[Grolsch: Growing Globally]
[Grolsch: Growing Globally]
Case analysis
MUSTAHID ALI
MBA-3
ROLL NO. 1334
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
and called as Wickuler due to which the capacity of Grolsch was doubled. Grolsch
also bought Ruddles, UK
and to create distribution network for its own
ands. In 1990,
Eastern Europe started opening up which resulted an investment in Poland & Russia.
Although Gorlsch acquired aforesaid
ands Wickuler was sold to to another German
and
while Bass bought Ruddles for its distribution in UK. In Poland Gorlsch took over one
ewery 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
and as a premium lager and charged a higher price in
comparison to the Netherland standard lager cost. However, Grolsch priced its products at a
discount in 3 of its 6 largest foreign markets (US, Canada, and Australia) in comparison to
competing imports in order to build market share. In France and Russia, Grolsch premium
Lager was priced significantly higher because the Amsterdam was the key volume producer
in these areas.
Grolsch also adapted their advertising and promotion strategy to maximize their presence in
their host country. They relied on the attractive image of beer from Northern Europe for most
of their promotion but the company realized that a good portion of consumers from other
countries (like the US) may not relate to or understand this concept. For example, in the US,
Grolsch used the swing top bottle accessory in a “Got that swing” commercial during NFL
football games. This theme made more sense than using the edgier UK commercials. Grolsch
also consolidated their operational cost by closing down two old export and import
eweries
in the Netherlands and built a new modern
ewery. Grolsch estimated the new plant would
save 1 million euros annually in operational cost.
Limitation:
The limitation of having only one plant is the potential that the plant could suffer a setback or
disaster and production could be halted for period of time, resulting in lost revenue. The
company also set up distribution relationships in many countries with joint venture partners
including the fore mentioned Molson Coors in the UK. However, Grolsch had suffered
setbacks in distributor turnover in the US, Canada, Australia, and New Zealand. These
distribution relationships with foreign markets proved to be complex because Grolsch had to
em
ace the concept of losing control over operations across country borders.
Q.3 Lessons and MABA Process?
According to Grolsch’s history the lessons learnt are
1) A company should expand in a market which has enough overlaps with the home
country in terms of culture, geography, economy and administration.
2) Ananlyze and assess before entering.
3) Establish Distribution Network and local help.
4) Companies think about growing globally on maturity in domestic market.
5) Communicating value is crucial.
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 volume growth, variable commercial contribution
Q.4 How to compete in the Markets Targeted, particularly in modes of entry?
According to Grolsch the best way to enter a market is in cooperation with importers,
distributors,
ewers and retailers. A change suggested in Grolsch’s historic strategy is not to
adapt the market completely in this case because it is an industry that gives importance to the
country-of-origin.
Markets Targeted:
South Africa: Monopoly Market, No.1 SABMiller (Market Share: 98%)
Brazil: Occupied by major Brewery Groups.
China: Competitive Market.
How to Compete:
South
Africa
Additional Line with SABMiller Co-Promotion with SABMiller
Brazil License out to Local Companies Intensive Promotion Support
China Marketing Research Co-promotion with JV
Q.5 What other changes would you suggest to Grolsch’s historical Strategies?
I suggest that Grolsch use a global strategy in the future. They should continue to
offer the standard products of the Grolsch premium Lager and the non-premium
and, Amsterdam. The premium lager accounts for 90% of the company’s domestic
volume and 2/3 of all exports. The unique green swing top bottle packaging and
unique taste separates the product from the rest of premium imports.
In addition, the Amsterdam is a quality, non-premium option to supplement the
premium lager
and and has gained traction in France, Russia, Australia, and Africa.
I think
anching out to different products and making them popular in global markets
would be too costly and time consuming
. The global strategy has been hard for firms in the past because they have to adapt
their product to the local market and have to coordinate operating decisions and
strategies across country borders. However, the Grolsch premium lager
and is
globally recognizable for packaging and taste, standardized, and has a consolidated
corporate strategy. In addition, the company has adapted their pricing, promotion, and
distribution relatively well in foreign markets.
I also think they have to reengineer their MABA framework. For example, they need
to incorporate analyzing distributor relationships in future markets in order to lower
turnover and conflicts of interests.
Q.6 Will the merger with SABMiller add value?
Merger with SAB Miller will definitely add value to Grolsch. It will help in making their
distribution routes more strong. I also help in global production of Grolsch. SAB Miller is a
160 years old
and. It has developed good trust and has notable
ands in market for bear.
Association for such
and will definitely add to Grolsch’s status. It has strong build up in
Latin America and hence will be easy for Grolsch to foray in this market.
Due to their own strong financials and the backing of SAB Miller, I think Grolsch should
consider building a large
ewery in the United States or Hong Kong to help the company
take advantage of economies of scale, increase presence, reduce transport cost, and decrease
eliance on distributors. It will also give Grolsch more ability to attack markets in Asia and
Central/South America, where total consumption grew rapidly from 2000 to 2005.
Mittal Steel in 2005: Changing the Global Steel Game
P A N K A J G H E M A W A T
J O R D A N M I T C H E L L
SM – 1529 – E
O – XXXXXXXXXX
________________________________________________________________________________________________________________
This case was prepared by Professor Pankaj Ghemawat and Jordan Mitchell, Research Assistant, as the basis for class discussion rather than
to illustrate either effective or ineffective handling of an administrative situation. August 2008.
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Last edited: 10/10/08
1
Grolsch: Growing Globally
In November 2007, SAB Miller, the world´s second largest
ewer,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
and. It’s North European, it’s a fantastic product, it’s got
unimpeachable
ewing 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
and 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
ut 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
ands. Groslch was already the world’s 21st largest global
and, measured by international (non-
domestic) volume (see Exhibit 1). International volume had grown to account for slightly over one-
half of total volume and, going forward, seemed to offer much more potential. Drinkers often rated
Grolsch higher than larger
ands, including Heineken, the top global
and as well as the leader in
Grolsch’s home market (see Exhibit 2). And Grolsch had started up a state-of-the art
ewery in 2004
that could be expanded at little incremental cost.
The acquisition closed and in Fe
uary 2008, Grolsch became an independent subsidiary of
SABMiller. Rob Snel, head of Grolsch International since 1999 and an employee since 1984, was
named Grolsch’s new CEO shortly thereafter. He had to decide what changes, if any, to recommend
to its global strategy.
1 This compares the relative positions of SABMiller with the two other major
eweries, InBev and Anheuser-Busch as of the
end of 2006. SABMiller’s fiscal year ends in March.
2 “Q&A with Nick Fell, Marketing Director, SABMiller,” SABMiller, www.sabmiller.com. Accessed Nov. 30, 2007.
http:
www.sabmiller.com
SM-1529-E Grolsch: Growing Globally
Company Evolution
Grolsch traced its history back to a
ewery, in the Dutch town of Groenlo near the German
order3 that was purchased by Willem Neerfeldt in 1615. By the late 1800s, the
ewery had come
under the control of Theo J. De Groen. In 1897, he introduced Grolsch’s iconic - and trademarked -
ceramic swingtop bottle, which was advertised as easy to open and allowing storage of beer for later
consumption. Marketing of the Grolsch
and began in 1918. In 1922, this operation merged with a
ewery in nea
y Enschede (see Exhibit 3 for a map of the Netherlands), but Grolsch was retained
as the principal
and. By the 1960s, Grolsch had grown from a “regional”
and to become the
country’s second most popular, behind Heineken.
After the death of the head of the De Groen family in 1982, the next generation of family members
agreed to an initial public offering (IPO) on the Amsterdam Stock Exchange in XXXXXXXXXXSubsequently, a
non-family member was
ought in to manage the company for the first time since the De Groens
had assumed ownership. By the end of the 1980s, there were no De Groens on the company’s
executive committee, but the family continued to own one-third of Grolsch’s shares and was
epresented on its supervisory committee.
Due to its stature in the Netherlands, the Dutch government honored the company with the
coveted “Royal” title in 1995, and the company was renamed Royal Grolsch N.V. In 1997, Grolsch
cele
ated the 100th anniversary of its swingtop bottle; a company representative said, “After 100
years, the swingtop is a great differentiator and still makes the Grolsch
and famous today.” In 1998,
the company decided to build a modern
ewery which, after disruptions and delays (see below
under “Operations”), started up in 2004.
Grolsch had been incorporated as a two-tier company under Dutch law and had two major, fully-
owned subsidiaries: Grolsche Bie
ouwerij Nederland, which handled sales and marketing of Grolsch
in the Netherlands and also housed most production, logistics and facilities support except operations
with foreign partners; and, Grolsch International, which was responsible for the worldwide sales and
marketing of Grolsch (and other
ands) outside the Netherlands and the UK and Ireland. The UK and
Ireland were handled by a 51:49 sales and marketing joint venture with Coors called Grolsch (UK) Ltd.,
which
ewed Grolsch under license locally.
Exhibit 4 summarizes Grolsch’s recent financial and operating history. In 2007, Grolsch’s total
volumes (including beers sold under exclusive distribution rights) increased by 3.1% to 3