GAB’s new strategy pays dividends

GUINNESS Anchor Bhd (GAB) expects sales for this Chinese New Year (CNY) period to be its best ever as moves to understand the consumer purchasing habits during the festive period starts to pay off. 

“We think we are going to deliver an even better level of performance than we did last year,'' GAB managing director Charles Ireland said. 

He estimated sales to be around 10% higher during the current CNY period from the same period a year ago, which he credited to tweaks on its offerings made last year. 

“Last year, we had a really good year. What we did was we completely turned on its head how trading was done during Chinese New Year,'' he said. 

Charles Ireland

Ireland commented that the market of yesteryear had been just about price, where consumers would wait until the last possible minute for the price of beer to drop before making their purchases. 

He looked at this habitual spending pattern last year, and based on his experiences and what had been learnt from other markets overseas, he decided to try something different. 

GAB then introduced the new strategy of adding value for consumers during the CNY period which was traditionally the highest volume period in the year. (Consumption of beer and stout during this period was double that of any non-festive period anytime in the year.) 

The added value strategy, as opposed to price discounts, resulted in volume growth last year and that strategy together with the introduction of Dragon Mission is expected to result in GAB further increasing its volume growth this year. 

The Dragon Mission is a community driven, fund-raising initiative for Chinese education. 

“Studies were conducted on the reason why consumers bought the packs during Chinese New Year and whether it was for entertaining or gifts. GAB then produced a range of packs that fit consumer purchasing needs without having to trade down on price all the time,'' he explained. 

“That just blew away prior year's performance and enabled us to have a record-breaking year last year.'' 

After the success last year, Ireland said, GAB started to assess the market for this CNY period in March last year to learn what worked and what did not during 2007's Chinese New Year period. 

“We got feedback from consumers and, based on that, put together a plan to beat the best year we have ever had,'' he said. 

This year GAB has added to its support of Chinese education a fund mechanism where consumers could directly contribute money to Chinese education through the purchase of a pack of Tiger, Guinness, Heineken or Anchor

For each of those packs sold in supermarkets, a donation of RM3 would go to a central fund for Chinese education. 

For bottles bought at refreshment outlets or coffee shops, the owner of the coffee shop will nominate up to three schools where money could be channelled. From the sale of each big bottle, 30 sen would be given to Chinese schools. 

Ireland said the response from the public had been great, as some packs were sold out in supermarkets and more bottles were being sold at refreshment outlets. 

Although education is one of GAB's corporate social responsibility pillars and is something the company has been working on for more than a decade, Ireland said this was the first time the group had done the Dragon Mission. 

He said it was GAB's ambition to raise RM1mil in the six-week period – the five weeks before CNY and the one week after – and said the company was on track to meet and maybe exceed that figure. 

Building up to the high volume festive period, GAB has been running its factories at full capacity for months and Ireland said the plant would undergo some maintenance and engineering works post-CNY period. 

He also said the current environment of high production costs had been a strain on GAB. 

“It's tough, particularly in the alcohol brewerage industry - the price of cans has gone up, the prices of packaging materials are higher, the price of hops have gone through the roof and barley prices have increased significantly,'' he said. 

“This is posing a challenge for us and we have to manage our costs.'' 

He said that while the volume growth and the resultant revenue increases had been helpful in dealing with increased cost, GAB was looking hard at the pricing of its product. 

“We have not made a decision yet, but we are looking at the consumer pricing element,'' he said, adding that GAB might increase the price of beer sold to consumers. 

 GUINESS :  [Stock Watch]  [News]

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