Interbrew's three-pronged strategy paying off
strong local brands, growing its core Stella Artois beer and buying
up regional brewers - have given the Belgian firm a strong and
distinctive identity on the world stage, claims Canadean.
Interbrew dubs itself 'The World's Local Brewer' but this is more than simply an advertising slogan. As a new report from market analysts Canadean shows, the tagline epitomises the Belgian brewer's strategy, one which contrasts sharply with that of rivals Heineken and Anheuser Busch.
Both these companies are known for their global brands, but Interbrew's growth over the last few years has been driven by its strategy of promoting a domestic lager to be a primary brand in each market and supporting this with at least one other brand from its portfolio.
The approach has paid off, according to Canadean, after record results in 2000 net turnover increased again in 2001, pushing year-on-year operating profit up 66 per cent, and reflecting brand loyalty despite price increases in many markets.
In addition to focusing its marketing efforts on key local brands, Interbrew has also been developing the Stella Artois brand through advertising and sponsorships, and of course expanding through acquisitions.
While some analysts clearly believe that the company is losing faith in Stella and is hedging its bets with the recently acquired German beer brand Beck's, Interbrew continues to claims that the 'snob' value of Stella (as epitomised by the 'Reassuringly expensive' ad campaign which has run for many years in the UK market) will drive growth in the brand - a claim supported by Canadean's analysts.
This means that heavy marketing investment is likely to continue, said Canadean, despite claims that budgets have been reduced to widen profit margins.
Western European growth for Interbrew has been driven by the third pillar of the company's growth strategy - acquisitions. The Belgian group now wholly owns Bass and Tennents in the UK and Beck's in Germany, and has an 80 per cent stake in Diebels in Germany. Aside from Luxembourg and Italy, it has complete control of its operations in all western European markets, Canadean said.
Although it has not practised outright purchase of leading brewers in one of its other major markets - the US - Interbrew has developed close links with operating partners. Here its activities are supported through Labatt USA (in which Interbrew has a 70 per cent holding).
The company is now dedicated to growing its operations in central and eastern Europe, and despite low consumer purchasing, medium term profits look healthy, Canadean said. The coming year is expected to see improvements made both to the supply chain and to brand strategy in this region.
But the situation is not universally promising, the market analysts warn. One area of concern for the company is the Asian region, where cutthroat competition comes from local brands in China. This could leave Interbrew relying on Korea to boost sales in the region, but its policy of reducing prices to raise volumes has thus far ended in the company losing market share.
Canadean also assess some of the challenges which could face Interbrew in the future as it continues to pursue its growth strategy. These include a possible conflict between the company's long cherished role as the world's local brewer and the need to maximise returns for shareholders by concentrating on selling premium beers in familiar markets.
For more details on Canadean's profile of Interbrew, click here.
