AB InBev's UK Non-Alcoholic Beer Market Entry Strategy

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PRINCIPLES OF STRATEGY
AB InBev
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ABSTRACT
The report has illustrated the proposition of AB InBev which is a large multinational brewery
working from decades and wants to establish their non-alcohol beers in markets of UK and for
which this assignment has presented the analysis of the markets of UK. The report initially
clearly stated that the industry is booming with a fast rate and there are several opportunities for
all the firms who are and wish to work. The report then illustrated the analysis of the external
factors that can affect the business of AB InBev with the help of Pestle analysis and then
presented the condition of the market forces that hinder of fosters the companies in this segment.
Overall, it can be stated that AB InBev can easily enhance their market share and value in the
UK as per the analysis results and increasing rate of growth of this sector of business.
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Contents
ABSTRACT....................................................................................................................................2
INTRODUCTION...........................................................................................................................4
SECTION 1 – PESTLE ANALYSIS..............................................................................................5
SECTION 2 – PORTERS FIVE FORCES ANALYSIS...............................................................10
CONCLUSION/RECOMMENDATIONS....................................................................................13
REFERENCES..............................................................................................................................14
Table of Figures
Figure 1: Key principles for strategy..............................................................................................4
Figure 2: Non-alcoholic (0 – 0.5 ABV) beer volume in UK 2014 – 2018.......................................6
Figure 3: Popular Brands with no or less alcohol content.............................................................8
Figure 4: Beer Consumers Data....................................................................................................10
Figure 5: Future of industry for 2024...........................................................................................11
Figure 6: Market share of the firms in industry............................................................................13
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INTRODUCTION
According to Campbell (2015), the basic principles of strategy have not changed from almost 30
years and he also said that the major concepts and perceptions are to enhance the earnings from
the cost of capital (ROI) so that they can put steps ahead from the average competitors. In
addition to this, to enhance the returns form the investments, one should have some competitive
advantages over others in the operating markets which might be unusual for the sector. There are
several ways to enhance these attractive forces and business advantages like reduction in usual
costs, unique selling strategies and compliance of the regulations. At the same time, an article on
Strategy (2017) has presented 10 strategies which need to have the following aspects in a
business.
Figure 1: Key principles for strategy
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Source: [Strategy, 2017]
So, in order to understand these principles of the strategy and the related concepts, this particular
study will going to illustrate the case of AB InBev which is a multinational drink and brewing
company based in Leuven, Belgium and are working to last, brewing beer and building brands
that will continue to bring people together for the next 100 years and beyond (AB InBev, 2019).
Company has centuries of experience with countless new friendships, connections and
experiences built on a shared love of beer. Company is now willing to develop its non-alcoholic
beer markets in the UK and serve people more effectively for decades and beyond (FoodBev
Media Ltd, 2019). For illustrating this, the document will include the strategic analysis of the
markets of UK with the help of Pestle analysis tool and Porter’s Five Forces so that they can
evaluate and understand the present condition of the non-alcoholic beer market and then develop
their strategies for serving people in the UK.
SECTION 1 – PESTLE ANALYSIS
The analysis of the environmental aspects that directly or indirectly affect the business of any
firm is always a major factor to enhance the competitiveness of the firm and benefits. So, for AB
InBev the analysis of the external factors affecting business is a necessary task. The present
market for non-alcoholic beer in countries like the UK is booming with the increasing concerns
for health and wellbeing among millennials and hence the consumption of non-alcoholic beer is
raising (Global Data, 2018). But, the present market for the non-alcoholic beer is niche and has
gained 13% growth in 2017 which is the fastest in any strength band. According to Global Data's
2018 Q3 UK, Consumer Survey says that 37% of people belong to 18-24 years are conscious
about purchasing an alcoholic drink. The researcher has also illustrated that the 16-24 year
individuals have the highest percentage of non-alcoholic beer consumption.
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Figure 2: Non-alcoholic (0 – 0.5 ABV) beer volume in UK 2014 – 2018
Source: [Global Data, Consumer Intelligence Centre, 2018]
While in terms of macro environmental factors of this sector affecting businesses:
POLITICAL
The success of the non-alcoholic fragment amongst more youthful members isn't amazing on
account that previous this year the place of business for countrywide information revealed that,
in Great Britain, children from 16 to 24 are more averse to drink liquor than some other age
gathering. Gwynn (2019) and Hancock (2019) has clearly defined that the rate of the
consumption of the non-alcoholic beers is raising fast and facts depict that this raise is 37% in
2018 to £51.8m.
According to Connolly (2019), the German Association of Brewers (DBB) and Office for
National Statistics survey (Butler, 2018), has described the governing bodies are also supporting
this sector of their markets as it helps in keeping the good health of their people without forcing
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them to reduce the dosage or consumption. Likewise, Gerrard (2018) has shown that the political
bodies are seeing this as a projected aspect to enhance their personal as well as nation’s growth
and after the Brexit, finding new opportunities and scope for the business is becoming vital. The
imbalanced conditions of politics in the UK in the last few years have scrambled the overall
growth and success of the country. This new sector of business is completely supported by the
governments for the betterment of their people (Collin, et al. 2014). Overall it can be stated that
the role of the politics is crucial for every business but for the AB InBev, the changing scenario
and imbalanced politics will not affect their business and hence they have a great chance to grow
their non-alcoholic beer segment of the business.
ECONOMICAL
Hancock (2019) has defined that in last years, the sales of no alcohol beers has reached to record
sales of £29.3 billion in 2018 which is a 38% raise. As a matter of fact, the definitions of non-
alcoholic beer differ by countries and the sales of non-alcoholic beers are increasing everywhere
despite different cultures, economic class and hence the profit margin of the industry is booming
and reaching new limits every day. With the strong economic growth companies are reaching
new destinations (emerging and developing countries) also and creating their new customer base.
Economically the markets of the UK are open to grab new opportunities with the plenty of
resources and talent available for the business units. The UK is economically the hub of
businesses with the most popular cities in the world like London, Manchester, etc. In addition to
this, the GDP of the country is much more than most of the countries of the world and hence it
can be said that this factor of markets will not be a problem for the AB InBev who already have
years of experience around the world and now searching for new opportunities in the non-alcohol
beer segment. In the increase in the size of the economy compared to the pre-downturn peak
there is a significant difference of 9.7% at present which is quite good but need some additional
efforts.
SOCIAL
Lee-Zogbessou (2018) has presented some most popular non-alcoholic beer names in the UK;
Beck’s Blue, Heineken 0.0, San Miguel 0.0, Cobra Zero Alcohol and Kaliber etc. so it can be
stated that the popularity of this category of drinks is increasing and with the health concerns,
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their consumption over traditional high concentrated drinks are increasing (McCormick, 2019).
AB InBev, the world’s largest brewer, announced in 2016 that no/low alcohol beer would ideally
account for 20% of its sales by 2025 (Forsyth, 2019; Wise Guy Reports, 2019).
The increasing rate of health concerns and drawbacks of high content drinks have made the
nations unrealistically drunk and hence serving the non-alcohol drinks to the customers can be a
viable approach to reduce the alcohol-related harms (Lachenmeier, et al. 2016). Socially, the
culture of the people in the UK is very friendly and they like to have a drink when they meet,
enjoy, celebrate, spend and at several instances and hence there is a need to have a healthy and
good alternative of high content beer which comes to be the same beer with less alcohol or no
content.
Figure 3: Popular Brands with no or less alcohol content
TECHNOLOGICAL
As the Fourth Industrial Revolution keeps on coming to fruition, Britain is seeing a time of
progress as huge as any ever. Innovation is driving social and fiscal exchange to a measure
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which we cannot but completely well known, and it's doing as such for the duration of an
interval of political motion as Britain gets capable to go away the ecu Union. Nevertheless, the
extra vast worldwide situation is nothing if now not unpredictable, with constructing
precariousness. In an exceptional part of the created world, we are seeing a thrust back in
opposition to globalization, the whole result of which stays indistinct. In a global loaded up with
vulnerabilities, where globalization is as prone to be dealt with wariness as a mannequin of
future success, exactly what is developing for Britain?
In terms of the brewery industry, they are using the latest technology to enhance the taste and
content of the beer while there is some sort of techniques that are helpful in enhancing and
regulating the content. So, technology is a major factor that is helpful in regulating the alcohol
content in the beer for the betterment of the people. The companies AB InBev are capable of
dominating the markets with their years of experience and by the support of their latest
technology involved in their business, they have a wide scope of opportunities in the markets of
the UK where technology is already advanced and present for all.
ENVIRONMENTAL
The environmental constraints to any business at present are high and since the concerns related
to environmental protection, waste management, ecosystem protection etc. are increasing. As all
know, the brewery industry basically has not such operations that affect the environment even
the waste is organic (ingredients) and so just needs to be decomposed properly. In addition to
this, like every nation, the government of the UK is also searching for some better options and
legal compliances to reduce the degradation level of the environment. So, it can be stated that the
rate of the environmental degradation might be increasing but businesses like AB InBev don’t
have any particular threat from the environmental constraints of UK and hence they can conduct
their practices ethically and legally.
LEGAL
Ally, et al. (2014) and Howard (2014) has presented their reports on the legal framework for the
brewing industry in the UK. They stated that Alcohol duty increments are a strong intercession
for diminishing liquor utilization and associated mischief through lessening moderateness. The
viability of this instrument relatively relies upon retailers passing responsibility increments on to
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customers as rate increments; or else called 'go by way of'. The extract duty and deals charge
(VAT) go through rates for liquor items, at various value focuses, by using UK markets. Using
responsibility increments involving other technique intercessions, for instance, least unit valuing,
may relieve the difficulty of price underneath-relocating for modest objects. According to Meier
(2010), The UK holds a more grounded on-exchange culture contrasted with numerous other EU
nations, with the much-adored social establishment of "the nearby" (i.e. the area bar).
Nonetheless, there is a solid increment in home utilization, prone to be driven by the expanding
inconsistency among on-and off-exchange costs (talked about underneath). For instance, on-
exchange lager deals diminished year-on-year in both supreme volume terms and communicated
an offer of the brew advertise.
SECTION 2 – PORTERS FIVE FORCES ANALYSIS
BUYERS
Forsyth (2019) has presented and showed a big opportunity for moderate drinkers and said that
“Non-alcoholic beer has the potential of high sales in both Muslim-dominated regions and
health-conscious but beer-loving Western markets. The customers in the UK are capable of
paying the costs to the companies and are willing to utilise the healthier drinks that can help
them in avoiding the bad effects of drinking and keep themselves healthy. In addition to this, the
consumer market for the alcoholic and non-alcoholic drinks in the UK is very large and hence
this force of markets for AB InBev and their new product range is favourable (Bruwer, et al.
2014).
Figure 4: Beer Consumers Data
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Source: [NHS Digital, Health Survey of England, 2017]
SUPPLIERS
Spicer, et al. (2011) has described the presence of a variety of resources to the brewery industry
of UK and the suppliers with the help of interventions the industry has experienced. The article
by Beeson (2018) has described the increase in breweries in the UK with the advent and
increasing trend of non-alcoholic or low alcohol beers. There are plenty of suppliers for the
bottlers to serve millions of customers and hence they are serving the customers effectively and
the supply and demand are quite balanced at present and hence it can be said that they also have
very less force in markets to the production units.
NEW ENTRANTS
Offers of non-jazzed up brew, wine and spirits are at a record excessive in the UK with
expanding quantities of London makers hoping to improve as so much as possible from the £100
million enterprises (Edmonds and France, 2019). As mentioned above, with the increase in trend
of the non-alcohol beer drinks, the rate of increase in breweries has tremendous. In addition to
this, the notion to have a healthy beer with very less or no alcohol content, the sales are reaching
new levels every day and hence this creates new opportunities for large multinational business
like AB InBev and even the other small firms.
Figure 5: Future of industry for 2024
Source: [Verma and Rawat, 2018]
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RIVALS
The leading market players in the global Non- Alcoholic Beer market primarily is (Market
Watch, 2018):
 Anheuser-Busch InBev SA (Belgium)
 Bernard Brewery (Czech Republic)
 Big Drop Brewing Co. (U.K.)
 Erdinger Weibbrau (Germany)
 Heineken N.V. (Netherland)
 Krombacher Brauerei (Germany)
 Suntory Beer (Japan)
The presence of these large manufacturers in the industry has created a tough competition for
everyone now but for AB InBev can lead their way with the decades of experience and
availability of resources. Basically, it cannot be said that they operate with the perception to
dominate each other; rather they are working on their own ways, products and services to serve
their target customers. So, for AB InBev, this market force may be moderately competitive but
they can manage their tasks according to the needs of the markets and consumers to avoid this
competition and lead with their business.
COMPETITION IN MARKETS
The aforementioned rivals present in the markets pose a great threat likewise in every industry
but since the consumption rate, availability of the resources and the presence of several
businesses makes it complicated for those wants to dominate over others but for those who feel
free to serve people with the best products and services, this force of markets can also be
neglected (Bruwer, et al. 2014). In addition to this, despite working ideally, if the presence of
numerous organisations makes a threat to others, the AB InBev can make suitable strategic
choices in their businesses to make their way.
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