A comparative review of the strategic development of Brasseries Kronenbourg and Brewery Group Denmark

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This assignment provides a comparative review of two organisations strategic development (Brasseries Kronenbourg and Brewery Group Denmark) within the context of the European brewing industry.

To undertake the strategic analysis of both organisations various methods have been applied which have helped to identify their performance overall as an organisation within the brewer industry.

Across Europe 50 per cent of the alcohol market is beer dominated. Making it major centre of beer consumption and production in the world. There are though considerable variations which exist from country to county, these include market characterises and industry structure. The European brewery market is an oligopoly market.

The French company Danone own a key player, Brasseries Kronenbourg, the 3rd largest brewer in Europe. They estimated total revenue of 26.7 million in 1993. The principle brands are Kronenbourg, Kanterbrau, 1664 and Tortel. Additional brands also include, Kronenbourg Light and 1664 Brune. The beer itself is premium outside of France and inside of France it is perceived as ordinary.

Brewery Group Denmark is a traditional Danish company that operate from two breweries either end of Denmark. They are a result of a merge between companies, which have now established them as the second largest brewery in Denmark. They are a small Danish brewery, which is fighting for a position in Europe and across the world. They import their beer into selected markets, these are Italy, The Caribbean, Germany, The Baltic States, Brazil, Russia, China and other Western European countries through a network of joint partnership schemes when distributing the beer.

Identifies organisations that have similar strategic characteristics through strategies or them competing on a similar bases.

Figure 1 shows a strategic group map of the Brasseries Kronenbourg and Brewery Group Denmark. The key characteristics are geographical coverage of Europe and marketing intensity these are illustrated through the two brands. Brasseries Kronenbourg (A1) are a multi national company that operate across the world with strong brands. In Europe they have a high marketing intensity with high geographical coverage. This is reflected through key characterises such as them being a large organisation that have a premium pricing policy, seven brands underneath their name offering a diversity of beer for consumers which serve various market segments.

Brewery Group Denmark (B2) operates national but is not a market leader. In Europe they have medium marketing intensity with medium geographical coverage. This is reflected through key characterises such as them being medium size organisation operating for a niche market. Consumers are willing to pay a premium price as the beer is regarded as high quality. Promotional offers are not a part of their strategy as the brand name is the main aspect in selling the beer.

PEST

Political

* Beer sold in cans is not a general feature throughout Europe, this is due to environmental reasons i.e. beer can not be purchased in Denmark by law

* In 1993 France limited advertising of alcoholic drinks, TV was forbidden, radio advertising was restricted to a few hours a day, press advertising was only permitted in magazines for adults and street advertising was forbidden in many areas.

* There is little ownership in Europe by non-European brewers. Licensing agreements have been set whereby brewers in one country brew a brand from another country, i.e. Whitbread brews Stella Artois and Heineken under license in the UK, this provides them with an expanded portfolio of brands to compete against

Economical

* Overcapacity within the beer industry, this has resulted in it becoming a saturated market

* In the Baltic Sates little investment is required as the demand for beer is high.

* Duty rates and taxation rates dramatically different across Europe making the production of beer more expensive in one place then another the duty rates have an impact on economies of brewing (raw material, salaries, packaging etc.).

Social

* Foreign beer is perceived to be of higher quality. Though in their county of origin it may be perceived as an ordinary beer

* More beer is sold through supermarkets in Europe

* The German drinkers are more loyal

* There are different perceptions of beer through different countries

* Consuming a name brand is regarded as more trendy

* Purchase of beer in two main ways, off trade or through; pubs cafes, hotel or restaurants to be consumed immediately.

Technological

* Advancements in computer packages has lead to efficiency in admin work carried out through computers i.e. distribution data bases

* Innovations in packaging designs, bottles which preserve the brilliance of the glass after several uses

* Labelling that change colour when the optimal consumption temperature is reached

* Automatic processing

Brasseries Kronenbourg take the strategy development approach of Fit. Identifying opportunities arising within the environment and adapting resources to take advantage of these. They are an established brand worldwide with seven different types of Kronenbourg beer. At present they have the 3rd largest market share in Europe and they form partnerships to gain competitive advantage. They are an organisation that can enter a country and adapt to fit their brand into the various markets enabling them always to be a key player. Capital resources establishes them with market share more quickly then other competitors. Special offers play a key role in the way they promote themselves.

Brewery Group Denmark, are the opposite their strategy development approach is by stretch. They utilise resources and competences for new opportunities or competitive advantage and innovate using current strengths. They sell themselves upon being a traditional Danish beer that fills a niche in the beer market. They have two brewery plants in Denmark and they export their product out globally from there. It forms a joint venture partnership combining themselves with someone who can complement them in that particular country rather then compete when distributing.

There main aim is not about maintaining themselves as a key player against the bigger names they are more concerned about their brand presence. This also means, special offers are not a part of their strategy as the products themselves are perceived as high quality and they are able to sell itself on the brand name. The consumer should think of the beer as something to be chosen for a special occasion and not as a daily standard product. Overall Brewery Group Denmark is able to combing tradition with innovations resulting in them adopting the stretch approach.

Conclusion

The beer market is a saturated market. The growth of both Brasseries Kronenbourg and Brewery Group Denmark can still be achieved, as beer is still beer. People are still willing to buy the product due to the consumption value. There will however be a consistent entry of new player who will enter into the market an uncontrollable factor, which will further effect all existing player within the market. These existing player should therefore develop their core competences and establish themselves as a real threat to new competition and not take a back stage approach otherwise their market share will be decrease.

In terms of the companies analysed for this assignment both Brasseries Kronenbourg and Brewery Group Denmark both have core competences and they should utilise and demonstrate them as an asset in their business strategies to gain direction, maintain and build market share.

At present Brasseries Kronenbourg can be described as a beer, which has no distinguishing features to set it apart from other competitions. The question of why is it so popular could be asked, however it is a brand, which is established and has a large organisation Danone behind. Other contributing factors to its success are awards for innovated packaging designs, and promotional offers help to sell the beer. The brand overall has many key competences. The success of the brand could increase if; they reconsider the taste of the brand globally giving it a unique selling point against other premium brands.

Brewery Group Denmark is a traditional Danish company. They have find a niche in the market. They cater for this group in an excellent mannor considering the size of the Organisation. They have developed a brand, which sells itself, and promotional offers are not relevant in establishing the brand or using it as a pricing policy in any country it enters.

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