As Grolsch’s higher revenue markets are predicted to decline, the company needs to look into expanding their brand recognition and presence into other international markets as there are considerable opportunities in markets such as overseas. The company also needs to evaluate their strategy, whether or not to go after developed countries, or go after undeveloped countries.
Pankaj Ghemawat and Jordan Mitchell
Harvard Business Review (PG0001-PDF-ENG)
May 06, 2011
Case questions answered:
- Statement of Problems
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Case answers for Grolsch: Growing Globally
What are the issues faced by Grolsch?
The issues faced by Grolsch are:
- Grolsch’s two largest markets are becoming smaller. The United Kingdom and Dutch markets to decrease in the future as the total product exported out is becoming smaller.
- Grolsch needs to increase its international sales by 3.5 million hl ( hectoliters). The company simply does not have the volume to produce 3.5 million hl due to their total capacity not being able to provide that, they would need to expand.
- Grosch needs to expand to be able to export the required hectoliters.
- Lack of presence in any market besides for western markets. 88% of the company’s profits came from western markets.
- Grosch needs to analyze other regions and think about other opportunities. Latin America, Asia, and Africa are three larger areas where there are immense opportunities to capitalize on.
- There is a lack of brand recognition outside of northern European markets.
- Competition against Heineken.
- Grolsch does not sell at a premium in US markets.
As Grolsch’s higher revenue markets are predicted to decline, the company needs to look into expanding their brand recognition and presence into other international markets as there are considerable opportunities in markets such as overseas. Grolsch will need to expand facilities to accommodate the demand internationally as well as look into becoming a more-known brand, potentially partner with companies abroad to help distribution, and also continue to innovate their product due to some countries not selling their product at a premium. Grolsch also needs to evaluate their strategy, whether or not to go after developed countries, or go after undeveloped countries.
Internal Analysis/ SWOT Analysis
- The quality and taste of the product make it a premium product.
- The brand is very historic.
- SABMiller has a strong distribution presence.
- Lack of distribution in international markets.
- Brand recognition globally.
- Ability to capitalize on international markets.
- Capturing a more substantial presence in other countries such as North America.
- Creating markets in Latin America, Asia, and Africa.
- Adding new facilities to accommodate expected demands internationally as well as nationally.
- The ability to use the resources needed from Amsterdam.
- Markets are decreasing in developed countries.
- Existing and new brands are making an entrance into the market.
- Craft beers/IPA’s are selling at a premium (competition).
After running the SWOT analysis, Grolsch should see what they need to do to capture undeveloped markets. The company has a stable distribution channel for developed markets. Grolsch needs to start advertising and marketing to achieve higher brand recognition, which could potentially increase sales. As sales hope to grow internationally, they will need to invest in facilities to produce more of their products.
Also, having a strong brand presence in undeveloped countries such as Latin America, Asia, and Africa could increase profits also. They will need to set up distribution outlets or connect with existing companies in those regions to move their product. Establishing their brand in these undeveloped countries will be critical due to most developed countries being stagnant in regards to sales and the United Kingdom and Dutch markets decreasing, which is where they are heavily receiving profits.
Grolsch will have to continue to innovate by hiring highly-skilled workers to continue to produce a great product. Yes, Grolsch sells at a premium in northern European markets but does not sell at a premium in markets such as the United States, which is the largest developed market for their product. The company may need to back and analyze how countries care about the quality of the beer as the United States is known for having a lower bar for the quality of beer. This can be conducted through research and surveys.
More craft beers and IPA’s continue to put competition on the premium beer market. Smaller craft companies will have a harder time marketing and establishing excellent brand recognition. Grolsch has the capital to create a high quality of beer, observe market tendencies in countries, as well as market heavily to achieve greater brand recognition.
Porter’s 5 Forces Analysis
The threat of new entrants is…