Professional Documents
Culture Documents
and Strategic
Alternatives:
Carlsberg A/S
Prepared for: Dr Victor Goh
Class: Strategy G13, Group 1
Group Members:
Ang Siew Min Jasmine
Kymberly Wong Ya Sze
Lisa Claude Annick Jubecourt
Renee Lim Kexiu
Sia Su Ying
Yeo Man Shi Cheryl
Table of Contents
Executive Summary ........................................................................................................................................... 3
Appendix ............................................................................................................................................................. 27
2
Executive Summary
As the fourth largest international beer brewer, The Carlsberg Group (“Carlsberg”) competes
against three other key players, Anheuser-Busch InBev, SABMiller and Heineken in the
consolidated alcoholic beverages industry. The global reliance on technology and consumers’
changing preferences are two key trends amongst others that are making innovation necessary
for competing firms. This need is exacerbated by the high power of buyers, suppliers and
substitutes, making it a highly competitive industry. Carlsberg leverages on innovation across its
portfolio of brands and markets, enabling them to sustain a competitive advantage.
Carlsberg adopts a differentiation strategy, offering their customers premium products that cater
to their needs and preferences. The firm also engages in dominant forward vertical integration, as
well as horizontal integration in the form of acquisitions and joint ventures, which enables it to
grow inorganically. With its large portfolio of both international premium and local brands,
Carlsberg pursues both an international strategy as well as a multi-domestic strategy globally.
Recommendations to mitigate the threats and weaknesses identified by leveraging and exploiting
the strengths and opportunities respectively were hence put forth based on a SWOT analysis, to
be strategically employed. Strategic alternatives include:
(1) The Acquisition of craft breweries,
(2) Collaborating with Carlsberg’s distributors to conceptualize an online platform to
provide direct product sales to consumers,
(3) Intensifying penetration into new markets and
(4) Innovating to expand its lower- and non-alcoholic beverage portfolio.
3
The Carlsberg vision and mission is aimed at maximizing long-term returns via value-driven growth.
Recognizing beer as its core product, Carlsberg pursues a dual pronged approach- striving to
drive volume sales through improving efficiency while continually identifying opportunities in mature
and growing markets to develop economies of scale. A global and local approach has also helped
in gaining global exposure by leveraging on the strength of local brands across geographies.
Consequently, Carlsberg’s consistent focus in doing better has contributed to its strong market
presence in core markets such as Western Europe, Eastern Europe and Asia.
As one of the most successful brewers in the world, its innovative culture, passionate team and
customer-focused values has helped the company to expand and deliver sustainable long-term
growth to stakeholders. Today, Carlsberg employs over 45,000 employees with its brands
available in more than 140 countries across the globe
This is further proven by the increase in consumption of premium beer in Asia due to increased
purchasing power. This is especially so in China and India, with large populations which are growing
in economy and disposable income. It is know that the Asia Pacific beer market had a value of
US$155.93 billion in 2013 and is increasing at a CAGR of 5% from 2014 to 2020. It is expected
that the Asia Pacific market would be valued at US$220 billion by 2020.iii
4
Socio-cultural Trends
Although beer consumption is traditionally perceived as a masculine activity, women and young
adults are increasingly attracted to beer due to the variety of flavors and options for lower alcohol
content.iv Sales to these new segments have grown with changing consumer perceptions and
increased innovation by brewers, providing lucrative new opportunities with more receptive new
audiences.v Consumer demand for craft beer has also grown by nearly 18% in volume in the US
despite slowing industry growth.vi Beyond the US, craft beers have also been gaining popularity in
Europe and Asia Pacific. This growing global demand for and towards different kinds of beer
provides Carlsberg with increased avenues in using its diversified and extensive portfolio of brands
to enhance its profitabilityvii.
Shifting consumer preferences in favor of premium alcoholic beverages have also caused many
brewers to look towards premiumization. With increasing saturation and competitive rivalry
between alcoholic beverages in developed markets, premiumization serves as a differentiator and
allows brewers to earn larger margins.viii Currently, the premium lager segment commands 25.7%
of the marketixand represents a profitable area for Carlsberg given its portfolio of strong premium
brands. However, this has also caused consumers with lower purchasing power to switch over to
cheaper substitutes. Recently, consumption preferences have also changed in favour of home-
drinking, with households spending more on home-drinking than on alcohol purchased from
restaurants, pubs or bars.x In the UK alone, off-trade consumption (alcohol purchased in a
domestic capacity) is roughly twice that of on-trade consumption (alcohol from outside venues).xi
Lastly, people have also become increasingly aware of the detrimental health consequences of
alcohol consumption. Binge drinking and alcohol abuse have also been recognized as social
problems. Due to the increased proliferation of such information, consumers may decrease their
consumption of alcohol, negatively impacting alcohol brewers such as Carlsberg.
Improving digital platforms and tools has also revolutionized alcohol advertising. Online advertising
has been increasingly pursued as an avenue to circumvent strict regulations on traditional media
advertising.xiii The trend towards social media and communicationsxiv have also driven brands such
as Anheuser-Busch and Heineken to adopt strategies through “Facebook” and “Twitter” to
5
increase outreach and capture the attention of a global audience. xvSimilarly, the digital platform
has also become Carlsberg’s key touch points in increasing brand engagement of their target
consumer groups.xvi Leveraging on technology infrastructure has also allowed Carlsberg to support
its supply chain by aiding in the management of procurement and logistics among others. New
software has also helped in fostering cloud-based collaboration, increasing the efficiency of work
and communication among employees.
The PESTEL analysis has highlighted opportunities and threats from Carlsberg’s external
environment that can be exploited or mitigated respectively. Socio-cultural and Technology factors
appear to be the most significant factors. Socio-cultural factors including the preference for
premium and innovative brews and the trend towards health consciousness highlight the need for
Carlsberg to continually innovate to cater to a new and burgeoning group of younger beer
consumers amidst a saturating market. Technology usage has also become increasingly
momentous in this digital age, with more businesses competing via online platforms. The Internet
provides Carlsberg with the opportunity to expand its reach globally, and also improve its business
operations by connecting its offices through the cloud.
6
purposes, resulting in increased competition with other firms for supplies. This allows suppliers to
have a higher bargaining power. While some degree of vertical, forward or backward integration is
possible to dilute the power of suppliers, they still hold a high degree of power as the finished
product is greatly influenced by the quality of raw materials used.
In conclusion, the beer industry faces strong competitive forces from buyers, suppliers and
substitute products, which increases the competitive rivalry among incumbent firms. With low
switching costs, a maturing industry and changing consumer preferences, existing players have to
compete even more to maintain market share and capture new ones. Consequently, as one of the
key players in a consolidated industry, it is important for Carlsberg to leverage on its brand
portfolio to differentiate and sustain its competitive advantage against larger rivals.
7
Strategic Positioning
Globalization has decreased mobility barriers and firms can sell products in different countries
through exports, equity alliances or acquisitions. Carlsberg is perceived as relatively more
premium compared to competitors, however, its geographical spread is lower, signaling less
geographical diversification compared to the other 3 brewers.
8
Competitor Profiles: Top 3 Industry firms
Carlsberg’s biggest competitors are the top 3 industry leaders that have established themselves
globally with high profits, volume sales and market shares. Through aggressive expansion
strategies through acquisitions and alliances, these firms have been able to increase volume
shares consistently.
Product offerings Beer, ciders, soft Beer and soft Beer and soft Beer and ciders
drinks, energy drinks drinks
drinks, water
Value chain Production, Production, Production, Production,
distribution, distribution and distribution and distribution and
marketing and sales sales sales sales
Business Europe and Asia America, Latin Latin America, Europe, Africa,
segments America America, Africa, Middle East,
Europe, Asia Europe and Asia Americas, Asia
Pacific Pacific Pacific
Anheuser-Nusch InBev
As the market leader in the beer industry since 2008, the firm has a broad geographical
coverage, with operations in 24 countries. It owns both beer and soft drink production plants and
has strong product innovation capabilities that have enabled it to develop and integrate brands
into its brand portfolio.
SAB Miller
SAB Miller operates across 75 countries and has broad geographical coverage, especially in
emerging markets. It adopts a more localized strategy, allowing them to be more responsive to
evolving market conditions. It also has strong strategic alliances with other brewers, such as the
Castel group in other countries. Besides engaging in the beer business, SAB Miller has pursued
diversification via expanding to industries including packaging, bottling and hotel and gaming.xxi
9
Heineken
As the third largest brewer, Heineken has a global network with operations and distribution
networks in more than 70 countries. Its strong brand portfolio of more than 250 brands has
helped in the building of a dominant market position. It is strongly premium-oriented with the
world’s leading premium lager brand.
10
Core Competencies
The VRIO analysis is used to evaluate Carlsberg's resources and capabilities to assess its
competitive implication and sources of competitive advantage. Based on the resources above,
Carlsberg’s core competencies include:
Ability to leverage innovation across brands and markets (Sustained CA)
In 2013, Carlsberg was ranked 66 in Forbes's list of innovative companies. Adopting a belief that
innovation has no boundaries, the firm pursues a holistic approach in implementing ideas for new
products, packaging and technologies etc through research and development. This helps
Carlsberg in continually reinvigorating its offerings by leveraging on its innovation efforts for local
brands. Its “Radler” product line launched globally has been largely successful due to the ability to
localize innovations to suit different market demands. This capability is highly valued in pursuing
expansion strategies and Carlsberg’s strong reputation and global presence has allowed it to
effectively capture value by launching many innovative products. As such innovations and
capabilities are not easily imitated, it represents a source of competitive advantage.
More importantly, their brand portfolio is diversified across markets in different countries. Strong
local power brands such as Baltika in Russia and Chongqing in China are valuable and have
facilitated differentiation strategies and reduced the risk of market overdependence for Carlsberg.
Together, the Carlsberg brand portfolio is rare and costly for competitors to imitate due to legal
trademarks. Finally, flexibility in modifying the product mix to suit specific markets has allowed
Carlsberg to capture value and sustain a competitive advantage.
11
Carlsberg's supply chain functions such as procurement, production and customer supply are
closely integrated. They participate in all stages of the industry value chain, from ownership of
input to production and output. This is valuable as it allows them to manage supply risks and
prevent disruption to downstream value chains. Participating in production also ensures the quality
of their beers while customer supply chain processes helps to reduce distribution costs. Thus, the
company's supply chain management process is organized to capture value. However, as
Carlsberg's biggest competitors also participate in such value chain stages, this competency is not
rare. However, it may be costly to imitate especially for competitors who are not fully vertically
integrated yet due to heavy capital requirements and business networks.
• The creation of a strong diversified portfolio of international and local that cater to unique
preferences in each of its markets.
• Leveraging on the strong brand equity of its popular international premium brandsxxiii to
position itself as a premium, high-quality brewer in the minds of consumers
• Continual innovations in terms of beer flavours, quality and packaging
• Unique marketing and branding campaigns help to highlight differences and produce a
distinct image amidst market competition
• Integration of corporate social responsibility within business strategies to foster good
brand image and reputation
12
Apart from differentiating itself, cost reduction strategies have also been implemented in an effort
to improve profit margins, mainly in markets with lower sales and macroeconomic threats such as
Russia. Increasingly, Carlsberg has tried to integrate cost reduction strategies to increase
efficiency in all parts of its business. These processes aim to streamline functions via centrally
defined procedures regardless of geographical boundaries, while still providing opportunities for
consideration of local markets, customers and consumption patterns.
• Standard ways of working and operating across markets in brewing and processing bring
greater efficiency and lower cost
• Central insight into planning of routes to reduce distance and costs
Corporate strategy
Vertical Integration- Dominant Forward
Carlsberg is involved in several upstream and downstream value chain activities. Despite larger
emphasis on supplying and manufacturing, Carlsberg also plays an important part in the
marketing, distribution and sales of its portfolio brands through joint ventures with local firms in
markets such as Vietnam, India, Myanmar and Thailand.
As Asia’s beer market continues to grow, Carlsberg has adopted an acquisition strategy, acquiring
both brewing facilities and local brands in order to gain exposure to global markets and
distribution channels. It’s West China focused strategy, which included the acquisition of
13
“Chongqing Beer group” and 8 other Chinese breweries, is seen to be pivotal in helping Carlsberg
to increase profit and volume sales in Asia. This also allows Carlsberg to reap economies of scale
and compete more effectively globally against competitors while offering a larger suite of products.
Carlsberg’s ambitious and aggressive acquisition plans for China in the past few years, together
with the popularity of current portfolio brands has contributed to its position as the sixth largest
brewer in China.
Due to its superior integration capability, Carlsberg has expanded to become one of the world’s
leading global breweries. Its leading market share in Asian markets like Nepal, Laos and Sri Lanka,
as well as market leadership due to large-scale acquisitions in Russia and Poland is testament of a
vast experience in identifying strategic targets and entering new markets.
Global Strategy
Carlsberg’s brand portfolio consists of both international premium brands and local brands
positioned to be super-premium. As such, Carlsberg is pursuing a mix of both an international
strategy as well as a multi-domestic strategy in marketing both types of brands.
For its international premium brands, Carlsberg has also acquired or created local
Carlsberg’s pursues an international strategy brands in many of the markets it serves in
due to strong brand establishment and low recognition of the difference in local
pressure for cost reductions. As an preferences towards different types of beers.
international strategy is typically used by
For example, in order to cater to the Russian
companies with large domestic markets and
market, Carlsberg produces the Baltika brand,
strong, reputable brands, Carlsberg appears to
a national beer brewed and sold in Russia.
be pursuing such a strategy as seen by
Known to be an idiosyncratic market, Baltika is
continual attempts to build its global brand
produced to cater to specific tastes of the
image. Part of Carlsberg’s marketing strategy
Russian market and is sold as if it were a local
involves revising its packaging to highlight its
brand. Thus, Carlsberg is utilizing a multi-
Danish (European) heritage despite being
domestic strategy, responding to high
aware that such positioning will not be as well-
pressure for local responsiveness. Despite
received in the Russian and Asian markets
this, local brands such as Baltika still follow the
(Brownsell, 2011). Thus, low pressures for
premium positioning consistent with
local responsiveness are evident in Carlsberg’s
Carlsberg’s business strategy.
global strategy.
14
Key challenges for Carlsberg
(1) Need for differentiation amidst intense competition and saturating markets
Changing demographics and depressing macroeconomic factors such as decreasing consumer
spending have negatively impacted the beer industry in developed markets. Apart from slowing
demand and annual growth, beer markets in the US, Europe and the UK are currently victims of
oversaturation in part due to competition from alcoholic beverage alternatives.xxv
Carlsberg faces stiff competition from existing incumbents (Anheuser-Busch InBev, SAB Miller and
Heineken N.V.). Further exacerbating the challenge is the recent agreement by AB InBev to
acquire SABMiller. This will provide AB InBev with greater access to breweries in Latin America,
Africa and Eastern Europe, markets where it has little to no presence. The industry consolidation
of the two biggest players will result in increasing difficulty for Carlsberg to compete as AB InBev
increases its geographical coverage and market share.xxvi
In order to address this challenge, Carlsberg would have to consider increasing its market share
(through strategic M&As), differentiating itself from competitors or focus on less contested
markets in the region.
As Europe is a core market for Carlsberg and significantly contributes towards its sales volume,
overdependence on a slowing market has resulted in huge losses for the company.
15
(3) Responding to changing industry trends and consumer preferences
Another challenge faced by Carlsberg is the proliferation of craft beers in the market and
consumers’ growing interest in such beers. Craft beers or specialty beers produced by
microbreweries are threatening the mainstream beer market that Carlsberg competes in.xxvii Sales
of craft beers have steadily risen within the past five years and thousands of craft breweries have
sprung up in the US and Europe as younger consumers increasingly prefer such beers.xxviii This
craft beer trend poses a challenge to Carlsberg by eating into profits of the mainstream beer
market.
Consumers are also becoming increasingly health-conscious. Health concerns have not only
resulted in lower alcohol consumption, but also a trend towards alcohols with lower alcohol by
volume (ABVs), since such beverages contain less calories as well. These changes in consumption
trends can be attributed to increasing health awareness as well as aggressive campaigns
conveying the detrimental effects of drinking on health. Besides pressure from consumers,
beverage companies are also facing pressure from non-governmental organisations that lobby for
minimum unit prices for alcohol and tighter advertising.xxix The growing health concerns poses a
challenge to Carlsberg, which must safeguard alcohol sales as well as modify its existing brand
portfolio to cater to consumers’ changing preferences.
SWOT Analysis
Strengths and weaknesses are derived from Carlsberg’s core competencies, while opportunities
and threats are mainly derived from the key industry and macro-environment trends.
Strength Weakness
• Innovation across brands and markets to • Smaller size (smaller scale operations)
cater to changes in taste and preferences compared to its competitors
• Dominant regional presence build on strong • Currently too dependent on certain
portfolio of Brands markets that are saturated (eg, Russia)
• Successful acquisition of small brands
(horizontally integrated)
• Brand reputation
Opportunities Threats
• E-commerce • Health concerns
• Trend towards premiumization • Intense competition from close rivals
• Potential for growth in terms of market value • Increasing trend towards craft beers
and market volume
16
Strategic Alternatives proposed for Carlsberg
Opportunities Threats
As more consumers drink from home and prefer to purchase products online, this strategy will
appeal to these changing preferences and enhance customer experiences with the Carlsberg
brand. Current customer receptiveness to current social media marketing strategies also
ensures that Carlsberg is able to capitalize on existing channels for successful promotion of the
online platform. Apart from being in line with consumer preferences, online retailing will enable it
to reach out directly to consumers and generate cost effectiveness by reducing slotting fees.
With few companies having this business to consumer strategy, buyer power is reduced, allowing
Carlsberg to differentiate itself while tapping on a larger group. Buyers who prefer the
convenience of online purchases and good customer experience would also thus be more willing to
turn to Carlsberg’s products and pay a price for such a feature.
The benefits and limitations for the strategy are summarized below:
17
Benefits Limitations
• Increased engagement with home consumers and • Does not apply to consumer groups
more price-sensitive consumers that consume only during social
• Increase customer interaction and understanding events or seek ambience from bars
of the products by capitalizing on social media when consuming
channels • Additional delivery costs incurred
• Create stronger brand loyalty • Difficult to ensure and verify legal
• Save costs on slotting fees age that may result in additional
• First mover within the industry in tapping on the complications
B2C Market
• Limiting purchase per transaction can reduce
probability of excessive drinking
• Meets consumer preferences for online purchases
Strategic Alternative 2: Innovations to expand their “low alcohol” and “no alcohol” portfolio
Due to changing preferences and trends, consumers have shown an increasing preference for:
Hence, to counter the threat of declining demand for traditional beer due to an increasing amount
of complements, Carlsberg has to leverage on its core competency in innovation across markets
and brands to expand and strengthen its “low alcohol” and “No alcohol” portfolio. Expanding this
portfolio also provides consumers with more choices while allowing Carlsberg to cater to these
emerging trends in order to increase sales.
However, launching new products may be risky, especially due to high innovation and
implementation costs. Carlsberg should thus conduct a comprehensive consumer research for
each of its markets to mitigate possible risks of failure. Also, this strategy is not static. If Carlsberg
finds that its current portfolio of brands is able to satisfy consumers' demands, instead of
introducing new variants of beer, it should focus on making these lower alcohol content and sweet-
flavoured beer more accessible in markets where they currently do not have a strong presence.
Just recently, in June 2015, in response to the boom in the alcohol-free beer category, Carlsberg
has launched an alcohol free beer in the United Kingdom.xxx This is evident of Carlsberg's strength
in innovation capabilities is, which justifies the recommendation of it leveraging on its strength of
innovation to expand their lower and no alcohol portfolio.
18
Strategic Alternative 3: Acquisition of craft breweries in Europe and US
In light of the growing craft beer trend and massive potential of tapping into the craft beer
segment, Carlsberg can engage in the acquisition of craft beer breweries in Europe and USA.
Acquisition of craft breweries by Carlsberg in Europe will allow it to tap onto the growing craft beer
segment as opposed to relying only on the struggling mainstream beer segment. At the same
time, acquiring craft breweries means eliminating competition in the beer industry.
The acquisition of craft breweries will also provide Carlsberg with a strategic advantage in the
form of gaining access to new consumers via new distribution channels. The typical mainstream
beer segment involves Carlsberg selling its products to distributors and supermarkets. Craft
beers on the other hand, usually have their own loyal customer base and are sold on tap to
customers in restaurants and pubs, a small niche that Carlsberg cannot reach out to as well.
According to the Consumer Insights Report 2014, pubs and bars are the most frequented out-of-
home destination by adults (34%), representing a large, potential market Carlsberg can reach out
to with its craft beers. Utilizing a wider variety of distribution channels also serves to reduce buyer
power.
In addition, acquisition of craft breweries in the US will allow for Carlsberg to gain a stronger
foothold in the US beer market, which is dominated by AB InBev and MillerCoors. Currently,
Carlsberg’s brands are distributed in the US by St. Killian Import Co. but Carlsberg does not have a
strong presence in the US. At the same time, craft breweries are gaining ground rapidly in the US.
With the acquisition of US craft breweries, Carlsberg does not have to establish new breweries,
but can nevertheless tap onto the US beer market.
Strategic Alternative 4: Intensify acquisition and expansion in Asia and Asia Pacific
Carlsberg is strongly settled in Eastern and Western Europe. However these markets are at
maturing and saturating stages and offer limited growth prospects in terms of beer volume
sales.xxxi To enhance growth prospects, Carlsberg should look for opportunities to intensify
acquisitions and expansion in alternative regions. Comparative to developed markets, emerging
markets offer impressive growth rates in beer consumption volumes that signal opportunities for
Carlsberg to scale up and reduce over-dependency on western markets. This strategy will also
ensure that revenues are more diversified and less dependent on contracting and unstable
markets like Russia.
19
• Lithuania, with the Carlsberg brand as a premium brand and supported by strong local
brands
• Vietnam, where the Carlsberg brand serves the small but fast-growing segment in the
premium beer and supported by strong local brands.
Through a detailed analysis of most emerging marketsxxxii, the Asia Pacific region stands out with
the most promising future outlook due to less consolidated markets, low presence of key
competitors, improving economic fundamentals and rising disposable income levels. With relatively
high organic growth rates, the APAC region also has comparatively less stringent regulatory and
tax challenges compared to markets such as the Middle East and Africa, which provides a
favorable environment to capitalize on. Carlsberg’s strong market position in countries such as
Nepal, Sri Lanka, Laos, Malaysia and Vietnam also provides a strong foundation for regional
expansion.
As Such, Carlsberg should continue to exert a strong expansionary acquisition strategy especially
towards large markets such as China and India. Especially as larger competitors seek to
consolidate, Carlsberg should try to actively identify and acquire strategic breweries to establish
market presence.
Opportunities
• Good growth prospects in China, particularly in North/Northeast and East China, which
are expected to see the strongest growth (9.2 billion litres) over 2011-2016.
• Untapped growth potential in most markets with increasing alcohol consumption
• Relaxed Regulations: Myanmar has no national policy or action plan to tackle alcohol and
no legal requirement on media advertising
For Example, Carlsberg can continue targeted expansion in Northeast and East China by
continuing to push its currently popular premium brands in line with the trend towards
premiumization. Carlsberg should also promote its economy lagers as affordability is still key in
most beer segments in the emerging markets. Additionally, strong local brands should be
continually identified and acquired to cater to local preferences. Their strong local distribution
networks and access to resources can assist Carlsberg in establishing its brand in the China
market. Acquiring of China-based breweries can also reduce its costs to export to international
markets. In line with this strategy, Carlsberg should also continue with its current efforts to
develop and enhance the brand equity of its flagship brands to generate additional value.
20
However, as Heineken, AB InBev and SABMiller are increasingly targeting Asia as well, it may be
difficult for Carlsberg to grab larger acquisition targets ahead of competitors with larger financial
muscle. Thus, Carlsberg may have to buy smaller and invest for the medium to long term. Large
financial resources for investment, coordination of global functions and integration of local brands
into its brand portfolio also means that the expansion strategy will be a longer term strategy that
focuses on long term growth.
The acquisition of craft breweries in the US and Europe, while elimination competition, will allow
Carlsberg to hasten penetration into the markets where the demand of craft beers is currently
highest. The acquisition of craft breweries also addresses the issue of Carlsberg’s need for
differentiation amidst the intense competition that it is facing in the highly saturated beer industry,
through the introduction of a new product offering.
With Carlsberg’s strong brand equity and prior success in horizontal integration, our team sees
the potential value of this strategy for the firm to achieve market growth. As such, our team
recommends that Carlsberg immediately proceed with looking for potential craft breweries in the
selected markets, and begin the acquisition process with suitable breweries.
As expansion is a huge and lengthy process, it has to be implemented in stages. We propose for
Carlsberg to intensify its efforts in China first, since it is a market that Carlsberg already has
rather strong visibility in, followed by the other new markets that would require additional effort
and time.
21
3. Innovation to expand product offerings (lower and no-alcohol beverages)
Carlsberg’s core competency lies in its ability to innovate across brands and markets, leading to
sustainable competitive advantage. Innovation will enable the firm to address consumers’ evolving
preferences, such as the trend towards low or no-alcohol beverages. By increasing the firm’s
product offerings and offering something slightly more differentiated that caters to the current
demand, Carlsberg will be able to capture a greater market.
This strategy should be implemented while looking at the long-term strategy of Carlsberg.
Resources have to be invested in this aspect for continuous innovation, so that the product
offerings can evolve alongside consumers’ changing tastes and preferences. In the case of the no-
alcohol beverage, Carlsberg can expand its reach by continuing its research on the alcohol-free
beer that was recently launched in the United Kingdom, to affirm its feasibility of bringing the same
product to other nations globally.
Having an online purchasing platform will enable Carlsberg to ride on the technology wave to
establish a virtual presence in the digital setting. This allows the firm to combat the intense
competition that it is facing to attract buyers physically. At the same time, going digital will relieve
some pressure from the recent poor performance in the mature beer markets that Carlsberg has
been too focused on. It will also provide the growing number of at-home drinkers a more
convenient option of obtaining their favourite beers.
While we acknowledge the challenge that Carlsberg may have in terms of reaching all the
distributors globally and getting them on board with the campaign, Carlsberg can start off by
developing a convenient and easy-to-use platform. This should be done while concurrently pitching
the idea to distributors in Carlsberg’s major markets, to introduce the idea for global adoption.
Subsequently, the platform can be introduced to more markets as Carlsberg partners with more
distributors worldwide.
Conclusion
22
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25
End Notes
i
23 and 17 countries in the EU have put in place statutory and non-statutory regulations respectively in an
attempt to regulate alcohol marketing in Europe. Source taken from National foundation for Alcohol
prevention in netherlands (2007)
ii
National Authority for the Campaign against Alcohol and Drug Abuse (NACADA) was established by the
Kenyan Parliament in 2012. Some of its functions include educating the public on alcohol abuse.
iii
Jenkins, L. (2015, September 24)
iv
People are increasingly attracted to beer due to the flavours and lower alcohol content as compared to
other alcoholic drinks (Ruddick, 2015)
v
Beer consumption, previously perceived as a more masculine activity in some cultures, such as in
Australia, is increasingly being consumed by younger females, signalling a breakdown in the demarcation
between both sexes (Pettigrew, 2001).
vi
This has sparked an 18% increase in the number of craft breweries in the US in 2014 (Marketline,
2015).
vii
Carlsberg owns Jacobsen, an upscale brand with seven different craft brews, and sells it across
Denmark, Sweden, Norway, the UK, Israel and Russia. It is thus well positioned to exploit the growing craft
beer category in Europe and enhance its top line and profitability.
viii
Euromonitor, 2015
ix
MarketLine, 2015
x
Brown, J (2013) Stay at home drinking and socializing on the rise
xi
Las.org.uk (2015) Drinking Patterns and trends
xii
Drizly is a U.S Incorporated company that delivers alcohol to customers after they purchase it online or
through a smartphone application (ITProPortal, 2015).
xiii
Alcohol advertising has gone increasingly digital, with firms increasing their annual budgets in this aspect
by as much as 50%, as digital platforms allow firms to circumvent strict regulations on alcohol advertising
(Johnson, 2015).
xiv
Marketing is now greatly integrated with daily communications and social relationships (Chester et. al.,
2015).
xv
Laufer 2015
xvi
Statistics provided by the Beverage Industry Environmental Roundtable (BIER) show that “a 750ml bottle
of alcohol produces 6.3 pounds of carbon dioxide” (Grist, 2015).
xvii
Studies have estimated that a litre of beer can involve 300 litres of water to produce (Kaye, 2014).
xix
Market Line, 2015
xx
Market Line, 2015
xxi
SABMiller is currently one of the largest bottlers of Coca-Cola products.
xxii
Employees use Microsoft Exchange Online for email and calendaring; Microsoft Lync Online to connect via
web conferencing and instant messaging; teams are collaborating on projects using Microsoft SharePoint
Online; and employees are adopting the Yammer Enterprise social networking platform for messaging and
collaboration.
xxiii
Carlsberg, Tuborg and Kronenbourg are Carlsberg’s top international brands
xxiv
Qiu, 2015 and What are beer consumers demanding?, 2015
xxv
McKinsey, 2015
xxvi
The estimated revenue for the combined entity is $65 billion and consolidated market share post-
divestiture is 28.4%, about five times that of Carlsberg (Mickle, 2015).
xxvii
Despite a fall in overall beer production (1.4%), craft beer production grew by 9.6% in 2013 (CNBC,
2014).
xxviii
Roddick (2015)What is crucial to note about the craft beer trend is the strong interest from younger
consumers (aged 21-34) and the prized characteristics (artisanal, small-batch production, high perceived
quality) of craft beer.
(Donelly, 2015)
xxix
xxx
Crafted using the natural ingredients of hops, malt and water, “Carlsberg 0.0%” retains the sharp and naturally
satisfying taste of the brand's traditional beer, yet is completely free of alcohol. However, its success in the UK market
is not yet known since it has only been a couple of months since its launch.
xxxi
Carlsberg's core Eastern and Western European markets offer limited growth prospects over 2011-
2016, with predicted volume CAGRs of +1% and -1%, respectively3.
xxxii
Appendix: Analysis of Emerging markets
26