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Performance
The four largest brewers world wide and Carlsbergs main competitors:
These four companies produce almost half of all industry volume and generate up to 70% of industry profits (JPMorgan Cazenove, 2010).|
1. AB-InBev 18% 2. SABMiller 14% 3. Heineken 9%
4. Carlsberg 5%
5. Other 54%
Source: Canadean
Performance
Carlsberg has concentrated its presence in the European and Asian markets
Carlsberg is the market leader in Northern Europe with No. 1 positions in Denmark, Sweden, Norway, Finland and the three Baltic States
In Western Europe, with important markets such as UK, Germany, France, Switzerland and Poland, Carlsberg holds an important share of the market. In 2010 Northern and Western Europe accounted for 43% of total volume and 46% of operating profit.
Performance
In 2010 Eastern Europe accounted for 41 % of total volume and 45% of operating profit. Carlsberg holds the no. 1 position in Eastern Europe.
The Carlsberg Group is a significant player in the Asian markets they have chosen to compete. In 2010 Asia accounted for 16% of total volume and 9% of operating profit.
Performance
Carlsberg overall performance has been excellent in the markets they have chosen to compete. However, their presence in the most important beer market (North America) is minimum in comparison to its competitors. Anheuser-Busch InBev (ABI), now the global leader, sold a third of its beer in North America in 2010 reaped 46% of its profits there (The Economist, 2011)
Performance
Carlsberg and Anheuser-Busch InBev showed sharply contrasting fortunes in the third quarter (of 2011) . (Reuters, 2011).
Share Price Performance: comparison between leader Anheuser-Busch InBev and Carlsberg
Source: Reuters
Carlsberg shares went approximately 33% down during 2011 (so far), while AB InBev's are only 4% weaker. 2011 has been a rough year for Carlsberg. The organisation betted heavily on the Russian market and have faced significant problems there: costly raw material (barley) imports enforced by last year's poor harvest there and the raise of duty on beer by the Russian Government. These situations have impacted Carlsberg's recent performance (2011 third-quarter operating profit fell by 21 %). Because many of its competitors have betted in other markets (North America and South America, they have done significantly better than Carlsberg. Nevertheless, Carlsberg maintained its full year profit outlook.
What are the main economic characteristics of the industry, using Porter s 5 forces analysis?
Porter s 5 Forces
Threat of new entrants
Possible to gain competitive advantage by exploiting economies of scales. Beer industry is considered as oligopoly market. Highly Expensive Capital requirement of entry A company needs to spend a large amount of money in advertising cost in order to create brand awareness, attract consumers and build market share. Ex. Carlsberg spends a lot of money on advertising in order to strengthen its status as a global premium brand. Long process to make the connection in the industry and a well established distribution network for products to be delivered. It is time consuming when new entrants need to build the good relationship with customer. Consumers tend to choose the familiar brand. Ex. If Carlsberg launches the new products such as apple cider , it is easily to attract consumer. Therefore , Carlsberg do not need to fear competition from entirely new players
Wine
focus on people in high income and age between 45 to 54 years old. It is a luxury product.
Ready to drink
focus on young and women drinker. Taste is often very sweet.
Cider
The largest threat of beer industry. It is a fruit alcohol drinks. It is considered as a threat for Carlsberg that they should be aware of in the future. It needs to follow consumption trends. That s why Carlsberg launched Somersby apple ciders in 2007 and also launched a pear cider in 2008 (Carlsberg s annual report 2008: 42).
Asia
Local competitors seem to be the most important competitors for Carlsberg. Carlsberg just recently get into Asia market.
Due to the increase in competitors, Carlsberg needs to follow the development in the market by investing heavily on advertisements and marketing campaigns to maintain market shares around Europe, as this is one of the most essential markets for Carlsberg
What are the unique resources and capabilities of Carlsberg, differentiating it from its competitors?
How would you characterise the internationalisation strategy of Carlsberg, and how does this relate to its resources and capabilities?
A Glocal strategy
- Carlsberg is considered to be a diverse company - a number of well-known brands in its portfolio, which are marketed either globally, regionally or locally.
An Excellence Programme
- Created by the former CEO Nils Smedegaard Anderson in 2003 - A rationalisation programmes which consist of a systematic analysis and subsequent rationalisations of all processes and workflows within a certain area - The margins should be increased through 3 parts: control of the cost, increased efficiency and optimisation of turnover growth (sales and marketing) With a success in Northern and Western European region, the program was implemented globally.