Empresas Polar Ready for the Global Beer Market

Photo by ruurmo

The consumption of beer continues to increase in Africa, Latin America and Asia, mainly because of the growth in population and income, and improving quality and appearance of the beers.

The latent demand for beer was estimated to $163.9 billion in 2005 with a steady increase to 198.6 billion in 2010. The distribution of the world’s latent demand (or potential industry earnings, PIE), is however, not evenly distributed across global regions. America is the largest market with $55.2 billion, 33.66 percent, second largest is Asia with $52.3 billion or 31.92 percent, and third is Europe with $41.3 billion or 25.20 percent of the total world market. If firms target these top 3 regions, they will cover approx. 90.78 percent of the global demand for beer.

Empresas Polar SA operates as the largest private industrial conglomerate in Venezuela; manufacturing and distributing a variety of food and beverages, particularly beer, soft drinks, juice, corn oil, rice, pastas, cheese spreads, jellies, frozen seafood and tuna fish. Beer is the core of the business and accounts for more than half of the company sales. Subsidiary Cerveceria Polar, ranks as the 17th largest beer company worldwide. Empresas consists of three businesses: CA Cervecería Polar, CA Polar Foods and Pepsi-Cola Venezuela CA, which through its 70 years of history has developed market leadership in Venezuela. Furthermore, Empresas has investments in Venezuela’s oil, petrochemical, and banking.

Because of the wide range of brands and companies in the beer market, Empresas will have to evaluate its positioning strategy within the market it will enter. The 6 steps will have to be evaluated carefully before initiation an expansion into the target market.

Steps In positioning Strategy

  1. Identify competition.
  2. Identity perception of own product/brand.
  3. Develop positioning themes.
  4. Screen positioning alternatives, and choose the best.
  5. Develop marketing mix strategy.
  6. Monitor and evaluate positioning strategy.

It seems like the best options for Empresas is to evaluate the possibilities in the Mexican market, because it already has connections there. Furthermore, the beer market in Mexico is approximately 6,5% of the total American marked (2.3% world market). Brazil as well, is a good candidate, because the market resembles the Venezuelan market more than oversea markets, and the country has approximately 8% of the total American market. But AB In-Brew already covers 70%of the market, which means a strong competitor. North America will be a good candidate for a developed market that Empresas could enter. Particularly the United States which possesses approximately 70% of the total American market for beer; meaning that even small segments of this market, could be big compared to segments in South America.An important decision is whether Empresas should change its beer portfolio to fit a global market (GCCP), or stick to the current portfolio and pursue a Niche strategy in new markets. Considering the competition in the beer market, I would recommend a Niche Strategy, where Empresas find segments that fit existing beers in Empresas portfolio, or develop a global portfolio besides its local market.

Indicators confirming Empresas Polar’s willingness and capacity to extend its boundaries:

  • Implementation of SAP Advanced Planning & Optimization, ensuring that the planning process is integrated and standardized.
  • Joint venture with Pepsi will facilitate brand awareness of Empresas.
  • Extensive market knowledge from Venezuela, which can be transferred to other emerging markets, particularly in South America.
  • Strong environmental responsibility.
  • Already supply other product to the Total American market.

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