Case Study Stella Artois

Rahul Bhosale
Matt Arbuckle
David Bowles
Eli Bradaric



Introduction

Company Overview and History

Interbrew is a privately held company headquartered in Belgium. It was started in that
country as the Den Hoorn brewery 1366. Between 1954 and 1990 the company expanded via
acquisitions and mergers, primarily in Belgium. It then grew rapidly as a result of a series of
international acquisitions beginning in 1991. By 2000 the company was the worlds fourth
largest brewer with business entities in 23 countries. 90% of its volume comes from outside of
Belgium.
The international beer market, with volume of 1.3 million hectolitres in 1998, is split into
segments for analysis: mature markets and growth markets. Mature markets are believed to
have peaked-out and may see decline. These include North America, Western Europe,
Australia, and New Zealand. Growth markets include Eastern Europe, Central and South
America, and Asia. Asia is the most promising with high expectations for China. This
excitement is tempered by the ongoing effects of Asias 1997 financial crisis.
The international market is fragmented. The top four brewers only command a combined 22%
of global volume. Consolidation to achieve economies of scale has been an industry trend.
This is help in check by current cost structures, the prohibitive cost of capital upgrades, and
deeply rooted local tastes preference that favour local historical brands. Recently the company
has had good performance, growing volume faster than its best competitor by 13%. The
greatest growth has been from China.

Corporate Strategy

The company is committed to focus only on beer. To maintain strength in mature
markets the product mix will favour premium and specialty beers that have superior margins.
The countries being emphasized are: U.S., U.K., France, Netherlands, and Belgium. The
company is committed to continued success in the growth markets and sees consolidation as a
prevailing feature in the beer industry going forward. The growth markets being focus in are:
Central Europe, Eastern Europe, and Asia (especially S. Korea and China).
Cross fertilization of ideas between operations is being emphasized. The cost structure
is being improved by shifting volume to the most productive factories, and to the factories in the
more active markets. It is also reducing its number of suppliers to form more lucrative
partnerships.
To grow is brand Interbrew will continue to add to its portfolio through acquisitions in
growth markets. They intend to identify specialty brands to develop regionally. Finally, it
intends to identify a key corporate brand and to develop it as a global flagship product.

Case Situation

Stella Artois was identified as the international flagship brand. Compared to the
companys other premium beer Stella Artois was known in the most countries and it was
produced in the largest volumes. The initial marketing efforts were fragmented and efforts at a
coordinated effort were met by resistance, especially with regards to common international
advertising. The centralized advertising plan was launched in 1999 in 15 markets, seeking to
position the brand as a sophisticated European lager. The target was 21 to 45 year old males.
After almost 2 years, Interbrew management was second guessing the price to earnings
leverage of have a global brand. The shotgun approach was not productive enough. A series
of filters were developed that potential markets most pass through. This screening favoured a
more focused approach. Early successes had been seen when specific city markets were
emphasized. This included concentrated targeting of the young adult population in urban areas.
The new emphasis was to perpetuate the city specific efforts. They planned to continue
their efforts in New York City, Boston, London, and Brussels. Interbrew would peruse potential
markets such as Moscow, Los Angeles, and Hong Kong.


SWOT Analysis

Strengths
Interbrew is spread across 23
countries, 4 continents
Decentralized approach of
management by the regional teams
Strong ventures and licensees in
various countries
Local brand acquisition strategy
Stella Artois, Global Flagship brand

Weaknesses
Stella is considered to be old
fashioned
The ratio of Fixed cost v/s variable
cost is high hence limited cost saving
potential
Opportunities
22% of global economy dominated by
top 4 players, thus have good
opportunity
Overall operations and production
cost can be reduced by motivating
employees instead of technical
improvements
Capacity utilization and Strategic
Sourcing
Threat:
Local brand loyalty in various market
across world
Decline of the Brand in home country

Internationalization of beer business
and consumers interest in Authentic
international brand




Manager Problem Statement

Because of the large global expansion plans of Stella Artois, management would need to
construct a new marketing budget. The marketing department is in charge of development of
core programs and selective support of local markets, so the overall budget would have to
increase to account for these important areas. Cooke will also have unanswered questions
regarding maintaining growth in Belgium while pursuing Stella Artois towards a global brand
status. It will be important for Interbrew to set specific goals and objectives within Belgium over
the three years the company plans to expand globally.
In regards to Interbrews challenges with global expansion, they need a valid way to
measure their performance. It will be difficult for them to create realistic expectations for their
global brand market development, so the toughest challenge will be knowing how to measure
their success. Marketing to a variety of markets will be another major challenge for the
company. It will be difficult reaching every targeted market by just launching a single global
marketing campaign. Finally, Interbrew will have to successfully launch an Internet based
approach to marketing Stella Artois as a global brand.

Alternative Solutions:
- Interbrew can concentrate more on developing global market (Asia, Central Europe,
Eastern Europe, South America) by targeting big cities and working from there.
- The company can decide to put their efforts to stop the constant decline of Stella Artois
in Belgium. They can make a specific ad campaign to penetrate their home country by
promoting Stella Artois as a modern, sophisticated, yet accessible drinking experience with an
emphasis on the very high quality of the beer supported by the noble tradition of European
brewing.
- The Company can focus on the top 10 beer markets in the world as they only have a
significant share in one of them (Mexico 45%). There is a lot of potential in these markets.

Evaluation of Alternatives:
If Interbrew focuses its effort on the developing markets, they can help generate that
global brand quicker. These markets have a lot of local brand loyalty, but if Interbrew can find a
way to become a market leader in these developing markets by introducing Belgian Beer Cafs
in the major cities it will help them reach their goal of being a global brand. Interbrew can put an
effort to rebrand Stellas image in Belgium to a more modern and sophisticated beer. If they are
able to do this in Belgium, they should not have a problem in the countries where they are
already having substantial gains. Interbrew can also focus on the top 10 beer markets in the
world by targeting key cities and promoting that premier beer status. Pricing their beer higher
than Heineken is a way for Stella Artois to become a more successful premier global brand.

Recommendation and conclusion
We recommend that the Interbrew must concentrate developing the global market (Asia,
Central Europe, Eastern Europe, South America), but also must put efforts to stop decline of
Stella Artois in home country, Belgium. It will not be good for brand reputation globally to see
decline in the home market. To raise the brand in Belgium, Interbrew must promote Stella Artois
as modern, contemporary beer, but at the same time maintain the reputation of having history of
many years.