Aire valley Breweries plc is one of the midsized UK brewing companies which produces beers, lagers, stouts.They produce different types of alcoholic drinks with different amount of alcoholic percentage.
China is one of the places where beer markets grow fastest in the world and the market for Chinese alcoholic drinks is very large and it is still growing rapidly. It is an increasingly important market, with a lot more potential for investment. The Chinese consumers are also very much brand oriented and highly developed that their degree of sophistication is increasing day by day as more brands and products are introduced. Older people who drink traditional spirits are now going for beers due to its lower alcohol level.Wines and beers are now the fashionable drinks for wealthy younger urban Chinese people.The Chinese beer market has grown at an increasing pace spurred on by the massive levels of foreign investment in the market along with the rise in average levels of consumer spending in China. Overall percapita consumption is still low in china, which offers a large scope for market development. Wines have attained consumer acceptance and the influence of western eating habits have been key in this, raising the incomes in China.(China Polling,2009)
The alcohol market in China is extremely fragmented with hundreds of producers nationwide. Dominant local players have well-established distribution networks, although they may be confined to a specific region. Local products benefit from lower prices and greater consumer brand awareness. The key competitors in this industry are the local companies like Tsingtao Brewery Pvt Ltd, China Resources Snow Breweries, Beijing Yanjing Beer Group Company, Fujian Sedrin Brewery Company .Apart from local competitors, there are other foreign exporters from US, UK, Australia which give a very high competition to this industry. These competitors benefit from shipping proximity aiding in price advantages.Competiton for the high end market is particularly strong at certain places in china and more over the Chinese beer market has become increasingly competitive, with companies spending much on advertising campaigns.(Business wire,2007)
- Communist party membership stands at nearly 70 million
- China has first adopted National People's Congress in 1982.
- Eventhough china is a unitary state, power lies within the political system which reflects economic weight.
- In general, they are against western democratic countries and their cultures.
- China's economic growth is responsible for 10% of the world's total value of goods export and 8% of world's total value of goods imports.
- The Economic growth of china is more compared to UK, US, Japan since 1990.
- 53% of Chinese GDP is accounted by manufacturing, mining, utilities and contruction, 32% for services, 15% for agriculture.
- The largest contribution to the economy was made by China's industry sector, with an added value of RMB 12.1 trillion, recording a growth of 13.4%.
- The GDP reached RMB 24.7 trillion, recording a growth of 11.4% from the previous year
- Due to china's open economy, the exports are high.
- Changes in consumer tastes.
- People are getting attracted to western life style.
- Literacy rate is 90% and average life expectancy is 72 years.
- Electronic advancements resulted in online shopping.
- Management and administration of the company through IT systems.
- Marketing and Advertising through electronic and print media.
- Laws on labelling and packaging.
- Brands should have local importance and recognition.
- Minimum wage rate to labours working in the company.
- Use of renewable resources in beer production.
- Concern against refill of the bottles, cans.
- Stopping the usage of plastic glass which is used for consuming the beer.
- Diverse range of beer products with different percentage of alcohol.
- Alliances with other companies for expansion.
- One of the emerging beer companies in UK market.
- Perception of high prices.
- New and existing competition.
- Market shift to globalisation.
- Low cost retailers.
- Lack of international exposure.
- Chances of developing their brand into international market.
- Providing a facility of acquiring the beer at groceries, retail stores and supermarkets.
- Consumers changing their habits and trying out new tastes and varieties.
- Chinese people are health conscious.
- Price factor-high cost of beer results in low sale of the product.
- Competition from existing local customers.
- Recession effect.
China has got the largest population in the world around 1.31 billion people. The population density is higher in coastal than in islands. There are sharp regional and cultural differences among the people. Therefore the companies have to consider the gap between the developed and less developed regions where a uniform market strategy is not possible when considering the large scale of Chinese market. In order to reach consumers, they must allocate more resources into channelling and distribution of products. Intensive advertising is one way to persuade potential consumers in major cities, a greater focus has to be placed on &ldquo:push&rdquo: marketing, to build up brand presence and product knowledge in the other cities.
Due to huge population and vast area, China has got different regions with in it, like Mid China, East China, North and Northeast China, South and Southwest China. There are also some companies which are already marketing their products in such regions like China Resources and Harbin beers occupy the Northeast China; Yanjing beer occupies North China; Tsingtao beer occupies East China; Chongqing beer occupies the West; Zhujiang beer occupies South China; Kingstar beer occupies Central China. Tsingtao, Yanjing and China Resources beers have formed a impasse in the markets of the Northeast, North China and the Southwest(Report Buyer,2009).And also each expanse has different traditions and cultures.So the companies should produce beer according to the taste and tradition of that respective region.
People in this generation are going towards healthier lifestyles and are more meticulous in the activities and the interests they take part in.They prefer diet plans and low calorie food intakes which has become more dominant. Therefore the company can come up with a new product by introducing low calorie beer and flavoured malt beer so that they can compete to the changing environment.
Expansion of the company and taking the brand to international markets is the ultimate target to any company. Therefore the companies should make attempts to release different kinds of beers to different sectors of the population. Coming to the female population, the women are attracted to different kinds of tastes and flavours. Therefore the beers for women should be released with different flavours and also they should be advertised in magazines so that the sales of the product increase(Oppapers.com,2005). However it is not only for women, but also for other sectors of population like men and college going students aged 21-27 and also elder people who generally prefer traditional beer. Hence beers of such types should be produced and released into the market.
The Chinese people are more towards health conscious and prefer beer with less alcoholic quantity.Therfore the company can come with the beers which they are producing in UK that contains less alcoholic percentage and release them in the market with different volumes and containers.
Price your product is important because it will have a direct effect on the success of the business. The prices must reflect the dynamics of cost, demand, change in the market and response to competition (Entrepreneur,2006). They must be established to assure sales. Product utility, longevity, maintenance, and end use must be judged continually, and target prices should be adjusted accordingly. Prices must be set to preserve order in the marketplace.
China has got a huge regional places where there are many distributors for beer market sand are dominated by different beer companies.The off-trade is still the main channel for beer sales, residents of low tier cities and rural areas purchase beer through off-trade channel and thus it still dominates beer consumption. In this channel, small independent grocery outlets,supermarkets and hypermarkets account for the largest share On-trade beer consumption in major cities like Beijing, Shanghai is much larger than in lower tier cities and rural areas. People in these cities have more opportunities to go to restaurants and have entertainment in pubs and bars, and they are also less price sensitive and can afford the higher price of beer in on-trade channels.
Distribution is the entire process of moving the finished product from the factory to the end user.It depends upon the market size and industry.One of the good way to decide is to analyse the competitors to determine the channel they are using and then decide if to go with the same channel or an alternative one which ultimately should give a strategic advantage.Distribution can be done by many ways like Direct Sales,Manufacturer's Representatives,WholesaleDistributors,Brokers,RetailDistributors,Direct Mail(Entrepreneur 2006).The company should also have a grip on the local distributors which it acquired for the distribution of their product.They should not totally depend upon the local distributors for marketing their products.
When the distribution channel is formed,promotion plan also should be developed.It is nothing but controlling the distribution of communication designed to sell a product.In order to achieve a good profit,promotion of the product is very much necessary.Since China is a large country with different regions,the promotion strategy should be done according to that particular regions.Promotion can be done through advertising,packaging,public relations,sales promotions and personal sales.Addition to these,the company can come up with different schemes by introducing some fancy offers like offering beer mugs,company merchandise with its logo etc which results in the promotion of the product
From the above information and data provided,it is therefore concluded that Aire Valley Breweries can enter in to china market primarily with a local distributor as a joint venture and produce their products in different regions where people consume beer with less alcohol content and also target customers who want to go for a change.
- Business wire,2007, Total consumption of beer in Chinese market,9 Jan 2009,available at http://www.allbusiness.com/services/business-services/4008072-1.html, [ accessed on 18 dec,2009]
- Euromonitor,2009,Beer in China,available at http://www.euromonitor.com/Beer_in_China, [accessed on 22 dec 2009.]
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- China polling,2009,china is now the beer kingdom,available at, 30 Oct 2009,http://www.chinapolling.com/insights/china-is-now-the-beer-kingdom-but-are-chinese-consumers-happy-with-their-brew.html [accessed on 27 dec 2009]
- House of commons, 2006,A political and economic introduction to china, 19 june 2006,available at http://www.parliament.uk/commons/lib/research/rp2006/RP06-036.pdf, [accessed on 28 dec 2009]
- Oppapers.com,2005,Market strategies,26 Nov 2005,available at,http://www.oppapers.com/essays/Beer-Company-Segmentation/71600 [accessed on 20 dec,2009]
- Entrepreneur,2006,China is now the beer kingdom,01 august 2006,available at http://www.entrepreneur.com/startingabusiness/businessplans/article25754.html,[ accessed on 29 dec 2009.]
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- Report buyer,2009,report on Chinese beer industry, July 2009,available at http://www.reportbuyer.com/food_drink/alcoholic_drinks/beer/research_report_chinese_beer_industry_2009.html ,[accessed on 30 dec 2009]
- China polling,2009,beer omnibus, 30 Oct 2009,available at http://www.chinapolling.com/product/beer-omnibus.html ,[accessed on 26 dec 2009]
- Agri food trade,2008,Alcoholic beverage market in china, March 2008,available at http://www.ats.agr.gc.ca/asi/4399-eng.htm ,[accessed on 23 dec 2009.]