An international marketing strategy for Black Sheep Brewery in Australia

Seminar Paper 2007 24 Pages

Business economics - Offline Marketing and Online Marketing


Table of Content

1. Introduction
1.1 Company Profile
1.2 The Beer Industry
1.3 Goals and Objectives

2. Environmental Analysis
2.1Analysis of the Internal Environment
2.1.1 Swot-Analysis
2.2. Analysis of the External Environment

3. Market Choice- Recommendation
3.1 Market Entry Strategy
3.2 Market Entry Methods
3.3 Implementation
3.3.1 The Marketing Mix Product Place Price Promotion People Process Physical Evidence

4. Conclusion

5. Bibliography

6. Appendices
Appendix I: SLEPT-Analysis South Africa *
Appendix II: SLEPT-Analysis Spain *
Appendix V: Beer Consumption by Country *
Appendix VI: Differentiation Strategy *
Appendix VII: Market Development Strategy *

1. Introduction

“International marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives.”

(Onkvisit and Shaw, 1997)

This report analyses the Black Sheep Brewery and gives recommendations on international expansion. It will analyse four pre-selected possible new markets, (Canada, Japan, South Africa and Spain) recommend one of them for future expansion and outline a market entry strategy and a marketing mix for this new market. The author is a consultant employed by New Paradigms Research Organisation.

According to McCarthy and Perreault (1994) a 5 step approach has to be implemented to find a new potential market:

1. Defining the problem
2. Analysing the situation
3. getting problem-specific data
4. Interpreting the data
5. Solving the problem

In order to find the best potential market for the brewery the author has to examine the different potential countries in consideration of their accessibility, market size and profitability. Furthermore recommendations due to the market choice, the market entry strategy and the marketing mix will be given.

1.1 Company Profile

The Black Sheep Brewery was founded in 1922 by Paul Theakston in Massham, his family has been brewing beer since 160 years.

Its product portfolio consists of four different types of beer: Black Sheep bitter, Black Sheep special, Black Sheep Emmerdale and Black Sheep Riggwelter. With these products, the company generates an annual turnover of £10m, mainly through wholesalers and large pub chains. The company is already active in several countries which include the USA, Finland, Singapore and Hong Kong (Black Sheep Brewery, 2006)

For its ongoing expansion it is now considering to enter a new market in either Japan, Spain, Canada or South Africa. In the next chapter, these markets will be analysed and one of them will be selected as a recommendation for the brewery.

1.2 The Beer Industry

The global beer market showed a stable growth during the last years and is expected to further increase. (www.datamonitor.com) This is due to the globalisation. The national beer markets approach saturation, therefore many beer brewers, Black Sheep Brewery is among them, are expanding internationally.

Furthermore, the key developing markets in Asia-Pacific are likely to maintain economy driven and especially microbreweries will develop niche and speciality beers to meet the consumers demand and needs in different beer varieties. (Nugent, 2005)

1.3 Goals and Objectives

- increasing world-wide presence in beer market
- increase sales, profit, competitiveness and market share
- keep good reputation and quality
- minimise costs and risks

2. Environmental Analysis

The environmental analysis is “the systematic and ongoing collection and interpretation of data about internal and external factors that may affect marketing and performance” (Wood, 2004, pg. 361)

2.1 Analysis of the Internal Environment

To identify the company’s strengths, weaknesses and opportunities that need to be considered and facilitate following recommendations which market Black Sheep should enter, the consultant has applied the Swot Analysis.( Wood, 2004, pg. 366)

2.1.1 Swot-Analysis

The SWOT – analysis (S trength W eaknesses O pportunities T hreats) “summarises the key issues from the business environment and the strategic capability of an organization that are most likely to impact on strategic development.” (Johnson & Scholes, 2005, p. 102)

The SWOT- Analysis is a helpful tool to develop the most appropriate market entry strategy for the Black Sheep Brewery:

Abbildung in dieser Leseprobe nicht enthalten

2.2. Analysis of the External Environment

To analyse the critical micro environmental issues and influences within the external environment which affect an organisation, several approaches can be used. (Drummond & Ensor, 1999, pg.13)

In this section the consultant analyses the potential markets and gives recommendations which of them is the most appropriate for the Black Sheep Brewery to penetrate. Therefore the SLEPT- Analysis and the 12C-Framework were used. As some of the C-factors were already covered with the SLEPT-Analysis only 4C-factors were used to as supplement. (for detailed version see Appendix I-IV)

The markets attractiveness is determined by the market size, market growth rate, competition, the profit potential the market accessibility and sustainability. Moreover, the capabilities of Black Sheep to cope with the challenges of the foreign market have to be taken into consideration.

3. Market Choice- Recommendation

As mentioned above, the consultant investigated all countries leaving out the fact that Black Sheep already markets its beer in all of the considered countries except South Africa.

After careful analysis and evaluation of all relevant information of the countries the consultant has come to the following results:

South Africa is a middle income country with an emerging economy and good GDP growth rates. Although an increase of the value of the South African beer market is predicted (www.datamonitor.com) and South Africa is hosting the FIFA World Cup 2010, which would be a great opportunity to promote a new product, the consultant would not recommend it as she has the opinion that Black Sheep would not benefit long-term. Moreover, there exist to many risks: As the major competitor is SAB Miller with a market share of 97.5% it is almost impossible for a small company like Black Sheep to be able to compete due to the missing resources. Additionally, the fact of its inadequate infrastructure and technology and the instable political situation are bearing further risks for the Black Sheep Brewery.

Spain is presenting a very strong economy with a total beer consumption of 3.3. billion litres. However, it still poses potential risks and difficulties such as the new imposed tax system, low productivity growth and a high inflation rate. The interests rates for investments in Spain are compared to the other countries very high and are expected to further increase. Additionally, is the beer industry in Spain a very competitive one and in contrast to the consumption of wine etc, the beer consumption is expected to decrease. (see appendix V)

Although Canada is a high income country with a GDP growth of 2.8% and seen as a Beer drinking nation (www.datamonitor.de), the consultant does not recommend to enter the Canadian market as there is a fierce competition in the market which would make it difficult for a small company like Black Sheep to compete as well as the Canadian laws and practices “are different in many respects and can be more complicated than their English counterparts.” (UK Trade & Investment, 2003, pg. 6) Another critical challenge for Black Sheep would be the different regional markets with different characteristics (e.g. Quebec beer market is totally different from the beer market in Vancouver) and therefore the time and resources needed to penetrate it. (UK Trade & Investment, 2003,pg. 5)

Japan offers the best option as a new market for Black Sheep. It is not only the 2nd technologically powerful economy and the 3rd largest economy in general but also the 6th largest consumer of beer. (www.kirin.co.jp) It accounts 45.5% of the Asia Pacific beer market by value.

Japan also has consistent GDP and economy growth rates, a high rising per capita income and a very low inflation rate. (www.datamonitor.com)

Negative factors are the highly bureaucratic system of regulation and licensing and the far distance from the UK. Although, those factors are compensated by the fact that the laws, concerning the selling and consumption of alcohol, are liberal and that interest rates are low . Furthermore, Japan disposes over a good distribution network to sell cross country which is due to the so-called keiretsu, a unique cooperation between manufacturers, suppliers, distributors and banks. (www.datamonitor.com)



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Institution / College
University of Sunderland – New College Durham
Black Sheep Brewery Australia



Title: An international marketing strategy for Black Sheep Brewery in Australia