Case Study on Craft Beer in the Market of Australia | PDF

RUNNING HEAD: STRATEGIC MANAGEMNET
International Business Strategy
Name of Student:
Name of University:
Author Note:

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Executive Summary:
Craft beer has been identified as the most potential segment growth in the beer industry
in the market of Australia. With the improvement of the quality of brews and the current trend of
decline of other alcohols, craft beer has been one of the most prominent sectors. People are
shifting their fascinations towards the cans and the tendency of online purchase of beer has
increased considerably. The craft beer companies who are currently set up and are operating in
Australia are keen on expanding the business across boundaries. While the western countries
view the consumption of alcohol to be a normal affair, countries of orients are still not habituated
with the trend. Thus, the companies need to analyze the socio economic and political factors of
the countries they are aiming to step their feet in. The present report analyses the opportunities of
the craft beer Company, “CHEERS” to expand their business in either Brazil or India. In
analyzing the most suitable market, the report has chosen Brazil to be the most suitable market
for the company. The report further analyses the entry mode and the suitable marketing strategy
that the company can apply in the chosen destinations. The report also focuses on the proposed
human resource management strategies in order to gain a competitive advantage.

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Table of Contents
Executive Summary:........................................................................................................................1
Introduction:....................................................................................................................................3
Risk and opportunities of the target countries:................................................................................3
India:............................................................................................................................................3
Opportunity Analysis:..............................................................................................................7
Brazil:..........................................................................................................................................8
Selection of Country:.....................................................................................................................11
Proposed Market Entry Strategy:...................................................................................................12
Marketing Strategy:.......................................................................................................................13
Market Segmentation:................................................................................................................13
Positioning:....................................................................................................................................14
Marketing Mix:..........................................................................................................................14
Human Resource Strategy:............................................................................................................15
Conclusion:....................................................................................................................................16
Reference List:...............................................................................................................................17

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Introduction:
Drinking beer is mostly about the quality and experience rather than the alcohol content.
Thus, the craft beer has risen into prominence because of their constantly changing recipes,
flavors, varieties and stories (Barlow, Verhaal and Hoskins 2018). The global craft beer
movement has been a historical trend in the brewery industry. Australia had been one of the most
well known markets for craft beer because of its saturation in the premium beer market that lacks
variety and taste. The concept of craft brewery or ,micro brewery refers to the concept of the
production of the small amounts of beer and are independently owned. Although initially the
name referred to the size of the beer but, later it started to reflect an altogether new approach
towards beer making, its experimentation, taste and adaptability. In Australia, the emergence of
craft brewery accounted for a drop of sale in alcohol of about 15 million liter (Santisi, Morando
and Sciacca 2018).
The following report will analyze the most suitable target destination for the
Australian craft beer company “Cheers”, owned by five friends. The report will make a situation
and opportunity analysis of both India and Brazil, the two target country and figure out the most
favorable one. It will then analyze the most suitable market entry strategy and then the marketing
strategy of their product in the chosen market. Finally, it will recommend the suitable human
resource management practices.

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Risk and opportunities of the target countries:
India:
The preparation of fermented beer has been practiced in India since a long time back.
And the root were in the history of colonialism. Their brewing art were mainly influenced by the
Europeans. In 1970s, when the contemporary government called for a freezing of the production
capabilities of the industries, there were around 26 breweries in India. At present, the south and
West have been the most flourishing areas for the production and consumption of beer, though
the spread is more or less good across the world. In India, the consumption of beer is increasing
because of the changing perception about the consumption of the alcoholic beverages and the
rise of the economic middle class. In order to analyze the market opportunities and risk, a pestel
analysis will provide an overall frame work that will be beneficial:
Political:
India is considered to be the biggest democracy in the world and the government
practices the federal system. The political factors that can affect the craft beer industry are:
1. The concern about the anti social behavior and binge drinking
2. Government has, in recent times, increased the demand of alcohol as a means of boosting
up the indirect tax revenues.
3. There is at present no harmonization across the EU and hence any company can take the
advantage of cross border cross border shopping (Rastogi and Trivedi 2016.).
4. The duty free trading has been abolished since 1999 that however, creates a little impact
on the brewery industry.

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5. The international consolidations had led the companies in looking for cross border
mergers and acquisitions as they help in enhancing the domestic revenues and economy
in turn.
6. Tight social policies regarding the alcohol consumptions.
7. Increased tax on beer.
Economic:
1. The economic condition of India had been improving at a continuous rate. The GDP
(purchasing power parity)has risen arguably over 3 trillion.
2. The continuous growth per capita income and the rise of middle class as a result.
3. Higher buying powers of the Indian consumers in recent times.
4. The rising consumption can be linked with the more or less higher affordability of
alcohol
5. Price fluctuation is however a cause of problem and since India is a developing country,
this affects the buying pattern to a large extent.
6. Asian financial crisis is a negative factor.
7. Increasing price differential between on and off trades.
8. Slow down of some developed economies
Social:
1. The social trend regarding the consumption of beer has changed since the last decade. Te
incase is far more than that of Russia and china that makes a promising market for the
brewery industry.
2. The recent surge in the café culture.
3. Drinking has been a culture that is built in a social fabric.