The Global Branding of Stella Artois

The Global Branding of Stella Artois

Student’s Name

Institutional Affiliation

The Global Branding of Stella Artois

Introduction, Statement, and Assessment

Introduction

            Interbrew was the fourth largest brewer in the world in 2000, when its chief marketing officer contemplated advancing the development of Stella Artois. The alcoholic beverage is the company’s premium product and flagship brand in its primary markets around the world. Interbrew can trace back its origin to 1366 in Belgium. The brewer’s rapid expansion to become a multinational firm took place in the 20^th century through the acquisition of and mergers with numerous regional and international breweries. The addition of companies in various countries such as Hungary, Canada, Romania, the US, Croatia, Korea, Russia, and Bulgaria resulted in Interbrew deriving more than 90% of its volumes from international markets outside its traditional Belgian market (Beamish & Goerzen, 2000). The business operated in a global beer market that was growing rapidly at a rate of 2% annually. Players in the brewing industry divided the international beer market into two categories comprising of the mature and developing markets. Mature markets were considered to be Western Europe, North America, and Australia, while growing markets were to be found in Asia, Latin America, Russia, and Central and Eastern Europe (Beamish & Goerzen, 2000). Staying relevant in the brewing industry required Interbrew to devise an effective market consolidation strategy that would confer the company a competitive edge over its rivals and gain market capitalization.

Statement and Assessment

            The brewing industry presented firms such as Interbrew with an excellent opportunity of expanding its operations and gaining new markets through market rationalization. The beer industry, unlike other industries, was not dominated by major corporations. More than 40% of soft drinks, spirits, and tobacco markets were dominated by large companies, while only 22% of the beer industry was monopolized (Beamish & Goerzen, 2000). Interbrew identified the opportunities presented by the fragmented nature of the market, which would allow the company to achieve and exploit benefits accrued from economies of scale in production, advertising, and distribution. The decision to pursue market rationalization as a business expansion strategy could have been informed by the observations that the best profit margins were achieved by companies with a leading position in the market or a niche market segment. The firm’s strategy was confounded by restricted cost-saving potential, considerable capital outlays, and differences in local tastes. The company adopted a new corporate structure that divided its international operations geographically into two zones; Europe/Asia/Africa and the Americas.

Strategic and Situational Analysis

Strengths

            Interbrew’s corporate strategy was characterized by an operational framework that cross-fertilized best practices in the industry between sites based on the monitored performance against its peers of 10 different dimensions. Leadership in all of its breweries was democratic and participatory in that employees were encouraged to offer suggestions and propositions on the best methods to improve processes continuously (Beamish & Goerzen, 2000). Active employee participation resulted in significant reductions in production costs, which was attributed mainly to effective worker motivation policies than pure technical performance. The firm used capacity utilization by shutting down some of its old processing facilities and brewery markets that exhibited a decline in consumption. On the other hand, growth markets were catered for by utilizing amenities in different locales until local capacities could be developed to meet the rising demand (Beamish & Goerzen, 2000). Interbrew also rationalized its supply base by selecting a smaller number of its best-performing suppliers and single sourcing from them in all of its operations worldwide. The use of the advertising slogan “reassuringly expensive” proved to be hugely successful in establishing Stella Artois as premium lager in the European market, especially in the United Kingdom (UK). 

Weaknesses

            The launch of Stella Artois as Interbrew’s international flagship brand encountered a perception problem, whereby the brand was perceived as an old beer resulting in a persistent decline in consumption volumes. Despite the successful launch of Stella Artois in the international market, the brand continued to suffer a steady reduction in popularity and purchases in its traditional home market of Belgium (Steenkamp, 2014). These upheavals were attributed to inconsistent marketing support and sales figures, as well as competition from emerging brands such as Jupiler. The launch was also confounded by difficulties encountered in convincing all involved partners and stakeholders to adhere to similar advertising strategies throughout its worldwide operations.

Opportunities

            The further consolidation of the global beer market was Interbrew’s most significant opportunity upon which it capitalized its expansion strategy. The brewer’s long-term marketing plan was shaped by strategic filters that would confer benefits and expose opportunities for increasing the company’s market share (Beamish & Goerzen, 2000). Stella Artois had a long-term volume potential that emanated from a large and growing market for premium lager beer, with an increased potential to penetrate the market share of the top three reigning brands in the specialty beer category. Interbrew exploited the opportunity offered by its prior presence in some major cities of the world, such as London, to launch Stella Artois around the globe. The strategy specifically targeted markets that had a concentration of affluent potential clients.

Threats

            Evolving global branding developments threatened Interbrew’s existing strategies, especially in its traditional home market of Belgium. Concerted global advertising campaigns in Belgium were not adhered to and instead portrayed Stella Artois as a mainstream lager (Beamish & Goerzen, 2000). The company was faced by the challenge of integrating all of its global development efforts under one leadership. Its brand’s success was threatened by the lack of support by all the involved marketing groups of the proposed new promotion approach.

Evaluation of Alternatives and Recommended Action

            The launch of Stella Artois as Interbrew’s international flagship brand was executed on a city-by-city basis. This approach offered the company insightful learning opportunities to inform the evolution of its new global expansion strategy (Steenkamp, 2014). The branding strategy was targeted at an emerging affluent category of young adults in all major cities such as London, where it was launched through a license agreement with Whitbread. The city-to-city launch of Stella Artois led to the brand becoming a leading premium lager beer in London, with lessons learned here being used to launch the brand in other cities in France and Belgium, which accounted for 31% of the brand’s total volume (Beamish & Goerzen, 2000). To align with Interbrew’s advertising slogan of “Reassuringly expensive,” the company priced Stella Artois at a premium to buy into the projected image of the brand being a beverage for the affluent. Interbrew’s acquisition of numerous local breweries in various locales allowed the brewer to cater to local tastes. The local beer makers also allowed the firm to introduce its traditional brands such as Stella Artois into new markets.

Summary, Critique, and Guidelines

The launch of Stella Artois as Interbrew’s international flagship brand offered the company the opportunity to accrue attractive margins after the initial three-year starting period. Players in the brewing industry divided the global beer market into two categories comprising of the mature and growing markets. Through this, the company launched Stella Artois as its global flagship brand. Active employee participation resulted in significant reductions in production costs, which was attributed mainly to effective employee motivation strategies than pure technical performance.

References

Beamish, P. W., & Goerzen, A. (2000). The global branding of Stella Artois. Ontario: Richard Ivey School of Business, University of Western Ontario.

Steenkamp, J. B. (2014). How global brands create firm value: The 4V model. International Marketing Review, 31(1), 5-29.