Market Entry Strategy: Australian Craft Beer in London, UK Market

This report analyzes the feasibility of an Australian natural resources Food and Beverage company expanding its craft beer product line into London, UK. It explores country-specific factors like rising craft beer sales, legal regulations, and consumer preferences. Industry-specific factors such as industry growth and manufacturing processes are also examined. A significant portion of the report focuses on cultural factors, including business culture, consumption habits, language differences, and a comparison of Australian and UK cultures using Hofstede's cultural dimensions. The report also suggests steps to initiate communication, align HRM practices, and addresses cultural challenges with corresponding recommendations. Budgetary considerations and the engagement of the board in investment decisions are discussed, leading to a conclusion that emphasizes government approval for expansion.

Management
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Working across cultures

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Executive summary
The aim of the report is to explore the concept related and strategies in understanding the cultural
setting and country-specific factors in expanding the business operations. The difference in the
country’s foreign work practices, settings, and the environment are discussed. Being the part of
the Senior Management team for an Australian company that is specialising in the natural
resources Food and Beverage. The company is willing to expand their craft beer product into the
new country as to capitalise on an opportunity to access a new market. The country where the
company can find the opportunities is London, UK. The findings of the report include the
different cultural issues that are related to the consumption habit, preferences, and many others. I
the end, the recommendations provided in related to the issues faced by the company.

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Contents
Introduction......................................................................................................................................4
Country/region specific factors........................................................................................................5
Industry-specific factors..................................................................................................................7
Cultural factors................................................................................................................................8
Business culture...........................................................................................................................8
Consumption by people...............................................................................................................9
Language....................................................................................................................................11
Australia culture differ from London, UK.....................................................................................11
Power distance...........................................................................................................................12
Individualism.............................................................................................................................13
Masculinity................................................................................................................................13
Uncertainty Avoidance..............................................................................................................14
Long Term Orientation..............................................................................................................14
Steps to Initiate Communication...................................................................................................14
Alignment of HRM Practices........................................................................................................15
Cultural Challenges and Recommendation...................................................................................16
Budget............................................................................................................................................17
Engagement of Board in Investment Decision..............................................................................18
Recommendation...........................................................................................................................18

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Government should approve to expand.....................................................................................18
Conclusion.....................................................................................................................................19
References......................................................................................................................................20
Appendix........................................................................................................................................23
Appendix 1.................................................................................................................................23
Figure 1 Consumption of Alcohol by Australian people.................................................................9
Figure 2 Consumption of alcohol by UK people...........................................................................10
Figure 3 Adult drinking in the UK................................................................................................11
Figure 4 Comparison of Australia and UK....................................................................................12
Table 1 Uk’s Beer Market Has Changed In Eight Years.................................................................6

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Introduction
In the present scenario, many companies are expanding their business operations in other market.
One of the Australian companies is willing to expand craft beer in the selected market. The
product on which the report focuses is craft beer that the company is willing to expand in the
new market of UK. The craft beer are the small amounts of beer which generally emphasis of
quality, flavour as well as brewing the techniques. The reason due to beer as a product has been
selected for expansion because consumption of beer is increasing in UK. The report will include
devising a plan with the motive to facilitate the expansion of the business.

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Country/region specific factors
The country that has been selected for expansion of business operation is London. It is essential
for the company to consider the country/regions specific factors.
Rise in sales of beer: - The rise in the health-conscious customers seeks for the quality in
alcoholic drinks. The intakes of the customers are increasing than the previous generations due to
the regional factors (The beer Connoisseur, 2019). The Britain’s thirst army of craft beer drinker
were able to avail 506 million pints of the finest craft beer in the year 2017. Thus, this has been
found that approx. 2.8 million hectolitres makes around 6.5% of the total beer market. According
to the research, the craft beer is booming in the market that led to the 20% of the surge in the
people who are registering trademarks for the beers in the UK market (Hancock, 2018). This
shows that there is opportunity for the craft beer in the market.
Table 1 Uk’s Beer Market Has Changed In Eight Years
Country
factors
Rise in sales
of craft beer
Legal
regulations
Consumer
preference

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(Source: Hancock, 2018)
Legal regulations: - While selling the craft beer in the market it is essential to comply with the
rules related to packaging as well as labelling. According to the standard labelling rule when the
drink is stronger than 1.2% ABV; company must declare the alcoholic strength on label and it is
not required to include ingredients list (In business Info, 2019).
Consumer preference: - The rise in the demand of the people towards the healthy alcohol
instead of the normal beer is registered. Most of the people like to consume craft beer in keg due
to which 44% of members are now selling some craft beer in keg from 37% in 2016 as well as
27% in 2015 (SIBA, 2018).
Industry-specific factors
Industry growth: - Craft beer bubble is bursting and the industry expert has warned as the
number of new breweries entering into the market (IBIS world, 2019). However, the number has
dropped from the previous year. In the year 2017, 434 new craft breweries have been opened in
UK as per the view of the UHY that is Hacker Young. Thus, this shows that the industry of the

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craft beer is growing in the market of UK (Johnson, 2019). Industry growth is an important
factor which is considered by the team with the motive to analyse the opportunity for the
company.
Manufacturing process: - The manufacturing process of a beer is based on the raw material and
it is time consuming as it involves fragmentation. Thus, there is need of the proper machinery as
well as the crops that helps in production. In addition to this, the grains are cooked in the water
on high temperature with the heat of 160 degrees F (80 degrees C).
Training: - Personal needs effective training for the way they can manufacturing the beer. The
training can be related to the manufacturing of craft beer as well as how the effective utilization
of the resources in the process of manufacturing. Moreover, this has been labour in London are
less when it comes to working for organic food and beverage industry.
Industry
growth
Manufacturing
processes
Training

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Cultural factors
Business culture
Australian people are not very formal so the greetings of the country business meetings remain
casual and relaxed. However, the meeting at London, UK starts with the formal greetings
(Business Culture, 2019). The decisions taken by the company are generally slower than usual in
Australia but on the other hand, the work environment of the UK says that they making fast
decisions when they find a good deal. Otherwise, they consume time when it comes to the
decision making of the company.
Consumption by people: - According to the view of Australian bureau of statistics, the
consumption of the alcohol is declining as people are consuming less from past few years. The
beer is considered as Australia favourite nation’s drink due to which it is ahead of wine. This
equates to 9.4 litres of the pure alcohol for every person aged 15 years or more. The consumption
is done on 224 stubbies of beer, 37 bottle of wine as well as 17 bottles of cider with 33 cans of
pre-mixed drinks for the 4 bottles of spirits (Australian Associated Press, 2018).
The below image show the graph of consumption of alcohol by the people in Australia: -

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Figure 1 Consumption of Alcohol by Australian people
(Source: Australian Associated Press, 2018)
The below given is the consumption statistics of people in UK,
Figure 2 Consumption of alcohol by UK people
(Source: Statista, 2019)
This has been found that the average number of liter of beer which is consumed per head in UK
annually from 2002 to 2017. This has been found that in past few years there is very less decline

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in the beer consumption. In addition, a surge in the popularity of wine has resulted in the
decrease in the share of beer-consumed on-trade. The consumption of the products has decreased
due to taxes. The consumption spending on the beer has substantially increased and due to which
the beer is still present and booming in the market. Thus, means that the consumer spending on
beer is increasing rather than on other alcohol.
Furthermore, the people who consume the alcohol are categories as men, women, as well as
adults (Drinkware, 2019). The below graph reflects the same: -
Figure 3 Adult drinking in the UK
(Source: Drinkware, 2019)
Language
The Australian and British people speak English as a language but the pronunciation of both
countries varies a lot (Today Translations, 2019). This difference occurs due to the class and
region of the people that similarly means that people of London live in a class-conscious society
with the regional rivalries.

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Staffing considerations
In London, the UK, the market of the Food and Beverage industry is growing due to which the
labour market of the country shows that there is very less number of personnel in the industry.
Thus, the company who appoint the personnel will pay a high amount to the employees.
Safety and legalities
The safety and legalities that are present towards the food and beverage industry are stricter in
the UK while comparing it with Australia market. The regulations and laws that are present in
the UK are stricter and in the matter of Food Company are required to follow the standards for
consumer safety.
Australia culture differ from London, UK
Hofstede’s cultural dimension defines the effects of social culture on morals of the member, and
in what way valuable links to behaviour with the use of structure derived from analysis of factor.
Figure 4 Comparison of Australia and UK
(Source: Hofstede’s Cultural dimension, 2019)