1. Executive Summary
Asia Pacific Breweries (APB) is the leading beer brewery in the Asia Pacific region. The company’s most iconic product, Tiger Beer, is notably one of Singapore’s most successful brands in the world and is valued at S$820 million.
The lucrative beer industry has attracted numerous foreign beers to vie for the market share in Singapore which is valued at S$562.7 million. As the beer industry in Singapore is reaching maturity, beer companies have to find innovative means to remain competitive to have a profitable share of the market.
Recently, there have been increasing trends of younger customers consuming alcoholic beverages. With improvements in economies, education and technology, younger consumers have acquired a stronger purchasing power and frequent purchasing patterns. Beer companies are aware of the recent change in trends and have turned their attention to market and invest in this segment.
Akin to the changing market conditions, our target market for Tiger Beer is those aged between 18-30 years old. Tiger Beer has a strong brand equity in Singapore and abroad, however it may appear ‘old-fashioned’ to the younger consumers.
To assist the consumers to change their perception of our product, we have derived a market plan. This report aims to apprise the management of our market plan in terms of our strategies comprising the 4Ps of Tiger beer (Product, Price, Placement & Promotion). The plan also includes an action plan along with control measures to indicate the various processes in which our strategies will be executed and supervised effectively.
2. Market Situation
1. Company Vision
Asia Pacific Breweries (APB) corporate vision is to be one of the leading brewers in the Asia Pacific region, and its strong portfolio of brands is synonymous with quality and innovation.
2.2 Company Mission
Asia Pacific Breweries Limited upholds the values of integrity, competence and commitment to excellence and a high standard of corporate governance. Its aim is transparency and accountability, while creating and enhancing long-term shareholder value through enterprise and strategic growth, in its continual quest for new markets for its beers. (Tiger Beer Annual Report, 2004, Pg. 73)
2.3 Company Objectives
Keeping focus in our vision, staying sharp in our execution, strengthening the company’s competitive advantage. (Tiger Beer Annual Report, 2008, Pg. 21)
Malayan Breweries Limited, was established in 1931, and was renamed Asia Pacific Breweries, APB in 1990. It is a collective business enterprise between Heineken International and Fraser & Neave (F&N). APB’s primary activities comprise the production and distribution of beer and stout products locally.
Since their establishment, APB has seen their business expand globally, providing numerous opportunities to diversify and develop new brews to bolster their portfolio. Presently, APB possesses an illustrious portfolio of more than 40 beer brands, such as Tiger Beer, Heineken, Barons Strong Brew and ABC Extra Stout (Asia Pacific Breweries Limited, Corporate Profile).
In 2010, Singapore’s beer industry acquired a total revenue of $769.2 million with a compound annual growth rate (CAGR) of 4% within 2006-2010. Lager sales which constituted 73.1% of the market’s overall value generated total revenue of $562.7 million, making it the most lucrative beer variant in the beer market.
Asia Pacific Breweries (APB) is the market leader in the Singapore beer industry with a market share of 64%.Tiger Beer is Singapore’s mainstream beer, which boasts an impressive portfolio brand value of S$820 million. (Marketline 2012, Beer in Singapore Summary)
Brewed from the finest of ingredients, under the most stringent of quality controls and meticulous brewing methods, Tiger Beer has been rated as one of the finest beer in the world for its distinct taste. It has claimed numerous recognized accolades around the world for several characteristics but most notably for its taste. (Asia Pacific Breweries Limited, Corporate Profile)
2011 proved to be a good year for beer, with a 7% total growth volume, amounting to 108 million litres. The demand for beer products continue to grow steadily with the escalating trend of social drinking in Singapore. Previously restricted to venues such as clubs and bars, beer products are increasingly being consumed at local coffee shops or hawker centres or being purchased off the shelf. (EuroMonitor International 2011, Beer in Singapore)
Beer is expected to post a total volume CAGR of 4% to reach 130 million litres in 2016. As the social drinking scene in Singapore consistently expands, beer will be able to expect a steady growth. However, in years to come, Singapore’s domestic beer industry will experience a slowdown as beer in Singapore is reaching maturity. (EuroMonitor International 2011, Beer in Singapore)
In 2011, local company Asia Pacific Breweries dominated the competition with a 64% volume share. This was due to the overwhelming popularity of its brand, Tiger, which had a 35% volume share. Tiger Beer faces strong competition, but can vie for higher market share through product differentiation. Other rivalry brands were Heineken and Carlsberg. The intensity of rivalry helps decide the extent of the value of brands and products in which will create head-to-head competition. It also determines the attractiveness of the industry.
Heineken, is the third largest brewer in the world and appreciated beer in Singapore. Based on volume, it has an annual beer production of 139.2 million hectoliters. It has 125 brewers in more than 70 countries. Heineken has the widest international presence of any international brand and is distinctive by its green bottle.
The Carlsberg Group is among one of the leading brewery in the world, with a large portfolio of beer and other beverage brands. In Singapore, Carlsberg has been marketed for more than 30 years and is acknowledged as the number one imported premium beer in Singapore and number two in the total market. It holds a 19.9% market share in Singapore currently. (Calsberg financial statement 2011, Solid performance in NW Europe and Asia; changes implemented in Russia)
The beer market is also fiercely challenged by other alcoholic beverages such as the spirits (Vodka, Whiksy & Gin), and wine.
Over the last 12 years, there has been a marked increase of Singaporeans consuming alcohol. The increment was particularly large between 1998 and 2004, in younger age groups and in women. The prevalence of alcohol consumption amongst the Singapore population is rising and approaching Western levels. The change in the drinking culture of Singaporeans can be evidently observed.
This could be due to recent improvement in the economy, as well as the increased popularity towards leisure activities. Positive consumer sentiments have also influenced consumers to spend more on social drinking activities. (Lim et al 2007, Discussion section)
Current economic situation affects the purchasing powers and spending patterns of consumers. The Monetary Authority of Singapore (MAS) expects inflation to average between 2.5- 3.5% in 2012, remaining elevated over the next few months before easing in next year’s second half. High inflation rates may increase the price of the product, which in turn cause demand of beer to fall and also reducing consumer’s confidence in purchasing our product (Heng, 2011).
Consumers who just met the legal age to drink would primarily be young adults with minimal purchasing power, followed by white-collar adults who have higher purchasing powers. The purchasing pattern of our consumers would increase along with their age due to their income, which ultimately decides their budget constraint. Nonetheless, the Singapore economy for Tiger Beer remained vibrant as tourists arrivals rose despite an increasingly competitive marketplace.
As technology advances, Beer producers are using various forms of technology to increase productivity levels. Tiger beer also uses advance technology like “Twin-ice” technology for Tiger ice freeze and the “Cold-suspension” technique for Tiger Crystal, for consumers to enjoy ice cold beer while maintaining the quality and taste of the product.
Cyber activities are channelled via various mediums like Facebook, Twitter, YouTube and its own website. Such channel allows Tiger beer to build a stronger relationship with both Tiger sponsored activity and consumers, to build credibility and positive association with the brand within the creative community.
Since the launch of the new site almost all key metrics has seen a great improvement. On Facebook, Tiger’s fans have increase 60% each month. Tiger’s database has also increase by 63% between September and November 2011.
If Tiger Beer does not keep up, it will soon find their products outdated and miss new markets and opportunities. (Kentico, Pg1)
Being a multi-racial society, Tiger beer is more closely associated with the Chinese community in Singapore, as 13% of the population are Malay-Muslim, and are forbidden to consume alcohol by Islamic law. (Heineken Financial Markets Conference Singapore 2011, Introduction section)
Therefore, to gain more market share, Tiger beer has to market campaigns to cater to specific audience to capture the customer value. For example, marketing campaigns during Chinese New Year can tap into the auspicious meaning of Tiger, which symbolises loyalty.
On the contrary, alcohol consumption is associated with socially ill characteristics such as addiction, road accidents, domestic abuse, unemployment and medical problems. Although moderate alcohol intake has been found to be beneficial in recent years, the harmful effects of alcohol still outweighs the benefits.
Newer generations are leading more busy and hectic lifestyle. Even though it may affect the time for leisure, consumption of beers at bars and pubs have not declined. This may be due to the fact that more working adults are drinking alcohol as way of distressing themselves after work (Lim et al 2007, Discussion section).
Also, as consumers are more conscious about the corporate responsibilities, the APB foundation has also been established to give back to the host country where they operate in (Asia Pacific Breweries Limited, Community Development). Furthermore in 2012, APB achieved the Singapore Environmental Achievement Award (Manufacturing category for its achievements in minimizing energy, water and waste impacts) (Marusiak 2012, Singapore Environment Awards).
Beer is a product that the government exercises strict control upon as it is an addictive product. On the other hand, the government’s implementation on Free Trade Agreement serves as a double-edge sword as it increases Tiger Beer’s opportunity to export their products more readily to expand their business. However, Singapore beer industry also experiences an influx of imported beer brands which will affect Tiger’s domestic business. (Heineken Financial Markets Conference Singapore 2011, Singapore beer market section)
Major environmental factors such as uncontrollable weather conditions have an impact on Tiger Beer. As the ingredients used (such as malted wheat and barley) are being imported, unforeseeable adverse weather conditions (floods, drought, winter) could delay the harvesting and manufacturing process, thus affecting APB sales performance for the year as consumption of Tiger Beer would have slight marginal decrease in figures. (Tiger Beer Annual Report, 2011, Adding Production Capacity and Capabilities In Vietnam, Pg. 6)
4. SWOT Analysis
Tiger Beer has strong brand equity in Asia, especially in Singapore as it is a locally-brewed beer that is specially catered for the locals. The distinct taste and flavor makes it the perfect remedy in the hot and humid tropical weather, also making it perfect companion to go along with delectable Asian dishes. (Drinkworks, Tiger Beer)
Tiger also has a cost advantage as being a local brew; the price is lower than other imported brands. Although being highly affordable, Tiger Beer does not reduce on the quality by using cheap supplies. It further assures the consumers that good quality ingredients are being use and stringent quality checks are done to obtain the best that Tiger Beer can offer. Furthermore, their accolades for their quality brew justifies their claims.
In the beer beverage market, brand-switching occurs frequently and affects brand loyalty. A strong competition from global brands means limited market shares in the Singapore market.
It faces difficulties in competing with foreign brands as they seem to be superior in taste which local beers are not comparable to. Young local consumers depict Tiger Beer as ‘old-fashion’, and seek for other foreign brands they perceive Western products with a “classy and quality” impression. Furthermore, hard liquor is often preferred over beer among youngsters today as there is more satisfaction from the high alcohol intake. Consumers have a wide range of alternatives to choose from since all are readily available at supermarkets as well as common drinking venues
Winning, which is the heart and soul of Tiger have not changed as we move into a new age. It also resonate the uniqueness of the ‘striving to win’ aspect of the Asian culture.
Tiger beer connects with football fans through its close association with the sport. By being the broadcast sponsor of the Barclays Premier League, it gives fans a new and unique experience centred on football, friends and the Tiger Beer.
With many other brands in the market, consumers have a large variety of brands to choose from. Many bars and restaurants usually carry several brands of beers. However, through effective marketing and promotion, Tiger Beer can create the demand for its products and with that value instilled in the name, many bars and club will still continue to carry the brand.
The ability to charge customers different prices with differences in the value created for those buyers usually indicates that the market is characterized by high supplier power (Porter, 1998). Tiger Beer minimizes the power of suppliers through close cooperation with the raw materials suppliers and thus minimizing the cost impact.
Furthermore, as Tiger beer have recently been purchased by Dutch brewer Heineken, which also have strong international acclamation. It is able to expand Tiger Beer further with its expertise.
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