CHEERS: International Market Entry Strategy for Beer Expansion

This report, prepared for CHEERS beer, a craft beer company from Australia, analyzes the potential for international expansion in the Brazilian and Indian markets. The report begins with an executive summary and introduction, then analyzes the risks and opportunities in each market, considering cultural differences, beer consumption trends, and market regulations. Risk assessment techniques, including Porter's Five Forces and SWOT analysis, are used to evaluate market conditions. The analysis leads to the selection of Brazil as the more suitable market for expansion, given the dominance of a single beer brand and the potential for CHEERS to establish a distinctive presence. The report concludes with a proposed market entry strategy, outlining the necessary steps for CHEERS to enter the Brazilian market, including regulatory compliance, market research, and a suggested entry point in Brasilia. The report emphasizes the importance of understanding local market dynamics and adapting business strategies to succeed in the international beer market.

Running Head: Global Business
CHEERS organization
Global Business

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Executive Summary
Under this report, risk assessment and opportunities factors will be discussed in relevance with
Brazil and India’s market conditions to select one of the countries for expansion of the CHEERS
from Australia. As business partners of the organization were seeking for expanding their
business in the global market. The Indian and Brazilian market was chosen from the
management of the organization to expand their business amongst the world. Hence, newly
appointed International Operations Managers was asked to review the marketing conditions of
these countries in relevance with the risk and opportunities factors so that adequate market could
be selected. Market conditions will be reviewed through various risk assessment techniques and
methods. After analyzing the appropriate market, the selection process would be applied and
market entry procedure will be discussed under this report.

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Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Analysis of Risks and Opportunities...............................................................................................4
Selected Country..............................................................................................................................9
Proposed Entry...............................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
Five business graduates from Southern Cross University analyzed the Australian market and as
per their research, they started the business of "CHEERS" beer. They started the business over
the Gold Coast as this is very famous place across the local public as well as for tourists too. This
place is covered with sandy beaches, theme parks are also situated i.e. dream world, sea world,
etc. These people started their business in the year 2010 with the initial capital of $500,000 under
which each partners' share was equal. At that time, craft beer was newly launched in the
Australia and taking that advantage they set up their start up business by delivering three
varieties of craft beer. Their start up business was growing at rapid rate and by the end of the
year 2015-2016, turnover of the organization was reached at the level of $30 million and the
number of employees was also increased from 8to 28. This was the very big achievement for
business graduates but after 2015-2016 financial years, organization's growth didn't increase and
it remains constant. To review this, they planned to expand their business in the international
market and while reviewing the international market, management of the organization selected
India and Brazil as their favorite countries to expand their business. They asked their
International Operations Manager which was newly appointed in the CHEERS organization to
perform risk assessment and opportunities analysis so that appropriate decision could be taken in
relevance with the expansion of the business.

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Analysis of Risks and Opportunities
The risk is the factor which reduces the business' ability to perform certain activities or it
increases the chances of losses through performing those activities. Under this scenario,
CHEERS organizations’ management has decided to review the market risks and opportunities
present in the Indian and Brazilian market. Analysis of potential risk factors will help the
organization to reduce the effect of risks factors. Apart from analyzing and reviewing,
controlling risks factors should also be determined. Acceptance of risk, transfer of risk and
ignorance of the risk are three factors which are also defined as the risk controlling or risk
bearing factors. These factors help the business after its commencement (Successive, et. al.,
2014).
Indian culture and Brazilian culture are very distinctive from each other. In India, traditionally
beer was manufactured from rice and millet but then European beer was introduced in the 18th
century and beer is not much famous as the alcoholic drink there in relevance with whiskey.
Brazil is known for its huge consumption of beer. It is the third largest beer consuming country
across the globe. Whereas, in 2016 both country's beer consumption was analyzed on the basis of
per capita consumption of 57 liters of India and 61 liters for Brazil. Indian market is growing
rapidly in terms of beer consumption. As per a recent survey report, it is found that beer
consumption in Indian market is growing at a growth of 7.5% in next five years except for
various hurdles (Sheth, 2011).
Indian market is full of risk for international brands because their consumption of costly beer is
less in respect of cheap beer. Certain obstacles that could be faced by the CHEERS organization

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is restrictions on licensing, ban on advertising and on promoting the alcoholic products in the
whole country. Apart from these risks, local tax rate over alcoholic and tobacco product are huge
over there. While comparing Indian breweries' market risks with Brazilian market's risk, it is
found that Brazilian market does not have much scope for outside brands in breweries field.
Standard Lager beers are very popular over there and this brand occupies approximately 98% of
market share. Brazil is also defined as the unregulated alcohol market as there many accidents
are recorded in drink and drive basis. A lot of times, policies have been developed in Brazil in
relevance with drinking programs but every time, all the methods, policies, techniques adopted
resulted in the failure (Bharwani & Mathews, 2012).
Below is Porter's five forces technique used to evaluate more risks factors present in these
country's market:
The threat of New Entrants: Indian brewery market has various beer brands including
international brands and local brands. In Brazilian brewery market, few brands are available and
amongst them, Standard Lager beer is very popular and due to this, chances for any other new
brand in Brazil are quite low. Chances of entering into Indian brewery market are quite high in
respect of this factor (Enderwick, 2012).
The threat of Substitutes: Substitutes for beers are whiskey and all other alcoholic products.
Irrespective of any other country, substitutes are available for beer. Consumption of whiskey and
other alcoholic drinks are much high in respect of beer in an Indian market. This is because
whiskey sounds the bit cheaper than beer. In Brazil, beer is more consumed in respect of any
other alcoholic drink. As per this analysis, Brazilian market should be selected for expansion of
CHEERS organization’s business (Laïdi, 2014).

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Bargaining power of customers: This option is available to consumers when a lot of choices
are available in front of consumers. In respect of Indian market, there are many brands are
available who are producing ad delivering beer and they all selling their products at different
rates. Hence, a consumer has the choice of adopting one of them as per their pocket power. In
Brazil, this option is not available to the consumer because 98% of market share is covered by
only one beer brand i.e. Standard Lager beer (Flynn, 2011).
Bargaining power of Suppliers: This is the same situation as bargaining powers with
consumers; the basic difference is, in this scenario, powers are available with suppliers. This is
effective when a number of suppliers are less or they only supplier is selling the raw material
required for producing the final product. In the scenario for brewery market, alcohol is required
which is available from the government only and for that appropriate license is required. Hence,
no supplier can implement bargaining strategies (Somdaka, 2014).
Industrial Rivalry: These are risk factors involved in every type of industry and in every
country. Competition, innovation, promotional expenses, etc. are some of the techniques which
are involved in this scenario. As in Indian market, there are large numbers of producers and
distributors are available for beer. They all use the different type of promotional strategies and
due to ban for advertising alcoholic products in India, companies’ use other products
manufactured under the same name to promote beers. In Brazil, there are no limitations on the
advertisement of alcoholic drinks but tough competition may be faced by the CHEERS
organization in Brazil.

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Apart from these risks factors, CHEERS organization has some opportunities strengths,
weaknesses and threats too which need to be analyzed separately as per the market conditions.
Below is the SWOT analysis of CHEERS organization:
Strengths
 CHEERS organization has achieved
targets and goals set up by their
management in the very short period of
time.
 CHEERS beer is the type of craft beer
and they are dealing with three types of
beers.
 This type of beer is liked and demanded
by local as well as tourists
(Seidenstricker, Linder & Schmitz,
2014).
 By the end of 2015, organization
achieves the turnover of $30 million in
just five years.
Weaknesses
 Lack of international market’s
experience.
 Lack of knowledge of demand of craft
beer in other parts of the globe.
 Lack of capital which does not allows
the organization to promote its products
aggressively (Kim & Mauborgne,
2014).
Opportunities
 CHEERS organization has the
opportunity to establish its position in
the aggressive type competition place
Threats
 In the Indian market, a ban on
promoting alcoholic products is the
biggest threat.

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of the Indian market.
 The Brazilian market is more
challenging because there is only one
beer brand, which occupies biggest
market share.
 Apart from being the competitive and
challenging market, a demand of
CHEERS' beer is very high in various
parts of the globe and it will gain its
position soon through promotion and
advertisement techniques (Haimes,
2015).
 In Brazilian market, market share is
covered by only one beer brand i.e.
Standard Lager (Binod, et. al., 2013).

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Selected Country
The appropriate country for expansion of the CHEERS organization’s business would be
Brazilian brewery market. The scope for CHEERS has much more there because there is only
one beer brand exists since a very long period. Due to this, consumers are also seeking for a
change in the taste. They are looking for cheaper prices because Standard Lager beer has adopted
the policy of monopoly market due to non-presence of any other organization in the industry
(Wheelen & Wheelen, 2011).
It is observed from the above discussion that both the destinations are full of risk factors as well
as of opportunities. Whereas, Indian market, various beer brands available, In Brazil, only one
beer brand is available and other brands are not able to develop their distinctive identity. From
the perception of CHEERS organization which is looking for market expansion, Brazilian market
will be found effective. It is due to chances of setting up their distinctive image in the brewery
market is much more in comparison to the Indian market where already various brands are
involved in this industry. Irrespective of holding whole market share by Standard Lager beer in
the Brazilian market, CHEERS have the opportunity to set up their position because aggressive
competition will not be present (Holden, 2011).

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Proposed Entry
Before developing the proposed market entry strategy for the CHEERS beers in the Brazilian
brewery market, certain rules and regulations need to determine. The most crucial policies are
legal, political, competitors’ information, trading barriers, etc. before entering into a new market
and especially before entering into an international market for selling alcoholic products, various
requirements of the host country needs to be fulfilled. CHEERS beers need to submit an
application to the government of the Brazil with all documents including a budget of the
organization for entering into the Brazilian brewery market in respect to expand their business
and to achieve certain set goals and objectives. As they are dealing in the alcoholic drinks i.e.
beer, hence; various types of formalities need to fulfilled such as taking the license for selling
alcoholic drinks, etc. All these formalities need to be fulfilled in respect of selling the products in
the international market (Bourke, et. al., 2012). These formalities, rules and other procedures
consist the one method for entering the international market for trading activities.
After getting the permit of entry as well as the permit for performing trading activities in the
Brazilian brewery market, CHEERS organization needs to analyze the market research activity
in relevance with reviewing the adequate and proposed entry in the new marketing conditions.
Brasilia is the capital of the country and this will be the adequate place from which CHEERS
organization could take the entry for the purpose of expansion and growth in Brazil. Brasilia is
the state where consumption of beer is much high in comparison with the other states of the
Brazil. CHEERS organization needs to adopt certain unique methods for promoting their beer for
developing an effective goodwill in the new market. Apart from this, offers could also be given

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to the customers such as by reducing prices of their products by a certain rate which does not
affect the profitability of the organization (Saad‐Filho, 2015).