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Strategy - Carlsberg vs. Heineken

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STRATEGY TD FALL 2012
JOÃO SILVEIRA LOBO | GUIDO MARETTO

VS | Carlsberg vs. Heineken |

TABLE OF CONTENTS

Industry Overview1
Competitive Advantage and its Sustainability1
Cost Advantage1
Differentiation Advantage2
Sustainability3
Future Scenarios for the next ten years4
Strategic Options facing each Scenario5

Industry overview
For thousands of years, beer has been sold in similar form and taste all over the world. However, it has remained a highly local product due to barriers such as local tastes, short shelf life, high transportation costs, taxes on imported alcoholic products and difficult-to-penetrate local distribution networks.
In 1999, the top-four brewers were only accountable for 17% of global beer sales. Beer was, at that time, seen as one of the least consolidated, and least profitable, industries in FMCG. But nowadays, because of greater scale, the effects of reduced competition and the growing profitability of emerging markets, the top-four brewers control over 55% of global sales. In spite of this positive change, beer is still a local business, with local operations and brands.
This consolidation can bring large benefits, such as operational leverage, efficiency in advertising expenses, increased reputation and distribution networks’ power. Although slowly, brand concentration is starting to occur both in developed and developing countries. The future prospects for beer brands tend towards industry and local brand consolidation, indicating the need to develop global beers brands.
Competitive Advantage And Its Sustainability
Heineken and Carlsberg benefit from competitive advantage through both cost and differentiation. Throughout the years, both companies have had the possibility to accumulate knowledge and expertise about the brewing industry, take advantage from their size and operational scale, and create brand

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