Continuing to rely on a balkanized strategy of selling across many different regions and nations will eventually dissipate the company’s marketing and selling budgets and time, and could lead to the global brand itself dropping in value. By choosing to create a single, unified global brand of beer, Interbrew also creates the opportunity to further support is regional and national branding strategies as well. Using a global brand to unify a disparate series of smaller product lines or brands creates the cumulative effect of strengthening the corporate brand overall (Hede, Watne, 2013). For Interbrew, this translates into a more recognized, globally powerful brand at the corporate level by choosing a global beer brand to promote. Given competitive pressures, a consolidating beer market globally and the potential for growth in Asia and throughout Eastern Europe, the decision to create and fully support a global brand is clear. Interbrew really has no choice form a global growth and continued competitive positioning standpoint but create a globalized brand.
Of the many brands mentioned in the case analysis, Stella Artois has the greatest potential to be positioned as a premium beer that exemplifies the company’s value proposition of quality while preserving its unique heritage as one of the most accomplished beer producers in the world. Stella Artois had been a holiday or Christmas beer in the past, often associated with social events and opportunities to get together with friends and family (Beamish, Goerzen, 2012). As Interbrew has been experimenting with cafes and other experiential-based marketing and selling strategies the Stella Artois brand also fits with that direction as it is associated with social events. The shift is nuanced in the case showing how Interbrew is slowly moving tis marketing away from celebrating the beer itself to celebrating the events and social connections that beer makes happen (Beamish, Goerzen, 2012). The emotions and experiences that people feel and have when drinking beer are the future of beer marketing, and that point is only obliquely made in the case yet it is clearly happening more and more during the time period of Interbrew’s history shown in the case.
Additional reasons why Stella Artois makes sense as the global flagship brand is the need for the company to counter price competition in a price-inelastic market that is rapidly consolidating (Beamish, Goerzen, 2012). When managing products that are competing in price-inelastic markets, the best possible strategy is to seek positioning that can substantiate and protect higher prices over time. The hard reality of price wars in the beer market is that when a market is inelastic, the best strategy of all is to raise prices and go for the higher end of the market as customers will quickly equate price and quality as correlated (Ruhm, Jones, McGeary, et.al. 2012). Choosing a premium band that can be used to raise prices over time, averting participating in unprofitable price wars, makes the most sense for the company given its diverse global operations (Beamish, Goerzen, 2012).
Interbrew has also specifically focused on cities over countries as their primary geographic segmentation strategy. There are several examples in the case, with the New York City launch being the one most discussed and analyzed (Beamish, Goerzen, 2012). The pros of this approach are amplified media coverage, more return on marketing and advertising investment, greater potential to increase distribution in major metro areas that outlying areas emulate, and more control over marketing and messaging execution. It can also lead to a great level of long-term brand recognition if national chains headquarters in the given city choose to standardize on the beer. The cons or disadvantages are the limited national and global exposure given the limited selection of media outlets, the lack of overall beer industry coverage as many media companies tracking the beverage industry are geographically dispersed globally, lack of insight into how different demographic and psychographic customer segments will react to the beer and its branding over time, and lack of overall insight into varying performance by region.
If Stella Artois was being introduced in the metro area I live in, they would first need to stress the Spanish connections the city I live in has a large percentage of Mexican and Spanish customers for the beer. It would also need to stress the craftsmanship of the beer and its legacy of being a centuries-old favorite of families. In this metro region given the Spanish-speaking customers would also require a more family-0driven messaging as well, as those values are critically important to that demographic group. In addition, the beach communities would need to be sold on the value of the beer for social gatherings and as a catalyst for social get-togethers. These requirements would vary significantly across other metro areas and would need to be fine-tuned to the demographic and psychographic needs of given markets to be successful. In addition, the messaging would also need to include more of an emphasis on achievement in other regions compared to the one I live in, as the cities to the north and east are more focused on visible evidence of social status and prestige. While the family branding would work in the city I live in, selling the prestigious aspects of the Stella Artois brand is going to be more effective as a selling strategy in the northern cities of the state I live in.
Interbrew’s future is going to be increasingly dictated by its ability to attract and keep younger, more affluent and health-conscious customers. Instead of relying on the traditional offline channels to capture these customers, the use of social networks needs to pervade their marketing strategies. Beer is a catalyst for social connections and celebrations, and using social networks to show this responsibly, Interbrew can attract an entirely new customer segment. The use of social networks to show how beer is in many ways the catalyst of the first social networks is critical for the company’s growth. Using Facebook to gain insights into new customer segments while using Twitter to prove updates and support new beer introductions is a must-have in their strategies in 2013 and beyond. The role of social networks is often seen as a means to broadcast information and self-promotion, yet it must be used for listening to customers and gaining new insights into how new beers can be produced and sold. Interbrew can create a dialogue with customers and further differentiate itself by having superior insight into emerging market segments as a result.
Interbrew’s many challenges and the dispersion of their brands, coupled with the challenges of competing in markets that are consolidating forms the foundation of the paradoxes the company faces during the time period of the case (Beamish, Goerzen, 2012). The ability to withstand and reorder the price competition of a consolidating industry through the use of price premium strategies that favor raising prices instead of lowering them to ensure price/quality relationships are clearly communicated, couples with the powerful nature of a single brand consolidating strategies to further illustrate corporate brand value (Hede, Watne, 2013) are critical to the company’s future growth. Also nascent in the market and just alluded to briefly in the case is the growing trend of selling the experimental aspects of beer as being the basis of social get-togethers and providing a chance for friends and family to get together (Beamish, Goerzen, 2012). This experiential aspect of marketing will grow in prominence over time, as has been seen in the coffee industry and Starbucks decision to pursue a “third place” strategy of making their stores comfortable enough for customers to meet friends at. Interbrew is moving in this direction with their cafe strategy, yet still lacks the overall unified global brand to make this all come together. Interbrew’s decision to pursue Stella Artois as its centerpiece global brand will be a strong catalyst for future marketing strategies as well, and will succeed across its
Beamish, P.W., & Goerzen, A. (2012). Global branding of Stella Artois. (). London: Ivey Management Services, a division of Richard Ivey School of Business.
Dezutter, B. (1997). Experiences of investing in Eastern Europe: A study of a multinational brewing company. European Business Review, 97(3), 139-144.
Hanon, B. (1996). The path to competitiveness: Strategies for investment in central Europe. Columbia Journal of World Business, 31(2), 76-85.
Hede, A., & Watne, T. (2013). Leveraging the human side of the brand using a sense of place: Case studies of craft breweries. Journal of Marketing Management, 29(1-2), 207.
Marinov, M., & Marinova, S. (1998). Investor strategy development and adaptation: The case of interbrew. European Management Journal, 16(4), 400-410.
Negrusa, A., Cosma, S., & Dumbrava, P. (2007). Strategic role of international companies for developing Romanian brewing market. The Business Review, Cambridge, 7(1), 348-355.
Ruhm, C.J., Jones, A.S., McGeary, K.A., Kerr, W.C., Terza, J.V., Greenfield, T.K., & Pandian, R.S. (2012). What U.S. data should be used to measure the price elasticity of demand for alcohol? Journal of Health Economics, 31(6), 851.
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