The Global Branding Of Stella Artois

The Global Branding of Stella Artois*

Synopsis

Interbrew had developed into the world's fourth largest brewer by acquiring and managing a large portfolio of national and regional beer brands in markets around the world. More recently, senior management had decided to develop one of their premium beers, Stella Artois, as a global brand. This case examines the early stages of Interbrew's global branding strategy and tactics, enabling students to consider these concepts in the context of a fragmented but consolidating industry.

Discussion Questions

1. Does it make sense for Interbrew to develop a global brand?

Table 1 - Pros and Cons of Global Brands

The case for a global brand The case against a global brand

Interbrew wants to be perceived by investment community as a global player in the consolidating beer industry

* stock market analysts expect serious players to have large intangible assets such as international marketing expertise and an internationally recognized brand

Some industries have globalized (e.g., computers, soft drinks) but the brewing industry is still quite fragmented

* Interbrew would not capture value by leading the globalization effort, but would benefit by responding to this trend in a timely and effective way

May capture share of "global" consumers

* consumer choices may be converging across countries

* there is a sizeable and growing segment of people that are affluent and well-traveled to whom a global brand is very appealing Traditional Interbrew management style has been decentralized with local managers empowered to develop local/regional brands

* a global brand requires centralized control, a change in both management style and organizational structures that have been very successful in the past

* not only marketing but also production would have to be integrated

Spill-over effects between countries

* popularity of brands in one country (e.g the U.S.) may spill over to neighboring countries automatically (e.g. Canada) Local brands in many markets have entrenched positions and may be difficult to compete with

* Interbrew already has strong local brands in many markets - a global brand may cannibalize market share

Cost savings through economies of scale in brewing, advertising and promotion ("if we can get everyone to drink the same product") Differing local market profiles may make standardized marketing plans ineffective

* consistent and proper brand positioning becomes difficult as markets increase in number

Global brands may allow the company to focus on its core resources

* company may capture greater share of value created by specializing on a component of the value chain (e.g. brand marketing) while leaving other components (e.g. brewing, distribution) to others with assets already in place

Global brands require expensive and sustained marketing support

A successful global brand would make Interbrew more attractive to potential future partners to enable an "asset light" expansion (e.g., local partners contribute capital-intensive assets while Interbrew would contribute intellectual capital) Slow and difficult to implement

* Interbrew's acquisition strategy has been successful - perhaps acquiring an established global brand might be a quicker and surer path to success

2. Does Stella Artois appear to be the right choice as the company's flagship brand?

Table 2 - The Choice of Stella Artois as Interbrew $BCT (B Global Brand

Reasons for supporting the choice of Stella Reasons why it may not be the right choice

Demand for premium brands is expanding in major markets (e.g., North America, Europe) Stella has a weak and declining market position in its home market (i.e., Belgium)

* country of origin is typically a key attribute required to develop a global brand (i.e., Swiss watches, French wine)

* Belgium has a relatively low international profile

No other Interbrew brand has achieved the same international success as has Stella (Note: this success has come primarily from licensee Whitbread's sales in the United Kingdom)

* although Labatt $BCT (B Blue (regular-priced brand) has a strong position in Canada, it $BCT (B international success has been modest

Many developing countries do not have a large market for premium brands

* bulk of market growth is expected to come from developing countries in Latin America and Asia, but this demand is primarily for brands at regular prices

Stella's high-quality image may enhance the overall perception of Interbrew as a company

3a. Interbrew's strategy has focused on developing urban centers as markets rather than the more traditional view of countries as markets - what are the pros and cons of this approach?

Table 3--Cities versus Countries as Markets

Advantages of focusing on cities Risks of focusing on cities

Promotional spending is more efficient in densely populated areas Large numbers of people are not considered despite the fact that people outside the major urban centers may make up the majority of the national population

* large national sales would be slower in coming

Fashion trendsetters tend to live in urban centers Economies of scale in a particular country may be more difficult to achieve

Easier to focus on the target market

Distribution is simpler

3b. What would Interbrew have to do to succeed with Stella in the major urban market closest to where you live? Will these requirements vary very much between major cities?

The objective