Competitor Analysis

Competitor Analysis

Of

Kingfisher Beer

Submitted by:

(PGPM 2010, Section C, Group 2)

Abhinav Singh 10P121

Amrita Nadkarni 10P126

Anket Gupta 10P128

Jalad Mukerjee 10P142

Shah Dhaval 10P169

Table of contents

1. Introduction 3

2. SAB Miller India 3

2.1 Vision & Mission statement 3

2.2 Company background 3

2.3 Porter’s five forces 4

2.4 brand description 5

3. SWOT Analysis 7

3.1 Strengths 7

3.2 Weaknesses 8

3.3 Opportunities 8

3.4 Threats 8

References 9

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1. Introduction

Though the Indian beer market is primarily dominated by Kingfisher, there is chiefly one main

competitor - SAB Miller. SAB Miller has premium beer brands in the market with the likes of

Haywards, Royal Challenge and Fosters. Another strong regional beer is Indus Pride, again owned by

SAB Miller. SAB Miller has a 35 % market share and has expanded strategically to take control of

beer markets at most places in the country. Mohan Meakin, which launched India’s as well as Asia’s

first brewery with popular beer brands such as Lion and Golden Eagle, also competes with the UB

Group.

In our analysis, we objectively aim to perform a swot analysis of all these competing beer brands as

well as find out the dynamics that exist in the beer industry.

2. SAB Miller India

2.1 Vision & Mission Statement

“Our vision is to be amongst the 3 most admired beverage companies in India.”

“Our mission is to own and nurture local and international beer brands that are the first choice of the

consumer.”

2.2 Company Background

SABMiller India is a subsidiary of SABMiller Plc, one of the world’s largest brewers. SABMiller has a

brewing presence in over 40 countries across four continents and a portfolio of over 150 brands. It

employs over 38,000 people worldwide in 81 breweries and 27 bottling plants. Outside the USA,

SABMiller plc is one of the largest bottlers of Coca-Cola products in the world. SABMiller

Plc is listed on the London and Johannesburg stock exchanges.

SABMiller has operated in India since October 2000, when it acquired Narang Breweries, followed by

the acquisition of Mysore Breweries Limited and Rochees Breweries Ltd in 2002. In May 2003, it

entered into a joint venture with Shaw Wallace & Company to form Shaw Wallace Breweries

Limited, thereby adding the popular brand Haywards to its portfolio. The management control

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rested with SABMiller. Over the years, SABMiller has cornered nearly one third of the Indian beer

market with brands such as Haywards 5000, Haywards 2000, Haywards Black, Knock Out, Royal

Challenge, Castle Lager and Fosters. With eleven world-class breweries strategically located across

India, SABMiller is well positioned to easily access and efficiently service the beer markets across the

country. The market share of SAB Miller in India currently stands at 36 %, way ahead of its nearest

competitor and inching closer to the leader Kingfisher.

2.3 Porter’s five forces

New Entrants - SABMiller operates in ‘challenging’ markets, which in the past has limited the threat of

new entrants. These markets tend to have a fragmented brewing industry and given the capital and

knowledge required to setup a brewing enterprise; this creates high barriers to entry meaning that the

threat of new entrants is low. However, in developed markets the industry is consolidated and

dominated by a few, larger players. As such, these large companies, like SABMiller tend to own multiple

brands with different market positions. In this market, it is much easier for competitors to launch rival

products that compete directly on price and thus eroding market share. SABMiller has experienced this

problem in North America with its rivals entering into a price war with SABMiller.

Suppliers - SABMiller is the second largest brewer in the world by volume. As such, they are able to

leverage their global reach to benefit from economies of scale. In this event it means that the bargaining

power of suppliers is unlikely to be too great.

Buyers - The diversification of risk is an important part of SABMiller’s strategy. By having operations in

many different countries, if one country is under-performing then this is usually counter-balanced by

other countries that perform better than expected. The example of Botswana, which did not do as well as

anticipated, compared with Tanzania, Uganda and Mozambique, which had a solid performance.

Substitutes - Premium brands have been identified as the fastest growing segment. However, if

disposable incomes fall, customers may decide to switch to lower cost brands. The switching costs within

the industry are low and so this could have a negative impact on SABMiller, who have positioned

themselves to take advantage from the growth in premium brand sales.

Competitors - In developing markets the industry is fragmented and SABMiller has plans to further

consolidate its business in these areas. However, in developed countries, the competition is fierce. The

industry is more mature and consolidated. There are a fewer number of industry giants who occupy a

number of different strategic spaces with their brands. The strategic groups identify a group of firms that

are operating in the same space within an industry, either with a similar strategy and/or business model.

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This helps management to get a truer picture of the competition and can affect the mobility of the firm in

terms of their positioning with an industry. In this type of industry the switching barriers within strategic

groups are low.

2.4 Brand Description

SAB Miller India has a rich repertoire of premium beer brands, each being a preferred choice of the

masses and having created a niche demand for itself. The various brands are as follows:

Haywards

Haywards 5000 is India's largest selling strong beer brand, which perfectly combines strength

with quality credentials that meet the high expectations of today’s demanding consumers.

Launched in the year 1983, Haywards 5000 is synonymous with strong beer in India. Haywards

5000 is brewed with the choicest of malts and hops lending itself to a unique flavour profile to

suit the Indian taste and preference. Haywards 5000 is the hallmark of original and authentic

strong beer which other beer brands aspire for. With such credentials, it is not surprising to see

men get together over Haywards 5000. It is the language of friendship amongst men who are

proud of their masculinity and look forward to a great time with their friends and peers.

Haywards is the most successful beer brand in the stable of SAB Miller India contributing to bulk

of its revenues. It enjoys a market share of 23 % of the Indian beer market.

Knock Out

Knock out is a strong beer in circulation mostly in the southern India region with leading market

share in the state of Andhra Pradesh. The beer is distributed in Andhra Pradesh, Maharashtra

and Karnataka. Ever since its launch in 1984, Knock Out has grown from strength to strength to

establish itself as one of the leading strong beers in India. The popularity of Knock Out is also

evident from the fact that despite being available in limited markets, as many as three lakh beer

bottles are guzzled by consumers every day. Knock Out enjoys an 8 % market share in the Indian

beer market.

Royal Challenge

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Launched in the year 1993, Royal Challenge Premium Lager is the second largest selling mild beer

in India. Royal Challenge is brewed with the choicest 6 malt barley. Its long brew duration

provides it with a distinct, smooth taste and rich flavour. It has all the hallmarks of a great beer -

Color that is golden honey, taste that is smooth and crisp, lace that sticks to the wall of the glass.

This is the beer for the discerning who have the confidence to make their choices based on their

superior taste and knowledge rather than just following the crowd.

The brand has moved from strength to strength since its re-launch by SABMiller in 2004, and has

set itself on a growth momentum that is well ahead in the mild beer industry. It has now become

the largest selling mild beer brand in many large beer markets, including Andhra Pradesh, Uttar

Pradesh and Orissa. Besides being available across most states in India, Royal Challenge Premium

Lager is also exported to USA, Europe, Middle East, Australia and Hong Kong. Brewed from select

malts and imported hops, on a specially developed recipe by the brew-masters from SABMiller,

one of world’s largest brewers with over a hundred years of heritage, Royal Challenge symbolizes

a perfect harmony between the high art of brewing and the assurance of modern technology.

Royal Challenge Premium Lager offers a difference with an edge. Besides its international class

packaging, premium image and path breaking advertising, what sets the brand apart is the long

brew cycle which lends it a distinctly smooth and easy flowing taste. It enjoys a healthy market

share of 6 % of the Indian beer market.

Foster’s

Foster's Lager is a uniquely brewed Australian beer. Brewed with the finest sun-dried malted

barley and the purest water Foster's has always been at the forefront of brewing technology and

the Foster's Lager brewed today is the result of over a century of attention of the brewing art.

Quality has been the strength of Foster's since its earliest days and remains a paramount concern

at every stage of the beer's journey from brewery to consumer. Foster's crisp, clean flavor won it

immediate international acclaim when it was first brewed in Melbourne in 1888. Today, more

than one hundred years later, it is still recognized as one of the world's best beers. SABMiller

India now brews & markets Foster's in various parts of the country. Foster’s enjoys a market

share of 3 % of the Indian beer market.

Some of the other beers belonging to the SAB Miller India are Indus Pride

and Peroni.

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3 SWOT Analysis

3.1 Strengths

SAB Miller India is a subsidiary of SAB Miller PLC which is second largest beer maker, by

volume, in the world

Positioned second in the Indian beer market behind United Breweries

In a span of just 10 years SABMiller India has been able to corner one-third share of the Indian beer

market. It has performed remarkably well in strong beer segment with Haywards 5000 and Knock Out.

Together they constitute 31% market share of the strong beer market in India. Royal Challenge and

Fosters are also very popular in the mainstream mild segment and together constitute a market share of

28%.

Diversified brand portfolio

SAB Miller India hosts a range of premium and popular beer brands that have created a

niche market for themselves and command a dedicated and loyal customer base. The brands

include Royal Challenge, Peroni, Foster’s, Indus Pride, Knock Out and Haywards.

Strategically located manufacturing facilities facilitating effective distribution channel. SAB

Miller has breweries at ten locations spread across India that caters to different markets

all over the country.

With 10 high quality breweries located strategically across 9 states in India. SABMiller India has a

market capacity of 5.7 Million HL. The company’s brewery in Andhra Pradesh is India’s first brewery to

have a capacity of 1.5 Million HL, which is twice the size of the second largest brewery in India.

Constant upgradation of brewing facilities in line with global standards

Dedicated Corporate social responsibility focus

SABMiller India has undertaken a range of citizenship initiatives. 

With the objective to improve the barley supply chain, SABMiller India initiated a ‘Malt Barley

Development Programme’, called Saanjhi Unnati (“Progress through Partnership”) in Rajasthan in the

2005. This project assists the farmers and local community in maximizing land use and securing good

income. It has now grown to 15 Centres in 4 districts of Rajasthan with membership of over 8000

farmers. 

SABMiller India, as a company recognizes HIV/AIDS is a major threat to the world of work. In 2007 it

started its HIV/AIDS internal workplace programme jointly with International Labour Organization (ILO).

The programme has been extended to supply chain (truckers) and trade (liquor retail outlets)

Water is one of SABMiller India’s top Sustainable Development priorities. This is reflected in the “5R”

water management strategy which has internal measures to Reduce, Recycle, Reuse and external

measures to Replenish and Redistribute. 

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3.2 Weakness

Each state has its own excise laws, whereby movement of goods from one state to another

is time consuming and costly

Inability to raise prices of the product as it is mainly fixed by government

Price regulations by the Government has hit SAB Miller’s revenue collections

Missed Opportunity in TN

SAB Miller has no plant in Tamil Nadu, thereby its inability to participate in the second

biggest beer market in India has hampered its sales figures

3.3 Opportunities

Per capita consumption of Beer is one litre, way below the world average

Growing per capita incomes raising people’s aspirations can impact beer sales positively

India has the highest number of young people who are the potential consumers for the

Company

Easing of the regulatory environment can lead to tremendous market growth

3.4 Threats

Rising cost of raw materials

With prices of almost all the commodities rising, maintaining the margins is a great challenge

for the brewery.

Talent attraction and retention:

In the last few years, the attrition rate at SAB Miller has climbed upto as high as 22% ( Source:

SAB Miller website)

Increasingly competitive environment with all major global players entering the Indian

market

Partnership between competitors:

Heineken partnering with UB gives it a national reach for an aggressive roll out of the Brand.

High taxes and regulations:

During the recent years, Government has enforced tough regulations and raised the taxes

for this sector. Therefore, the high costs of doing business in this sector act as a significant

threat to SAB Miller India.

Prohibition on advertising

The advertising restrictions placed on alcoholic beverage industry in recent years make it

harder to achieve brand loyalty.

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