MNG92210: Cheers Brewing - International Market Expansion Report

This report analyzes the international market expansion strategy for Cheers, an Australian craft beer brewing company. The report begins with an executive summary and table of contents, followed by an introduction that highlights the growth of the brewing industry and Cheers' goals. It then delves into risk and opportunity analysis using PESTLE analysis for both India and Brazil, evaluating political, economic, socio-cultural, technological, legal, and environmental factors. The report identifies opportunities for Cheers, including the growing demand for craft beer in both countries. The report recommends India as a better choice for expansion due to its more stable economic environment and favorable trade agreements with Australia. The report also explores market entry strategies, specifically focusing on exporting through distributors and targeting high-end clubs and hotels. The report concludes with a discussion of human resource strategies and references.

International Marketing
Student Details
1-1-2020
Word Count- 2943

INTERNATIONAL MARKETING 1
Executive Summary
Cheers is an Australia based brewing company, specialises in craft beer. The organisation has
achieved success within Australia and is focusing upon expanding its business operations
within international markets, as a choice Cheers has selected India and Brazil for expansion
of its business operations. The market within India and Brazil has potential growth
opportunities for a brewing company, but in comparison to Brazil, India is a better choice for
the market expansion of Cheers, as India has a stable and developing economic condition as
compared to Brazil, also the preference of customers within Indian markets is shifting
towards premium quality craft beers.
Cheers can effectively enter within the Indian industry through exporting its products within
the market through a distributor, the organisation can focus upon the selection of the place
where the products will be available for the sale and can focus upon the extensive distributive
strategy, as the craft beers are premium quality products, therefore the customer segment who
can afford such premium products can be targeted at high-end clubs, bars or at 5star hotels.
Therefore, the organisation is required to focus upon the product quality as well as ensuring
the effective distribution of its products within the industry so that it can ensure its success
within the industry.

INTERNATIONAL MARKETING 2
Table of Contents
Introduction................................................................................................................................3
Risk and Opportunity Analysis..................................................................................................3
Opportunities available for the organisation..........................................................................6
Selection of the Destination for expansion............................................................................7
Market Entry Strategy................................................................................................................8
Marketing Strategy to be adopted by the company....................................................................9
Human Resource Strategy........................................................................................................11
Conclusion................................................................................................................................11
References................................................................................................................................13

INTERNATIONAL MARKETING 3
Introduction
The rapidly changing social preferences have resulted in the growth and expansion of the
brewing industry, as with the changing lifestyle and the urbanisation of the societies the
popularity of beer consumption is increasing. The developing economies including India and
Brazil have shown effective market growth in terms of beer consumption. The attitude of
societies within the nation are changing towards the consumption of beer, therefore with the
changes in the consumer preferences, the competition within the industry is also growing, as
the brands are promoting their products internationally within the global markets (Mifsud,
2018).
Cheers is an Australia based start-up that brews craft beers, after the success within the
Australian market, Cheers focus on its international expansion and selects India and Brazil as
the market choices for its international expansion. The report is focused on analysing the risk
and opportunities available within the nations, and effectively analysing the strategies that
Cheers can adapt to ensure its business success within the nations.
Risk and Opportunity Analysis
The organisation operating within the industry is exposed to certain risks as well as
opportunities, therefore it is required that the management of the organisation effectively
focus upon analysing the internal as well as external environment of the business so that such
risks and opportunities can be identified and the decisions can be made to avoid the risk
factor and to work effectively so that the business performance can be improved. The risk and
opportunities can be analysed through effective evaluating business environments. The
management of the organisation is focusing upon the business expansion within India and

INTERNATIONAL MARKETING 4
Brazil, therefore to analyse the effectiveness of the business environment, PESTLE analysis
can be conducted to analyse the risk within the business environment (Perera, 2017).
Political Factors
Various political factors influence the performance of the organisation within the nation. In
India, certain political issues impacts the performance of the brewing industry, the political
factors within India controls the taxation on the beer products due to which the price
competition within the industry increases, also within India transporting beer across state
border is also illegal; therefore, the organisation will have to face certain challenges in
establishing its business in India (Knoth & Borrit, 2014).
On the other hand, the Brazil brewing industry does not directly influence the brewing
industry, as the Brazil Brewing industry stands at the third position in the world in terms of
beer consumption. The tax system of Brazil is the main issue within the industry, due to the
complicated tax system the product price varies from region to region and due to the taxes,
the price gap for same product within the regions increase, which is a challenging factor for
the organisations operating business within Brazil Brewing Industry (Canada, 2019).
Economic Factors
The beer industry in India is likely to grow and expand in future, despite the regulatory
hurdles the industry seems to have high growth potential. Also, there is a continuous
increment in the per capita income which indicates that the consumers within the economy
have a higher buying power. The All India Brewing Association states that the sale of the
craft beer is growing at a rate of 20% year-over-year (Economic Times, 2017). Brazil has
recorded a slow growth from the 2015 recession, which has led towards high rates of
inflation, unemployment, currency depreciation and falling wages due to which the consumer
income and spending capacity has been reduced, despite the economic conditions the

INTERNATIONAL MARKETING 5
consumers within the industry are spending on the premium quality products, the sale of the
beer products in Brazil has grown by 9.3% on an average between FY 2013 and 2017
(Canada, 2019). The economy of Brazil is unstable as compared to the Indian economy.
Socio-Cultural Factors
The attitude of Indian Societies is changing towards alcohol consumption, and the industry is
showing strong growth in terms of beer consumption. The consumers are now showing a
positive response towards the beer in the social gatherings, and with an increase in the café
culture in India, the social trends are changing towards beer consumption (Chakraborty &
Suresh, 2018). The increase in beer consumption in India has recorded 90% increment from
2002-2007, the change is due to change in the lifestyle of the people and with the
introduction of the health-conscious diet/light beers (Vashishth & Tripathi, 2016). Brazil has
a high competition within the industry and the consumers within the society consume a large
number of beers, and their preference for the beer depends upon the quality rather than on the
price, and it is assumed that within the Brazil Brewing Industry there is a chance for
expansion within the industry (Dias & Falconi, 2018).
Technological Factors
The improvement in technological factors has increased competition within the beer industry.
As the technological factors influence the brewing industry production as well as distribution
process, therefore the company having a leading technological resource to speed up its
production process will be able to lead within the industry. Therefore, it is required that the
organisation focuses upon the technological advancements within the organisation so that it
can effectively compete within the international market (Didora, 2018).
Legal Factors

INTERNATIONAL MARKETING 6
Some certain legal rules and regulations guide the brewing industry within India, as per the
law the brewing companies cannot directly advertise their products on various platforms,
authorising regulation and licencing requirements within the industry limits the offering of
beer products in specific states or region. Also, in India, some various laws and regulations
govern the production, distribution and even the pricing of the alcohol. Therefore, the
companies are required to effectively analyse the legal factors before expanding their
operations in India (Chakraborty & Suresh, 2018). In Brazil, the major legal issues faced by
the companies operating within the nation is the taxation policies introduced by the
government due to which the price of the products vary from region to region, and the
companies are required to effectively analyse the policies as per the region (Agriculture and
Agri-Food Canada, 2019).
Environmental Factors
The nations are focusing on the sustainable growth of the economies and to implement the
growth strategies they are focusing on the effective utilisation of the natural resources and has
also developed legal regulations so that the companies operating within the nation also focus
upon the sustainable growth of the industry. Therefore, it is required that the organisation
focus upon the effective utilisation of the resources during its production process and
contribute towards the government initiatives towards managing climate change (HPS, 2020).
Opportunities available for the organisation
Beer is one of the most preferred alcoholic drinks preferred by consumers over the world.
The developing countries including India and Brazil have reported a significant rise within
the market sale of the premium beer products. The organisations have the opportunities to
expand their business operations within the nations by meeting the customer's requirements
for the quality products, also the organisations can focus upon the production of craft beer

INTERNATIONAL MARKETING 7
which is considered as a preferred choice of the customers within the industry (J.P.Morgan,
2018).
CHEERS have an opportunity to be part of the expanding Indian brewing industry. The
industry has shown a growth rate of 20% y-o-y which is higher in comparison with the global
brewing industry which is 5-7%. Also, the choice of consumers within the nation is shifting
towards the consumption of craft beer, and with rising disposable income the sale of the
alcoholic beverages is estimated to rise to 25% till 2022. Indian industry is dominated by
limited brands among which approx. half of the market is dominated by United Breweries,
therefore the CHEERS can expand its business operations within the nation by developing
effective strategies, as the company has competed with limited competitors within the
industry (Connoisseur, 2018).
Brazil beer industry is third in the world in terms of the alcohol consumption within the
nation, the brewing industry in Brazil is experiencing a growth in its premium beer markets
as the customers within the nation focus more on the quality of the beer that is being offered
to them. The craft beers have limited availability within Brazil; therefore, CHEERS have an
opportunity to effectively promote their brand and to compete within the industry by
providing the market supply for craft beers. The brewing industry within Brazil is considered
to be a major importer of the premium quality products from the countries like Belgium,
Germany and the Czech Republic, due to local taxes such imported beers are sold at a high
price as compared to the locally brewed beers. Therefore, locally brewing companies can
effectively compete with international brands by providing quality products at low prices
(FITM, 2015).

INTERNATIONAL MARKETING 8
Selection of the Destination for expansion
The risk and opportunities analysis within India and Brazil for CHEERS reflect that India is a
better choice for the expansion of business operations as compared to Brazil. The economic
or the financial stability of India is more as compared to Brazil, as due to the recession in
2015 Brazil has recorded a slow growth within the industry also Brazil has high
unemployment level as well as high inflation rate due to which the sale of beers within the
industry may get affected in future if the unemployment rate increases (Gallas & Palumbo,
2019). Also, due to Brazil government taxation policies, CHEERS will have to face a price
competition within the nation.
CHEERS being an Australian company requires that the nation in which it is operating its
business to have good and effective trade relations with Australia. India and Australia have a
balanced and effective free trade agreement which focus on promoting high-quality trade
between the nations. The negotiation between the countries is officially termed as a
Comprehensive Economic Cooperation Agreement (CECA). Such trade agreements provide
Australian companies with an opportunity to develop and expand their business operations
beyond the borders of the nation (TOI, 2018).
Market Entry Strategy
The market selection is based on the economic, political as well as legal factors of the home
and the host country. India has a stable political and economic environment which promotes
the business organisation to grow and expand their business operations. in case of the
brewing industry, some certain rules and regulations are required to be analysed by the
organisation and accordingly develop its operational strategies so that it can effectively
compete within the industry. Australia and India have also signed a free trade agreement
which limits the trade restrictions and regulations within the nation and promotes the growth

INTERNATIONAL MARKETING 9
of cross-border business within the nations (Commonwealth of Australia, 2010). Therefore,
CHEERS can effectively establish its business within the Indian Industry, if it focuses on the
legal rules and regulations within the nation.
CHEERS can make an entry within the markets of India through the direct export of its
products through a distributor as a medium. The distributors are independent merchants who
buy directly from the company and sell the products to the customers. The export of beer
within the Indian industry is most preferable market entry option for CHEERS, as the global
import of India has grown by 21% in 2016 amounting to 10,800 tonnes, which represents a
high growth opportunity for international brewing companies (Connoisseur, 2018). Exporting
of products also provides an option of withdrawing the product from the market in case the
product fails to achieve the targeted growth within the market. Government regulations
possess a risk within the Indian brewing Industry, as due to strict legal rules and regulations
the overall beer market (AWI, 2013).
The organisation focusing on the export as an option for entry within the foreign market does
not require that the organisation invest heavily on developing infrastructure, as it just requires
that the organisation supply products to a local distributor who will be accountable for the
sale within the region. The export mode of market entry provides the organisation advantage
in terms of risk management as well as control within the market, as the distributor is dealing
within the host market, therefore, he has better understanding of the legal rules and
regulations, therefore, he conducts activities as per the rules and regulations and help the
organisation to expand its business operations within the nation (Grünig & Morschett, 2012).
Marketing Strategy to be adopted by the company
The company is required to adopt marketing strategies so that effectively compete within the
industry. As direct alcohol ads are banned in India, therefore it is required that the

INTERNATIONAL MARKETING 10
manufacturers focus upon innovative strategies so that they can effectively promote their
products within the industry. The organisation can focus upon the distribution of its products
within the market, so that it can be in the reach of the customers, and can establish itself as a
brand within the industry. CHEERS can focus upon promoting craft beer produced by the
company, as the trend of craft beer is increasing in India, therefore the company can focus
upon craft beers as the key attraction for the promotion of the brand within the industry
(Mallikarjunan, 2019).
Apart from the promotional activities to develop an effective marketing strategy it is required
that the organisation focus upon the target market, as the Indian industry is driven by the
young population and with rising disposable income the choice of quality products is
increasing, therefore the marketing strategies developed at CHEERS should promote as a
quality product within the industry (ET, 2017). The organisation can focus upon its
promotion through indirect channels such as sponsoring of events, creating social media
pages as the target market of the organisation is available on the online platforms and
especially on the social media platforms, therefore, CHEERS can effectively interact with its
target customer over the social media platforms and can promote its products effectively
(Moise, 2015).
Craft beer is among the premium products, as the manufacturers maintain a premium pricing
policy for the craft beers. Therefore, within the industry, the craft beer brewing companies
face competition in terms of the product quality as well as the availability of the product
rather than competing in terms of price of the product (Bhasin, 2019). Therefore, CHEERS
can focus upon adapting price skimming strategy for the pricing of the product, as the product
offered is of premium quality and entering into the industry requires the organisation to spend
on the advertisements and promotions, therefore CHEERS can focus upon introducing its
product at a high price within the industry (Spann, et al., 2015).

INTERNATIONAL MARKETING 11
The organisation can control the distribution of its product within the industry through
adopting exclusive distribution strategy, as craft beer is a quality and high priced product is
not affordable for lower class, therefore the organisation can focus upon the selection of the
high-end clubs, bars or 5star hotels where the organisation can focus upon its target
customers.
Human Resource Strategy
The organisation operating in the international business environment has a diverse workforce
in terms of culture, experience or knowledge; therefore, it is required that the organisation
focus upon developing strategies through which it can effectively manage its workforce
within the organisation (Briscoe, et al., 2012). To develop an effective workforce within the
international organisation it is required that the organisation focuses on the factors within the
nation, such as the nation’s employment laws and policies, as in India, government has
established Employment and labour law to guide the employers and to protect the rights and
interest of the employees working within the nation (GLI, 2020).
The organisation should focus on the hiring of the employees within the nation in which it is
expanding its business operations, as in India the workforce required by the organisation is
easily available, due to the unemployment within the nation. As the employee hired within
the nation understands the business environment within the nation and can effectively lead
the organisation towards the achievement of the business goals and objective. The
organisation can take help of recruiting agencies to source candidates and based on the
personal interview or screening the organisation can select the suitable candidate for the
workforce of the organisation (Rees & Smith, 2017).

INTERNATIONAL MARKETING 12
Conclusion
The Indian brewing industry is under the development stage despite the legal restrictions on
the industry. The attitude of people towards alcohol consumption within the society is
changing, which led towards the rise in the sale of premium beer products within the
industry. As compared to Brazil, Indian economy is a stable condition, as the Brazil economy
has recovered from the recession but the industry is still showing slow growth in comparison
to the other economies of the world, also Brazil has high unemployment rates and high
inflation due to which the per capita disposable income has reduced. CHEERS want to
expand its business in the international market; therefore, India is a better option for
CHEERS to expand its business operations.
Cheers brew craft beers, and the demand for the craft beers is increasing within the Indian
market, as being a developing economy the consumers within the market prefer quality
products, due to which the competition within the industry is based on the product quality
rather than on price. Cheers can focus upon setting up high price for its products, as the
customers within the industry require a quality product, therefore they will be willing to pay a
high price for quality products. The organisation can focus upon adapting extensive
distributive strategy so that the targeted consumers can be approached and the brand will be
able to establish itself as a premium product brand within the nation. Developing an effective
workforce is also required to compete within the international market, therefore the
organisation is required to focus upon developing strategies so that it can develop workforce
within the organisation, and will be able to achieve the business goals and objectives.

INTERNATIONAL MARKETING 13
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