...PG0-008 MAY 16, 2011 TEACHING NOTE Grolsch: Growing Globally Case Synopsis Grolsch reassesses its international strategy in light of the company’s recent acquisition by SABMiller, the world’s second largest brewer. Grolsch was the 21st largest global beer brand, sold 51.5% of its volume in international markets, and exported to 70 countries. However, its poor profitability in international markets, four countries alone accounting for two-thirds of foreign sales, and churn of markets and distribution partners raised concerns about the company’s international strategy and execution. Grolsch’s 60 years of history in foreign markets provides a rich backdrop to introduce a range of international strategy topics including: performance assessment, rationale for expansion, market selection, and choice of entry mode. Suggested Assignment Questions 1. Why did Grolsch globalize, and how well has it performed internationally? 2. What are the key elements and limitations of its emphasis on adaptation, in particular? 3. What lessons does Grolsch’s history afford about where to compete? What, specifically, do you think about the MABA process? 4. What lessons does Grolsch’s history suggest about how to compete in the markets targeted— particularly about modes of entry? 5. What other changes would you suggest to Grolsch's historical strategy? 6. Will the merger with SABMiller add value—or will it be a win-lose deal? Teaching Objectives ...
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...PANKAJ GHEMAWAT JORDAN MITCHELL SM – 1529 – E O – 308 - 029 Grolsch: Growing Globally In November 2007, SAB Miller, the world´s second largest brewer,1 announced the friendly takeover of the world’s 51st largest, Royal Grolsch N.V. of the Netherlands, for €816m in cash - 84% more than Grolsch’s value over the previous month. Nick Fell, SABMiller’s Marketing Director, explained the logic of the deal: “[Grolsch is] a fantastic brand. It’s North European, it’s a fantastic product, it’s got unimpeachable brewing credentials and authenticity and credibility. And it’s a damn good product. So for anybody interested in developing their premium beer business, this is an absolute peach of a brand to get hold of… we see huge potential for it in our global footprint, particularly in markets like Latin America and Africa where we’ve got a strong route to market but where the premium beer business is still in its infancy.”2 Grolsch had hitherto focused on developed markets, particularly the UK, US, Canada, Australia, New Zealand and France, in pursuit of its goal of becoming one of the world’s top 10 global beer brands. Groslch was already the world’s 21st largest global brand, measured by international (nondomestic) volume (see Exhibit 1). International volume had grown to account for slightly over onehalf of total volume and, going forward, seemed to offer much more potential. Drinkers often rated Grolsch higher than larger brands, including Heineken, the top global brand as well as...
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...PANKAJ GHEMAWAT JORDAN MITCHELL SM – 1529 – E O – 308 - 029 Grolsch: Growing Globally In November 2007, SAB Miller, the world´s second largest brewer,1 announced the friendly takeover of the world’s 51st largest, Royal Grolsch N.V. of the Netherlands, for €816m in cash - 84% more than Grolsch’s value over the previous month. Nick Fell, SABMiller’s Marketing Director, explained the logic of the deal: “[Grolsch is] a fantastic brand. It’s North European, it’s a fantastic product, it’s got unimpeachable brewing credentials and authenticity and credibility. And it’s a damn good product. So for anybody interested in developing their premium beer business, this is an absolute peach of a brand to get hold of… we see huge potential for it in our global footprint, particularly in markets like Latin America and Africa where we’ve got a strong route to market but where the premium beer business is still in its infancy.”2 Grolsch had hitherto focused on developed markets, particularly the UK, US, Canada, Australia, New Zealand and France, in pursuit of its goal of becoming one of the world’s top 10 global beer brands. Groslch was already the world’s 21st largest global brand, measured by international (nondomestic) volume (see Exhibit 1). International volume had grown to account for slightly over onehalf of total volume and, going forward, seemed to offer much more potential. Drinkers often rated Grolsch higher than larger brands, including Heineken, the top global brand as well as...
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...2 What lesson does Grolsche history afford and where to compete? Although Grolsches is a well-known brand name, there are still some lessons Grolschs have paid for in its long developing history. First of all, in year 1998, Grolsches planed for a large new brewery in order to strengthen the two facilities. One is Groenlo and the other one is Enschede, they are produced for export and Dutch market respectively. However, there is an explosion happened in the planning phase and destroyed parts of old Enschede brewery. Causing large amount of cost and force the major scramble to keep the operations going on. This lesson let Grosche it’s crucial to analyze and assess the project before entering. Secondly, In the second half of the 1990s,there is a stage that the open up of Eastern Europe, which motivate the Grolsh invested money in the Poland and Russia. However, in Poland market, the profitability performance is so poor and also fails to achieve the majority level. In the end, Groslch have to sell it. If Groslch expect to achieve a good performance, it should find out the markets which has enough overlaps with local areas. 2.What, specifically, so you think of the MABA process? According to our case, MABA process is a framework to assess international opportunities and inform us in our decision at the end of the day by measuring the four distances specific. In addition, Company also works through calculations each year to assign aggregate scores to each market. High score...
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...• Grolsch decided to globalize given the domestic market stagnation and shrinkage. • Also, seeing its archrival Heineken making headway in the global market, Grolsch found the opportunity of global expansion hard to let go. • Initially, it encountered few failed Joint Ventures and lost stakes in Russia during the Asian Financial Crisis. However, it regained its market position and by 2007 it was generating 51.5% of revenue from international sales. • The key elements of its emphasis on adaptation are: 1) Adapted focus and growth target core markets – Allowed Grolsch in prioritizing and focusing on expansion in key markets. 2) Adapted Brand strategy - The use of different advertising campaign to reflect the preferences of different customers helped make a connect with the international customer. Limitations: Adapted production and internal logistics – Exploitation of labor in low-cost countries to reduce cost of production. • According to Grolsch’s history the company should expand in a market which has enough overlaps with the home country in terms of culture, geography, economy and administration. • MABA is a tool used by the employees to judge the ranking/standing of a country in terms of investment priority after assessing various factors to judge the distance between the new market and the home market. For eg: Language difference (Cultural), EU Membership (Administration), cost of transport (Geography) and GDP (Economic) are factors for Market Assessment and total...
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...Grolsch Analysis In November of 2007, SAB Miller purchased Royal Grolsch N.V. to develop their premium beer product line. Grolsch has two main brand families: Grolsch premium Lager and Amsterdam. The takeover gives SAB Miller the ability to attack the premium beer market with an established and standardized brand that has grown globally (21st largest global brand in 2007) with a differentiated taste and packaging strategy. In this analysis, I will evaluate the reasons for Grolsch’s global expansion, their ability to adapt their pricing, distribution, advertising, and distribution to global demand and their strategy to evaluate the potential of entering new markets with MABA (Market Attractiveness, Business Assessment framework). I will also suggest a strategy moving forward under SAB Miller’s command. Reasons for Global Expansion One reason Grolsch went global was to reduce the company's reliance on local and national markets. In the 1960s-70s, the domestic market in the Netherlands began to shrink as Heineken and Amstel merged and took ownership of 50% of the Dutch market and 70% of exports. In addition, according to Exhibit 13, total consumption in the Netherlands decreased from 2000 (13.23 Million Hls) to 2005 (12.75 million Hls). In 2007, Grolsch’s home market of the Netherlands accounted for only half of its total volume and 65% of its revenue. Grolsch only owned 13% of the volume in the Netherlands alongside Bavaria (17%), Heineken/Amstel (46%), and Interbrew (14%)...
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...Mo 30.09.2013 | Case study: MNE competitive advantages | CASES Grolsch: Growing Globally Pankaj Ghemawat, Jordan Mitchell ------------------------------------------------- Top of Form DESCRIPTION Grolsch reassesses its international strategy in light of the company's recent acquisition by SABMiller, the world's second-largest brewer. Grolsch was the 21st-largest global beer brand, sold 51.5 percent of its volume in international markets, and exported to 70 countries. However, its poor profitability in international markets--four countries alone accounting for two-thirds of foreign sales--and churn of markets and distribution partners raised concerns about the company's international strategy and execution. Grolsch's 60 years of history in foreign markets provides a rich backdrop to introduce a range of international strategy topics, including performance assessment, rationale for expansion, market selection, and choice of entry mode. Questions 1) Why did Grolsch globalize, and how well has it performed internationally? 2) What are the key elements and limitations of its emphasis on adaptation, in particular? 3) What changes would you suggest to Grolsch’s historical strategy? Mo 14.10.2013 | Case study: International alliance | UTV and Disney: A Strategic Alliance (A) Atanu Adhikari, Rama Deshmukh ------------------------------------------------- Top of Form DESCRIPTION The case describes the dilemma faced by the senior vice-president of business...
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...MUSTAHID ALI MBA-3 ROLL NO. 1334 [Grolsch: Growing Globally] Case analysis Grolsch: Growing Globally Q.1 Why did Grolsch Globalize and how well has it performed internationally? Reasons for Global Expansion: Grolsch faced less demand in Netherland (Home) to its products in 1970’s. At the same time its rivalry Heineken was moving impressive in an international market. Grolsch acquired German brand called as Wickuler due to which the capacity of Grolsch was doubled. Grolsch also bought Ruddles, UK brand to create distribution network for its own brands. In 1990, Eastern Europe started opening up which resulted an investment in Poland & Russia. Although Gorlsch acquired aforesaid brands Wickuler was sold to to another German brand while Bass bought Ruddles for its distribution in UK. In Poland Gorlsch took over one brewery which had to be sold due to less profitability. Asian financial crisis & devaluation of Ruble in Russia forced Gorlsch to focus on developed markets. Gorlsch entered France by setting up its own distributorship. Around 51% of the total volume of Gorlsch was from international market. Overall Gorlsch did better internationally although not best. Q.2 What are the Key Elements and Limitations on its emphasis on Adaptation? The key elements of the Grolsch adaptation strategy were in: Pricing Promotion Operations Distribution channels Grolsch wanted to position their brand as a premium lager and charged a higher price in comparison to the Netherland...
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...1 X-CULTURE Me Late Chocolate Challenge Instructions Updated August 19, 2015, latest version Challenge Presented by: Caffè Vergnano, Italy, www.caffevergnano.com More on history and products here. Company contact person: Giovanni Chiappano Junior Export Area Manager S.S. Torino - Asti km. 20 – 10026 Santena (TO) Email: g.chiappano@caffevergnano.com Cell. +39.349.336.3068 Tel. +39.011.94.55.111 Contacting the company: There will be many teams working on the challenge. We would like to buffer our partner company representatives from email overload. If you have questions or need more information from the company, please contact Admin@X-Cuture.org first. Chances are, the answer to your question is already in our database. If not, your question will be forwarded to Caffè Vergnano. X-Culture Webinars We will have an online webinar with Caffè Vergnano on September 18. You will have a chance to meet the company manager(s), learn more about the company, and ask your questions. You will receive an email with the date and time of the webinar and the instructions for how to attend it. About the Company 2014 Turnover: 72.200.000 € Employees: 124 Production lines: 24 Factory surface: 13.500 mq Italian retail clients: 300 Italian clients HORECA: 5000 Export Countries: over 70 Coffee Shops 1882: 80 Caffè Vergnano was founded way back in 1882 and it’s Italy’s most ancient coffee marker. The company began as a small grocery shop in Chieri, a small town just below...
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...Grolsch Case Analysis 6/5/2013 What lessons does Grolsch’s history afford about where to compete? What, specifically, do you think about the MABA process? Grolsch’s 60 years of experience in foreign markets provides a poor backdrop to introduce a range of international strategy topics including: performance assessment, rationale for expansion, market selection, and choice of innovation mode. Grolsch, a company with a strong history and a highly rated product, has just been purchased by SABMiller. The company is evaluating its global strategy in light of the acquisition and determining how to position and sell its beer going forward. Grolsch has positioned itself well to compete internationally and has leveraged several tools (e.g. the MABA framework, strategic analysis) to effectively expand abroad. However, they must assess whether or not the MABA framework is still useful, what type of international strategy they should pursue (i.e. developed vs. developing markets), and if their adaptation strategies will continue to be an asset in their business development. The initial conclusion, detailed below, is that Grolsch should expand the MABA framework while also leveraging and recognizing the value of SABMiller’s distribution network. They need to maintain focus on international markets, looking at both developed and developing markets to diversify growth opportunities. Success for Grolsch depends on how well they can identify markets where their high-end,...
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...Erasmus RSM MFM: Mergers & Acquisitions ‘SABMiller Acquisition of Royal Grolsch NV’ Dou Wednesday, July 01, 2009 S. Mongeau Mergers & Acquisitions Analysis: SAB Miller Plc. Acquisition of Royal Grolsch NV Author: Scott Allen Mongeau Erasmus Rotterdam School of Business Candidate - 2009 Masters in Financial Management scott@biomatica.com Supervisor: Hans Haanappel, PhD Erasmus University Rotterdam, Department of Finance Assistant Professor - Faculty of Economics hans_haanappel@planet.nl I. MANAGEMENT SUMMARY SABMiller plc (www.sabmiller.com), publicly listed on the London Stock Exchange (LSE:SAB) and Johannesburg Stock Exchange (JSE:SAB), and available via the US OTC market (OTC:SBMRF), is a global brewing and bottling group. Founded in South Africa in 1895, SABMiller today is an international enterprise with a market value of £21 billion, producing a range of premium beers, including six numbering amongst the top 50 brands in the world: Pilsner Urquell, Peroni, Miller Genuine Draft, Miler Lite, Castle and Grolsch. The Grolsch brand, previously purveyed by 392-year-old Royal Grolsch NV, was the target of a notable acquisition in the brewery industry in November of 2007, with SABMiller paying a premium €816 million ($1.2bn; £583m), an 84% premium over Grolsch’s then share price. A premium price for a premium band, the acquisition of Grolsch added a northern European product to SABMiller’s portfolio and expanded its native and foreign market share. Riding a wave...
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...commitments to building market positions. • What is missing? Connection between the MA and BA components of the framework – how to prioritize promising markets (MA) where the company does not yet have a strong position (BA)? Background image of page 4 What lessons does Grolsch’s history afford about where to compete? What, specifically, do you think about the MABA process? Grolsch’s 60 years of experience in foreign markets provides a poor backdrop to introduce a range of international strategy topics including: performance assessment, rationale for expansion, market selection, and choice of innovation mode. Grolsch, a company with a strong history and a highly rated product, has just been purchased by SABMiller. The company is evaluating its global strategy in light of the acquisition and determining how to position and sell its beer going forward. Grolsch has positioned itself well to compete internationally and has leveraged several tools (e.g. the MABA framework, strategic analysis) to effectively expand abroad. However, they must assess whether or not the MABA framework is still useful, what type of international strategy they should pursue (i.e. developed vs. developing markets), and if their adaptation strategies will continue to be an asset in their business development. The initial...
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...Question 1 (i): Using the data from the case (and any other source available), carry out for the European brewing industry a PESTEL analysis. What do you conclude? Beer has been a part of the social fabric of cultures around the world for thousands of years. Even today beer ranks as the third most popular beverage in the world next to water and tea. Considered one of the oldest drinks, the origin of beer dates back to 6000 B.C. With low-cost strategies and lack of marketing and product innovations all created a very stable situation guaranteeing high returns on investments for most breweries in Europe. However, this situation has been changing dramatically and the industry has witnessed different brewing styles over the last decade. The market entry of large multinational breweries resulted in shrinking demand due to changing consumer preferences, the emergence of more aggressive competitive strategies and rapid changes in important distribution channels have created growing competitive pressures for European breweries. An industry that was used to stability must now find its way in an increasingly turbulent market environment. First of all, I need to evaluate the macro environment of the industry. The most suitable tool to analyze the broad macro-environment is the PESTEL analysis. In the PESTEL analysis environmental influences are categorized into political, economical, social, technological, environmental/ecological and legal aspects. It helps to identify how future trends...
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...painters Rembrandt, Vermeer, and Van Gogh or pictures that come from the tale of Hans Brinker and the Silver Skates, a tale that only very few Dutch are familiar with. Quite a few Americans have read the moving diary of Anne Frank and come to visit the "Achterhuis" on the Prinsengracht in Amsterdam. Some do even know that the painter De Koning, the writer Jan Willem van de Wetering, the movie director Paul Verhoeven, and the movie actors Rutger Hauer and Jeroen Krabbe, basketball player Rik Smits of the Indiana Pacers, astronaut Wubbo Okkels, gitarists Jan Akkerman and Eddie van Halen, and the Concert Gebouw Orchestra all come from that small country across the Atlantic. Some identify Holland with fresh flowers, some with Heiniken Beer or Grolsch Beer. Some know that a good vodka and the finest gin in the world, or actually genever as it is properly called, comes from Hooghoudt right here in Groningen, though some prefer Bols or Bokma or one of the numorous other brands. Some Dutch firms or partly Dutch multi-nationals like Philips, Unilever, Akzo and Shell are known in other circles where some Americans also realise that the Dutch are among the large investors in the US. Besides lots of expressions with the word "Dutch" in it that have a rather negative connotation, there is also a market for special Dutch products in the...
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...Price Fixing Describe the situation and the product. What was the impact on prices, quantities, consumers, etc. On 18 April 2007 The European commission had made a decision that Heineken, Grolsch, and Bavaria constituted a cartel between 1996 and 1999 to arrange price fixing. The product involved in the case was for the most part premium beer, but there were some instances where the suspicion carried onto the cheaper own-labels too (Kamp). The impact on consumers was tremendous because these three breweries hold almost 90% of the beer industry in Holland. Describe how price fixing arrangement was made – i.e. how did the firms plan to enforce the arrangement? The arrangement was made in the series of meetings between the top management of the three companies. They were operating more like a cartel than a three separate companies. They planned to control the supply and demand of the beer in order to maintain the desired level of prices. They tried to focus their profit control in the bars and supermarkets. How did the government determine that the firms were involved in price fixing? Based on the market conditions the EU commission noticed something unusual is going on. For that reason they have watched closely to the price changes and changes in supply in the demand. Soon after they have encountered evidences that the top management of the three biggest breweries were meeting on a regular basis and were operating a price fixing cartel (Kamp)...
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