Facing up to a flat beer market


  • Business
  • Monday, 17 Feb 2003

BY YAP LIH HUEY

WHAT is Guinness Anchor Bhd (GAB) to do when market growth for brewery is expected to be flat?  

Put in more investment in branding, promotion and advertisements, automate production to cut costs and maintain quality, repackage and relaunch its products and increase distribution and sales channels.  

This year, GAB will spend no less than RM173mil to aggressively increase its market share in the blonde beer market, where its number one and only contender, Carlsberg has more than 50% market share.  

GAB would also try to maintain its leadership in the stout market and is confident of converting younger crowds to drink stout through its creative advertisement campaigns. To date, GAB through Guinness Stout has about 83% local market share in stout business.  

Ng Yoke Pun, general manager-marketing of Guinness Anchor Marketing Sdn Bhd argued although its sole competitor certainly has more market share in the beer market, Guinness has the advantage of a broad portfolio of brands ranging from premium, standard to value brands to cater to a full spectrum of consumer.  

It has in total eight brands, namely Guinness Stout, Tiger, Heineken, Anchor Smooth, Anchor Ice, Barron's, Lion Stout and Kilkenny.  

To increase its beer market share this year, Guinness had recently given a fresh makeover to its Anchor brand by re-launching Anchor Smooth and Anchor Ice and expects its market share to increase by 2%.  

“We make sure the process of brewing would allow for smoother and refreshing tastes. And, based on our research and development the beer is made in such a way that consumers will not feel bloated after drinking it,” he told StarBiz in an interview at its Sungei Way brewery house recently.  

“We also repackaged the Anchor Smooth bottle in red colour to make it more attractive and eye-catching and graphics are sleek while the Anchor Ice bottle is slim and transparent and comes with a twist cap that would appeal to our target markets,” Ng explained.  

“In the first couple of months after the launch (in December) of the new brands, we received positive responses partly because of the festive seasons and the attractiveness of the packaging.” 

Ng said, eventually, both Anchor Smooth and Anchor Ice would double its beer market share within the next three years.  

“For December (2002) and last month, we experienced a huge increase for our Anchor products. It had grown by 5% in sales volume compared to the same period last year,” he added. 

According to him, Anchor Ice would be a potential winner. “Based on our research in the beer ice category, we found out Anchor Ice is more dominant than its competitor. We are working closely with entertainment outlets tailored to our target market – the young, dynamic people aged between 18 to 25 years old that are bold and unconventional.” 

“We came out with a provocative tagline and we are proud of the fact that it has the signature twist cap on the bottle to encourage them to drink from the bottle,” he said.  

Meanwhile, Anchor Smooth adopters are mature customers, above 30 years old, highly educated and hold professional jobs. Ng reckoned the product is for people who indulged in food. 

“We had worked closely with restaurants such as the raw-fish promotion tie-up during the Chinese New Year period. We had over 700 eateries nationwide and this collaboration would continue along the year. 

“Since our brand statement differs across various market segments, we need to have sectoral targets to go after identified customers and work on tie-ups with certain identified outlets,” he elaborated.  

Ng commented: “For last year, we had done relatively well in view of the flat market. Our top performers were Heineken and Tiger. As for this year, we expect fierce competition for market share in beer and stout from our sole competitor.”  

“In order to maintain our competitiveness, we will continue to do things at the right place and right time and to maintain our quality with lower production costs.” 

The better our marketing focus is the better we will be able to increase our market share, says Ng Yoke Pun.

He said: “We had allotted RM33mil to expand our capital expenditure for the brewery house. Out of that figure, a substantial amount would be used to automate most of its production processes and would gradually increase its productivity per head.”  

“By computerising our processes, it would have an impact on labour input as we used a fair bit of workers to do manual work. We need to upscale our workers like retrain them or get new workers with ready skills. Over time, the productivity of workers will be improved,” he added. 

Its brewery plant has the maximum capacity of producing up to 1.7 million hectolitres. The current total Malaysian market consumption is 1.3 million hectolitres annually.  

“We have ample capacity to produce new products but our strategy now is to develop our own brands to cater to local tastes,” he added.  

Within this year, GAB is working hard at introducing new products to capture the local market. However, he disputed the possibility of securing third party and cheaper brands from Asean because he can't see that it can give GAB a long-term and stable value for its business.  

“Our role is a generic one. As we are a joint-venture company between GAB, Heineken Group and Asia Pacific Breweries Ltd, our first priority is to look internally at which brands that can be a success in the local market. If we can't find a successful brand, then we would look at third party brands to bring into our portfolio.” 

Despite the brewery industry being plagued by cheap, smuggled beer, Ng would like to think that it caters to different markets. “During economic recession, the cheap brands might gain certain market share but when the economy starts to pick up, established brands will gain more share.” 

“If you analyse it, the cheaper brands are sold in sundry shops for buyers to take home and drink rather than to be seen drinking it. This is the impact of brand equity. The better the brand equity, the more people want to be associated or seen drinking it in public. That is why we would keep building our brands by investing in advertisements and building brand awareness.” 

On the price war, Ng said Guinness would respond to market changes quickly. “Whatever our competitor do, we would have to respond to it. We would continue to invest in building our brand equity. By doing so, we would not have to worry about price competition anymore. It is easy to cut prices but we are shying away from it.” 

Guinness would approach the pricing issue from the perspective of “offering value-added on its brands” for its consumer.  

“Yes, expenditure would definitely go up but with automation in our plant, costs in other areas can be lowered. We are fairly positive that we would be making a fair bit of inroad in gaining market share for all GAB products and we are positive that we will gain from this competition this year.” 

He added: “We would concentrate on pushing our beer products to increase our beer market share. At the same time, we would maintain momentum on our Guinness Stout product. We are definitely looking at more growth this year.”  

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