alcoholic beverages market

8/6/2019 Alcoholic Beverages Market

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Alcoholic beverages market, especially beer market in India is growing with leaps and bounds.

The beer market in India is estimated to be over Rupees 3000 corers. Annual consumption of

beer is over hundred 10 million cases. CAGR of beer industry in the year 2008 is 14.3%, much

higher than most of the countries. Rising income the Indian consumer, change in age profile

and lifestyle as well as a reduction in beer prices are major factors pushing this growth.

Traditional beer markets like Europe and USA are either flat or in a state of decline whereas

consumption in the BRIC countries increased by almost 50% during 2002-2007. In India, beer

sales grew at nearly 90% compared to, less than 60% growth for other alcoholic drinks and

according to industry sources Indian beer market is expected to nearly double itself to 23.3

million hL by 2012 from 12.5 million hL at present. Another interesting fact is among non-

Islamic countries India has the lowest per-capita consumption of beer.

For these reasonsinternational beer companies are coming to India almost every quarter. Three big

international brands Budweiser, Carlsberg and Heineken entered India in last 12-15 months.

In February this year, Anheuser-Busch, makers of the legendary Budweiser, that calls itself the

king of beers, announced its India entry through a 50:50 joint venture with the Hyderabad-

based Crown Beers. Three months before that, Carlsberg, the beer brand for soccer fans,

announced operations in India through its venture, South Asian Breweries. Last year, the

Singapore-based Asia Pacific Breweries picked up a 76 per cent stake in Aurangabad

Breweries, paving the way for the launch of Heineken into India. There are others like NRI

entrepreneur Karan Bilimoria, who created waves in UKs Indian restaurants by marketing

Cobra, a less-gassy beer, also eyeing the market. Even the


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big three b

siblings. Apart from Heineken, Asia Pacific Breweries (APB) sells Canon, Barons and Tiger;

Crown Beers India unveiled Armstrong; while South Asia Breweries has introduced

Pallone.But Indian beer market is highly saturated and difficult to break into. More than 80%

of the market is controlled by the two players, UB and SAB Miller. While UB with brands like

Kingfisher, Zingaro and Kalyani Black has a 48% market share, SABs bouquetof acquired

brands- Haywards, Royal challenge, Knock Out and Fosters deliver a combined market share

of 37%. According to market analysts international brands excepting Fosters have made little

impression in India till date but according to these new entrants Indian beer market just

started to evolve and has a huge growth potential. Till now the new entrants are looking at

encashing equity with a premium pricing strategy and they cater to only 30% of the market-

the mild beer segment. For remaining 70% market this players launched multiple new brands

that are competitively priced. However some of the consultants are not confident about the

success of this marketing mix since Indian scenario is widely different from other growing

markets because of its immense and diversified geography, huge variety of social and cultural

setup, differential tax regime across states, are to name a few. Taxes imposed on alcoholic

beverages are very high which make the competition tougher for new entrants. Currently spirit

manufacturers trying to push forward a policy change which will exempt beer (especially mild

variety) from high alcoholic tax regime and accept it as normal refreshment beverage but in

Indian socio-cultural and political scenario this proposal has only a few takers.

Classification of beer: Lager: It is stored for a specified period before being bottled or canned.

Pilsner: A type of lager beer, it is light with 3.0 3.8% alcohol and has a medium hop flavor.

Ale: Top fermented, this kind of beer has distinct hop aroma. The alcohol content is around 4

5%. Stout: Dark with burnt flavor and strong malt aroma; it is heavily hopped and contains 5

6.5% alcohol. Porter: This is less dark than stout, even less hopped and is somewhat sweet.

Alcohol content is around 5%. Creamy Ale: A highly carbonated beer that is produced by a


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combination of Ale and Lager. Malt: A strong flavored, high alcohol content beer that ranges in

flavor and colors.

Classification of Beer :

1. Lager: It is stored for a specified period before being bottled or canned.2. Pilsner: A type of lager beer, it is light with 3.0 3.8% alcohol and has a medium hop

flavor.

3. Ale: Top fermented, this kind of beer has distinct hop aroma. The alcohol content isaround 4 5%.

4. Stout: Dark with burnt flavor and strong malt aroma; it is heavily hopped and contains 5 6.5% alcohol.

5. Porter: This is less dark than stout, even less hopped and is somewhat sweet. Alcoholcontent is around 5%.

6. Creamy Ale: A highly carbonated beer that is produced by a combination of Ale andLager.

7. Malt: A strong flavored, high alcohol content beer that ranges in flavor and colors.Methodology: Due to lack of time and resources collection of primary data has not been

done and the entire project depends on the secondary datas collected from different web

pages, online research papers, etc.Analysis and others parts are done on the basis of these

secondary data and knowledge collected from the marketing lectures and text books.

Analysis:

Marketing Mix Analysis:

Kingfisher History: Parent company of Kingfisher, United breweries was established in 1857

with the name Castle breweries. It was renamed to United Breweries in 1915 and started

manufacturing beer from the year 1944 under the label Exports Beer. UB group started

exporting beer to Middle-East from 1974 and in the year 1978 it launched Kingfisher brand.

Market Position: It is the largest selling brand in India and commands more than 30% share in

the beer market. In 2005-2006 it recorded 28% growth.

Target markets: Kingfisher has two different products for different market segments.


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Product :

1. No. 1 selling product in its segment.2. Good quality raw material is used to maintain the quality standards.3. Consistency of product quality is high.4. Always tastes fresh due to good quality and well developed distribution network.5. Hangover due to heavy consumption is very mild.

Place :

1. It is available throughout India, and is dominant particularly in South and West India.2. UB has 16 company-owned breweries apart from nine contract breweries in 20 different

locations across the country.

3. Kingfisher also has a presence in 60 countries.4. Kingfisher also has an online marketing system. Any consumer can go to

www.Kingfishernetshop.com and get their beer- a mini mum of six bottles home delivered.

This move has been a big draw with info tech professionals and district women drinkers.

5. It also has some sixteen hundred shops apart from pubs and bars. Better retailing outletsare also to be opened under the Kingfisher Brand.

6. Kingfisher also has tie-ups with large department stores like Foodworld forretailing its Beers.

7. Kingfisher also has association with number of Very Classy, Up-market & Stylish bars &lounges which goes hand in hand with its brand image.

Price :

In both mild and strong beer segment Kingfisher uses competitive pricing strategy.

Promotion :

1. Kingfisher tagline King of good times is one of the most popular and mostsuccessful tagline in India.

2. Since advertising of liquor is banned in India, Kingfisher uses surrogate advertisingmethods like using mineral water and sodas.

3. Aggressive advertising at Outlets & Pubs.


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4. Recently it also started merchandizing sports goods and trendy clothing and accessoriesunder Kingfisher brand name.

5. Each year Kingfisher brings out new calendars featuring top models in swimwear.6. Kingfisher also promotes itself by sponsoring events like fashion shows, sportspersons like

Narain Karthikeyan, East Bengal soccer team. UB promoter also acquired a Formula- One

team (Force India).

7. Kingfisher also deals in sports merchandising starting with an ad featuring Sourav Gangulyand Ajay Jadeja in 1997.

8. With the launch of Kingfisher airlines combined promotion is possible which helps the brand promotion a lot. Kingfisher also ventured into other businesses with same brand

name making the brand more visible and publicity easier.

9. Kingfisher recently tied up with NDTV for their new lifestyle channel NDTV Good Timesfor five years

10. And finally the Sultan himself, Dr. Vijay Mallya, the Big Daddy of all brands, theflamboyant Czar of the liquor industry who is the youth icon of a million hearts. His sole

presence outweighs all other competitors taken together.

Fosters

History: Fosters was established by two brothers W M and R R Fosters in the year 1986.

SAB Miller is the parent company which runs Fosters group, a premium global multi-beverage

company delivering a total portfolio of beer, wine, spirits, and cider non-alcohol beverages. In

the 70s Fosters started exporting to USA and UK and entered the Indian market in a 1998.

Fosters is considered as a consumer driven brand.

Market Position: Fosters belongs to the SAB Miller stable which is the second largest beer

company in India, in terms of market share. Till now it is the only international beer brand

which successfully captured a significant share in the Indian market.

Target markets: The main target markets of Fosters in India youth. But targeting strategy

of Fosters can be presented as


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Product :

1. Premium Lager beer2. Fresh taste3. Among the two sizes (330ml and 650ml) pint size (330ml) is more aggressively promoted

and

4. 70% of Fosters sales today come from the pint-sized market5. The product is a light beer highly carbonated with low bitterness and no aftertaste. It has

fewer calories and lower alcohol content.

Price :

Fosters unlike Kingfisher follows a premium pricing strategy for its products. The prices of

widely available Fosters product are


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Place :

1. SAB Miller has 10 breweries in nine

states and

contract manufacturers in two other states.


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2. Fosters has 24 distributors serving over5,000 outlets, including over 2,300

outlets in Mumbai.

General distribution structure of Fosters is shown here-

Promotion : -

1. Australianness is the essence of Fosters brand image is promoted in every marketin the world. All Fosters lager theme advertising is consistent with an Australian

positioning

2. The overseas advertising of the product often focuses upon the Australian connotations ofthe beer, e.g. with reference to stereotypical Australian imagery such as kangaroos,

exaggerated accents, and hats with corks on strings

3. Since direct promotion is banned in India Fosters use surrogate advertising method usingmineral water of the same brand name

4. Fosters promoted its brand by sponsoring various sports like cricket, to enter the Indianmarket. Afterwards it withdrew from cricket and started promoting sports like football,

rugby, motorsport etc.

5. Fosters is deeply committed to promoting responsible consumption.6. While Fosters does not provide medical advice, nor attempt to advise individuals on

important and complex medical issues, the Company is committed to ensuring that

consumers access the best available information regarding alcohol and their health.

7. Steeping into Mens Fashion apparels collections for better brand visibility.Brand repositioning of Indian brand in presence of international brand:

The term positioning is widely used within the marketing and advertising

communities today. Positioning is often used nowadays as a broad synonym for marketing

strategy. Positioning should be thought of as an element of strategy, a component of strategy,

not as the strategy itself. The term positioning is, and should be, intimately

connected to the concept of target market. That is, a brands positioning defines

the target audience. The correct positioning of a brand is basic and fundamental to its success;

an incorrect or suboptimal positioning can doom a brand to underperformance or failure.

Kingfisher, since its origin proved to be the marketing savvy brand. Even though it was the

largest selling beer brand, but when Fosters entered the Indian market, Kingfisher sniffed


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possible competition and invested heavily in brand visibility and positioning. During 2003-04

Kingfisher again repositioned itself by changing the logo.

Instead of the

sitting kingfisher bird, the picture of a flying kingfisher was used during creation of new logo

because the company wanted to promote itself as an aspirational brand which always wants to

go high. This change was made mainly to maintain the distinctive positioning and to create a

stronger emotional bond with the aspiring Indian youth.

This repositioning was so successful that even today Kingfisher uses this logo. After the entry

of international brand Fosters, Kingfisher repositioned itself into a lifestyle brand adopting

jingles like Oola la le lo and tagline King of good times. Kingfisher tried to

position itself as a brand for the successful and professional individuals who are always ready

to take a break, have a party or just chill out. This positioning was promoted using Indian

cricketers such as Ajay Jadeja and Sourav Ganguly, West Indies cricket team (At that time

Kingfisher was the official sponsor of WI cricket team) and various other means. The notable

thing during this repositioning process is that during this process Kingfisher kept the original

message of the brand intact while adopting strategies (including advertising, logo designing,

etc.) to communicate better with the consumers and to create a stronger emotional bond with

them.The strategies of Kingfisher paid off well and as a result Kingfisher maintained the

leadership position and added more dimensions into the brand making it stronger than before.

Brand Extension :

Kingfisher is one of the most recognized brand in India and SAB Millers fosters has

also positioned itself as a unique brand so extension of both brands is possible without much

hassle.

Kingfisher : -

Kingfisher is widely known among large number of consumers and its brand presence

increased after diversification into airlines business. Kingfisher brand can be extended in

following ways-

Line Extension:


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Ultra Premium Beer: Though Kingfisher has a huge presence in both light and strong beer

segment but from the beginning it followed strategic pricing policy and that made the brand

very popular. But with the increasing income level of the Indian youth and the entry of

international spirit majors like Carlsberg, Budweiser, etc. Kingfisher should introduce a high-

priced premium beer that would compete against these brands effectively. In this way the

company could extend its customer base and their strategy would also help the company to tap

the high income aspiration group and since company could apply skimming the cream

policy for this segment, it could be assumed that revenue generation would be high enough to

maintain profitability. This move may also help the company if it wants to transform itself into

a legendary brand not only in India but also across the globe.

Category extension:

Energy drinks: Kingfisher always maintained itself as a lifestyle brand and associated the

brand image with the youth. With the increasing per-capita income and westernisation of the

Indian society, people are getting ready to spend more and more. On the other hand they are

more conscious about health issues. Energy drinks are very popular in Western countries and

some of them also entered into the Indian market but they failed to make an impact. If a

company like Kingfisher with huge brand popularity and strong self and distribution network

introduce energy drinks it could be a success. It will also go hand in hand with the current

image of the brand.

Film production and distribution: Every year Indian film industry release a lot of movies

and it is the largest film industry in the world considering the number of release per year. Still

in India same production and distribution has not reached professional level. Only a few

companies at present do things in a methodical way. But international production majors are

entering in the Indian cinema space and Indian multinationals are also taking interest in this

field. Kingfisher as a lifestyle brand always maintained a close relationship with the film

fraternity and also has a presence in the television space in a joint venture with NDTV. So it

would be a natural extension for the brand to start a movie and television production house.

With this move Kingfisher would bring in its corporate expertise and financial muscle. This

will also help the brand to increase the brand visibility. And just like Adlabs Kingfisher will

have the opportunity to create its own multiplex chain and it will also help the current lifestyle

apparels and accessories business a lot.

Apparels and accessories retailing: Even though Kingfisher is already present in the

apparel and accessories space but its presence is very limited. According to industry estimates

organised retailing is the next big thing. In this scenario Kingfisher could easily use its huge


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brand presence and popularity by investing more into theapparel and accessories retailing. In

this way Kingfisher could transform itself into a complete lifestyle brand and that would open

new horizons for the brand.

Fosters

Fosters always maintained its Australian identity throughout the ups and downs of the spirit

industry. It is the only well-known international spirit brand in India and Fosters can use this

very easily to extend the brand

Line extension:

Low-price beer: From the beginning Fosters maintained high pricing strategy and that

helped the brand to grow. Now since the brand is already popular they could introduce a

localised version of the brand in lower price. That would help Fosters (SAB Miller) to

strengthen its market presence and to compete against Kingfisher. This new brand will be a

unique mixture of Australian characteristics of Fosters and local characteristics and the target

segment will be the Indian youth with low disposable income. Using the current infrastructure

and distribution network, SAB Miller would make the process easy and less costly and that

would increase the profitability of success.

Category extension:

Sports merchandising: Fosters always maintained its position as the Australian brand and

Australia is a multisport country where most of the sports are very popular and as the country

Australia is very successful in these sports. Fosters previously maintained its relationship with

cricket and other sports and is now also responsible for different sporting events. So they

could use this to enter sports merchandising business in India using cricket as the entry point

and then extending into other sports. They could also use the Australian image to relate the

sporting fraternity of India and Australia and by this way they could popularise the currently

unpopular sports like boxing, shooting, etc. If this strategy could be implemented properly it

would make Fosters unique and give the brand a head-start.

Limitations:

Our study is based on secondary data, mainly from newspapers and websites and we had no

access to primary data. As a result the report may not contain the latest data about the present

market scenario which could otherwise have made it far better and relevant.

Findings:

Traditional beer markets in Europe and USA are either flat or are in a state of decline, whereas

India still has a huge untapped market. For these reasons international beer companies are


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coming to India almost every quarter. Kingfisher, since its origin proved to be the marketing

savvy brand and even though it was the largest selling beer brand but when Fosters entered

the Indian market Kingfisher sniffed possible competition and invested heavily in brand

visibility and positioning. Kingfisher changed its logo and adopted a new logo and tagline,

sponsored the West Indian cricket team and also used the Indian cricketers to sponsor its

product. It went into airlines, lifestyle and even started a television channel with NDTV. From

our study we have also suggested some brand extension methods under, line extension and

process extension.

Conclusions:

India is a growing economy and its market is opening up. The per capita income of the people

of the country is rising daily and so is the beer consumption rate. The stigma associated with

the consumption of alcoholic drinks has also gone down; as a result the beer companies are

trying to get more associated with everyones life.

alcoholic beverages market

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