is china thirsty for canadian craft beer
TRANSCRIPT
Is China Thirsty for Canadian Craft Beer?
What’s on Tap TodayThe Company Overview
The Target Market
Marketing Mix
The Chinese Beer Market
The International Strategy
Video Story Time
Craft beer is…
craft beernoun
a beer made in a traditional or non-mechanized way by a small brewery
Company OverviewCompany Overview
based in Surrey, BC“Dedicated to brewing world class craft beer with the best ingredients”
The Selection Process 1Focus on Consumers Between Ages 25-54
The Selection Process 2Focus on both Males & Females
The Selection Process 3Focus on both Retail Stores & Restaurants/Pubs
Perceptual Mapping
The Expat Appraisers“Beer, it's the best damn
drink in the world” in 2010, 600K expats in China familiar with the whole craft beer
culture fueled the beginnings of micro
brewing in China
24,358
8,023
7,306
5,591
Number of Expats in Shanghai in 2010
AmericanGermanCanadianBritish
The Urban Millenials
“Beer in one of my favorite drinks now”
1/3 of population are millenials Western university degree affluent urban consumers started switching to imported
premium beers foreign brands associated w/
status and well-being live for TODAY & enjoy life to
the fullest
The Beersnissmen aka Beer Snobs
“Let’s drink it as long as it is strong and
expensive” “Each beer bottle brings
friendship to a higher notch, every bottle of baijiu helps sealing a deal.”
job ads requiring drinking skills Drinking banquet baijiu culture health trend & gender equality
focus Imported beer viewed as luxury preference of dark stouts
The Crafty Ladies
“Why not, if it’s healthy and low-alcoholic”
nonexistent in the past urbanization & financial
independence contributed to rising trend
health trend & gender equality focus
preference for light lagers (taste and APV)
The Brewbies aka Beer Newbies
“Is it cool? Is it reasonably priced? Sign
me up!” made popular by Chinese
studying overseas + beer festivals
urbanization & financial independence contributed to rising trend
consumer confidence & small living spaces
Price
Chinese beer @ CAD $1.31 to $2.62 Budweiser lager @ CAD $1.27 (6.13 yuan) imported beer @ CAD $2.62 - $5.23 (100 – 200% more) imported craft beer @ CAD $10.47 - $19.63 per liter Russell Premium Price starting @ CAD $13 (63 yuan) Russell Special Price @ CAD $10 (48 yuan)
o conspicuous consumption & fulfillment of ego needso Russell Brewing positioning as the premium beer
Product
based on taste, beer is light or strong preference for light and sweet fruity beer growing demand for low-alcohol lagers (12 Russell beers)
4 new beer lines (Chinese friendly lines)1. line for beer enthusiasts2. line for women3. line for newbies4. line for businessmen
Place weak brand loyalty representative office set up is costly do distribution biz with a local agent e.g. Ecovis establishing potential markets and clients be in charge of arranging the beer sales a performance based commission
International Strategy
Exporting indirect aggressive
Advantages:• less risky• opportunity to study and learn about Chinese beer market
Disadvantages: • shared profit margin• no direct contact with consumer base, may impede long term
expansion plans
PromotionTwitter-like
Facebook-y
International Strategy
First time overseas therefore using Domestic Exporter/Importer FVI CapitalExporter driven by salesOffers least amount of Risk
Pricing Strategy
Dual Pricing Strategy Importing taxes 17% from Vancouver to
ChinaShipping CostsCommission to Domestic ImporterExchange Rate
Marketing Strategy
Hire Marketing Firm - Grey Group China Focus on International Brands wanting to expand brand
to Chinao They will do market research for us and sampling
dayo When our target market goes shopping
peak days they are shopping Create a Social Media Strategy Use local Social Media channels to get the work out
about product Run by Grey Group China Sampling Day and 1 Day Sale
Risk Mitigation Strategy
No start-up costs, just commission paid to exporter Sampling day will give us immediate market research
• Do they like the flavour• Is the branding correct• What are their thoughts on this beer• Does it have a premium taste and look
Allow us to see how the Chinese market enjoys Russell Brewing prior to us fully committing to the market
2-year plan to begin to brew locally
Risk Mitigation Strategy
China: 100.4 bn Japan:24.8 bn India:5.2bn 24.5% of Global market share World’s largest beer market 4631 kl beer whereas U.S. 2408 Largest in volume but not in revenue U.S. 25%beer sales come from economy lager whereas in China
82%
Opportunities & Threats
Opportunities
o Growth in disposable income
o Growth in Internet Retailing
o Women having more purchasing power
o Social media as an effective promotional tool
Threats
o Uneven income distribution
o Fierce and unfair competition
o Anti-extravagance campaign
o Increasing corruptiono Middle Class Migration
Competition
Leader in the Chinese Beer Market with 23% market share Social Media and Online Retailing (Jd.com and Tmall.com) Snow Beer: JV between SABMiller and CRE Greatest brand share 21%, Tsingtao 9.3%, Harbin 5.8%,
Budweiser 2.6%
Tsingtao
o 2nd largest market share 18%o Focus on premium brands Yi Pin
and Augertao Goal: to increase premium beer
saleso Backup from Asahi
Anheuser Busch InBev
o 3rd largest brewer in Chinao Acquisitions: Jilin Ginsber Draft
Beer and Jiangsu Regal Beero Top ten fastest growing breweries
in the marketo Harbin performing wello Global brands: Budweiser and
Stella Artois are sold as premium beers
o Launches Corona as premium beer
Competition Continued
Cheers & Thank You
High Quality
Low Quality
Low Price
High Price