Foster’s has enjoyed international growth of more than 40 per cent in the last five years and is one of the fastest growing premium beer brands in the world. Brewed in nine countries and over 20 plants, Foster's Lager is widely sold and distributed throughout Australia, Asia, the Pacific, Europe, the Americas and the Middle East. It is the world's third most widely distributed brand, with over 100 million cases sold annually in more than 155 countries.
Foster’s brand beer is currently ranked the number two selling import brand in the UK (AC Nielsen); number seven across Europe, number six in the US (Impact International), number two Middle East (Foster’s Research) and the most recognizable beer across Asia (Asian News).
Foster’s Brewing International employs 1,873 and sold over 856 million liters of beer in 2003 with total sales of $217.5 million (AUD) (Foster’s Group PLC Annual Report).
Foster’s Brewing International Sales and Profits Table
Source: Foster’s Group 2003 Financial Results
In the US, Foster’s Brewing International contracts out bottling of the Foster’s Lager brand beer to the Miller Brewing Company, a division of SAB Miller. Foster’s sells it’s beer in the U.S. market through its 50%-owned Foster's USA distribution unit.
Foster’s Brewing International Brand Strategy and Recognition
Foster’s brand strategy encompasses positioning as a premium brand, promoting unique brand awareness and international distribution.
Foster's Lager is characterized by its Australian heritage and carries the image of Australia's climate, landscape, people, attitude, and exuberance. The core of Foster's identity is summed up by its advertising slogan, “Foster’s is Australian for beer”.
The Beer Industry and U.S. Market
In 2002 the U.S. domestic beer market was battered by imports and malt alternatives. While big producers like Miller Brewing Co. and Adolph Coors Co. focused their efforts on business restructuring, imports went after the domestic premium brands. Imports captured 18% of retail beer sales and represent a market share more than three times that of the malt alternatives category. According to Davenport Equity Research, total import sales grew 6% in 2002.
Malt beverages had the highest percentage increase in sales in among all beer categories. This category had a 24% increase in volume and a 30% increase in retail sales in 2002, according to Dave Williams of Information Resources Inc.
Total domestic beers sales increased 5%, with small brewers growing 4% and sub-premium brands remaining flat. Information Resources Inc., Chicago reports that brands such as Budweiser, Miller Genuine Draft and Coors Original actually lost .4% market share in 2002.
Even with threats from imports and malt alternatives, the big three: Anheuser-Busch Co., Miller Brewing Co. and Adolph Coors Co. still account for 75% of U.S. domestic beer sales in 2002. Anheuser-Busch Co. maintains the top spot with 50% market share, Miller number two with 19% and Coors number three with 11% market share.
1998-2002 Brewers' Production and U.S. Market Consumption Table
Source: Davenport Equity Research, ATF, U.S. Dept. Commerce, Beer Institute
2002 U.S. Domestic Beer Market by Popular Brands Table
U.S. Market Outlook
Miller Brewing Co. experienced the most notable business shake up in 2002 when Philip Morris Cos. Inc. sold the company to South African Breweries plc for $5.6 billion. The companies merged to become SAB Miller, with headquarters in London, operations in seven U.S. states, and nine U.S. breweries. Analysts expect that it could take SAB Miller as long as three years to benefit from the merger. According to the Beverage Report, SAB Miller needs to find innovative ways to market the Miller family of brands at a low cost in order to turn the company around. SAB Miller has had an impact on the number of imports on U.S. shelves because of its import-heavy portfolio.
With flat U.S. sales, both Anheuser-Busch Co. and Coors have turned to international markets to find growth. Anheuser-Busch Co. has expanded in Canada, China, and the U.K. with increased advertising and promotion. Coors has moved in the U.K. with the acquisition of the Carling brand from Interbrew S.A. early in 2002, making Coors the second largest brewer in the United Kingdom. Coors is using this leverage in the U.K. to offset losses in the United States.
The other growth opportunity, the malt alternative category, is not without risk. Diageo-Guinness USA leads this category with Smirnoff Ice, Smirnoff Ice Triple Black and Captain Morgan Gold. Although hugely successful over the last two years, Dave Williams of Information Resources Inc., Chicago, is predicting slower sales growth due to market saturation and a freeze in investment resulting from potential reclassification and regulation as a spirits based alcoholic product. The U.S. Treasury department has suggested that flavored alcoholic beverages that use more than 90% spirits should be regulated as such. Many malt alternative producers are pulling back on investment in the category until the decision about reclassification is final. True malt products such as Mark Anthony Brands' Mike's Hard Lemonade, Anheuser-Busch's Bacardi Silver and Coors Zima are expected to maintain their sales growth.
Pricing
Fortunately for beer and malt alternative producers, consumers are drinking more and are willing to pay more for what they drink. This is primarily due to the increased consumption of premium imported beer brands, which average $24.27 per case, and malt alternatives that average $27.19 per case. When compared with the average domestic case price of $16.47.
Williams says, "The bulk of new shoppers are migrating toward imports primarily because they don't mind paying a premium rate".
Market Breakdown By Price Point (million barrels and %share) Table
SOURCE: Davenport & Company estimates
Imports
Industry experts believe imports' sustained growth is attributable to brands such as Corona Extra and Heineken, the top two retail brands in the import segment in 2002, according to Williams of Information Resources Inc., Chicago.
Corona's growing popularity in the U.S. is a sign that Grupo Modelo, the Mexican producer of Corona beers, which is 50% owned by Anheuser-Busch, is becoming the import of choice of American beer drinkers. Corona Light beat out all other premium light brands in retail dollar sales by almost 50% percent, and Corona Extra holds the number one spot among imported beers in the U.S., according to Information Resources Inc., Chicago.
Heineken holds second place with sales of Heineken up 10% and Amstel Light up 17% in 2002. Amstel Light, ranked number two in the premium light brand category in the United States is helping Heineken make up for lost sales in Europe, according to the company's annual report (Beverage Industry, May2003, Vol. 94 Issue 5, p18, 5p Item: 10004613).
2001-2002 Leading Imported Beer Brands Table
Source: Adams Beer Handbook 2003
Consolidation and Globalization
The market conditions of the past two years have accelerated the pace of changes in the beer industry. The prevailing trends affecting the U.S. beer market are consolidation and globalization. "The growing globalization of our industry is also changing the competitive make-up of the beer industry,” said August Busch IV, president of Anheuser-Busch. Consolidation and globalization are appealing for a number of reasons. Consolidation gives brewer’s greater efficiency and economy of scale and makes use of industry capacity. Globalization gives brewers the opportunity to expand into markets with more growth potential than their own backyards.
The downside of consolidation is that wholesalers no longer have single brewers that represent a clear majority of sales volume, so their loyalties are divided. Economics have forced many wholesalers, who once carried only one of the major domestic brewers, to now carry others to compete. Brewer consolidation has meant that wholesale companies are presenting distributors a large portfolio of products, not just single brands anymore (Adams Beer Handbook 2003).
Pressure On Distributors
In 1980, there were 475 brands of beer available in the US. Today, there are over 3,400. The reason is that in 1980, there were only 88 breweries. Today, there are over 1,600. It’s worth noting that 99.5% of those 1,600 breweries account for only 3% of all the beer brewed in the US today. They are, however, responsible for the tremendous growth in brands. Also, back in 1980, imports only made up about 2.5% of the market. Companies like Heineken, Corona, Beck's and Foster’s have really only come into our market in a big way over the last 10 years. Today, imports account for 10% of all beer consumed in the US (Beverage Aisle, Dec2002, Vol. 11 Issue 12, p22, 3p, Item: 8984212).
"Distributors are looking to line up a portfolio to get leverage," said John Lennon, president of Beck's North America. "There are now more core brands, more anchor brands, for distributors, so we're in more battles for distributor attention. In one market recently, a distributor's portfolio went from 36 brands and 200 SKUs to 60 brands and 400 SKUs. That puts pressure on what they can stock, on the people on the street and pressure on retailers who are running out of stock on products."
As U.S. distributors get larger through consolidation, they also gain power in the marketplace. That has an effect on a brand's ability to reach consumers.
"The locus of decision-making has shifted from supplier to distributor," Lennon said. "They're saying which SKUs will sell in the market."
This fact has changed the way brewers and importers approach their relationships with U.S. wholesalers. U.S. beer marketers must appeal to consumers and distributors both now.
There are niche opportunities available in the U.S. beer market and brands with the ability to take advantage of them will get distributors to focus attention on their products.
Additionally, U.S. retailers need to make sure beer gets adequate presence in stores. Beer profit contribution is among the top three or four categories in a retail store. It is important to have beer products in the store where consumers can see them and priced in a way that makes them a good value for consumers.
Foster’s U.S. Joint Venture Partner SAB Miller
After purchasing Miller from Philip Morris last year, SAB has been focusing on Miller's core brands, which have been losing market share for years. Recognizing that merger costs and sales volumes declines will impact short-term results, SAB took quick action in making management changes and reshaping the Miller product portfolio. SAB is looking for ways to leverage Miller’s extensive sales and distribution channel with new products and effective promotions. One area they have stubbed their toe was investing in new spirit and malt beverages, which have been met with varied success. The Sky Blue brand is doing well, while the Sauza Diablo and Stolichnaya Citrona brands have been failures in the U.S. market. Like the other big U.S. beer producers, exports and international sales of Miller brands continue to provide volume growth (6.6%) and stable profits. The other bright spot is contract brewing which grew 3.6% in the last nine months. Miller’s contract brewing includes Foster’s Lager, which represented 690,000 barrels in 2002.
SAB Miller Review of North American Operations 2003 (nine months) Table
Financial summary US$m
Turnover 3,473.0
EBITA 250.0
EBITA margin (%) 7.2
Sales volume (hls 000s)
– Lager 33,852
– Contract brewing 8,172
– CSDs 55
Total 42,079
Source: SAB Miller 2003 Financial Highlights
SAB Marketing Strategy
#1 Drive volume and productivity
#2 Expand through acquisitions
#3 Seek value-adding opportunities
#4 Growing brands in the international premium beer segment
Foster’s Opportunity With SAB Miller
Foster’s has a unique opportunity to leverage the joint venture with SAB Miller’s by utilizing brewing and distribution capacity in the U.S. By implementing a program to increase sales and promotions of Foster’s Lager, including line extension through a Light offering and possibly a malt alternative, Foster’s will benefit by riding the import growth wave and SAB Miller increases profitable use of its manufacturing and distribution capacity.
U.S. Import Market Competition
Corona (Anheuser-Busch)
Anheuser-Busch owns 50% of the number one U.S. import Corona. Just as other imports have enjoyed sales growth and profitability in the U.S. market, Corona is far and away the favorite import brand. The problem for Anheuser-Busch is that attempts to capitalize on the import craze and grow it’s own sales through new products and brands inevitably results in cannibalism. As Corona grows, it’s own products suffer. As it tries to introduce competitive premium import brands such as World Select European-style lager, they tend to take sales away from it’s own domestic brands or and potentially even Corona. Profits also suffer as new product start up and promotion costs can be expensive, such as the $70 million Michelob Ultra Low Carb beer introduced in early 2003. The Anheuser-Busch strategy for the U.S. market is two-fold, first modest growth in market share and profit through advertising (saturation) and introduction of new specialty products. Second, to prevent erosion of sales of it’s domestic brands. This has been a losing effort in the last few years due to imports and malt alternatives. Anheuser-Busch’s overall marketing strategy depends heavily on expansion into new global markets such as China, Europe and Asia. Anheuser-Busch’s defensive position in the U.S. market results in higher advertising and promotion costs compared to it’s competitors just to keep the sales from eroding further. Anheuser-Busch’s marketing budget was $425 million in 2002, much more than it’s competitors (Advertising Age; 03/27/2000, Vol. 71 Issue 13, p70, 2/5p, 1c).
2002 Top Brewer Marketing Spending Table
Heineken USA
Heineken has four main marketing objectives:
- Remain one of the top global brewers
- Being more profitable per hectoliter than other international brewers
- Build the most valuable brand portfolio, with Heineken as the international flagship brand
- Remain independent
To reach these objectives, Heineken focuses on a combined portfolio of local brands (like for example Moretti, Zywiec, Cruzcampo and Tiger) and international brands such as Heineken, Amstel and specialty beers like Desperados and Murphy's. Heineken aims for broad leadership positions and seeks to be the number one or number two in local beer markets. Heineken exports it’s products from breweries in the Netherlands, France, Spain and Poland to the U.S. market.
Segment leadership is key in the markets where the number position is not an option such as the U.S. market. In the U.S. market Heineken strives for strong position in the premium/import and specialty segments. Heineken is the number 2 importer in the U.S. market. Heineken depends heavily on distribution partners as an exporter, which requires constant quality control oversight and trade promotion. The Heineken brand has been positioned as a high-end premium product which makes it higher priced than competitors such as Corona and Foster’s. Such product positioning does impact market potential for Heineken as super premium products only make up 3.1% of the total U.S. beer market, while premium products make up 31.9% of the market.
Labatt’s (Interbrew)
Labatt USA, owned by Interbrew, has enjoyed double-digit sales growth every year for the past 15 years in the U.S. market with brands such as Labatt’s Blue, Labatt Blue Light, Labatt Ice and Rolling Rock. U.S. Labatt Blue is the number one Canadian beer in the United States and the number three imported beer overall behind Corona and Heineken. Labbatt’s also imports brands from Mexico such as Tecate and Dos Equis. Interbrew, the second largest brewer in the world, has a global marketing strategy covering 110 countries worldwide. Interbrew pursues sales growth through partnerships and acquisitions with a focus on exploiting local brands. They see themselves as the world’s local brewer. Their direct investment and joint venture strategy causes them to focus marketing on brand leadership in each market, versus worldwide brand recognition of it’s various beer product lines.
Guinness Stout (Diageo-Guinness USA)
Diageo imports Guinness Stout to the U.S. market, which is the number 5 import brand. As an export, Guinness is similar to Heineken in that it is positioned as a super-premium brand with a small market potential in the U.S. Diageo has been focused more on the malt & spirit alternative products such as Smirnoff Ice, Triple Black and Captain Morgan Gold. As mentioned previously, these products have been popular in the U.S. market, but face slower sales growth due to market saturation and a freeze in investment resulting from potential reclassification and regulation as a spirits based alcoholic product.
U.S. Market Demographics on Beer Consumers
What Do Consumers Want?
Knowing what sells in the U.S. beer market is not straight forward. Generalizations like imports are growing faster than domestics and light beer is growing faster than regular beers are easy, there are no hard rules that fit brands into these categories. Research shows that consumers are trading up to high-end beers, and that light beers now account for more than 40% of industry volume. Imports continue to gain share in the U.S. market, but not all brands are growing. This generation of legal drinking age (LDA) consumers has grown up with a tremendous variety of beverages and flavors to choose from. They are interested in variety and accustomed to experimentation. Because they were brought up on drinks like soda, flavored teas and energy drinks, LDA consumers have been attracted to the cocktail craze and to malt alternative beverages. “Per capita consumption of beer among 21 to 27 year-olds is pretty close to what it has been for the past five years, so I don't think we're seeing less volume because they're drinking less," said Gawronski. "They're definitely more interested in variety, which has driven malt alternative and import sales growth”. What's really going to affect our business is how well we develop consumer pull."
"The onus is on the beer industry to maintain excitement," said Dave Perkins, president of Molson USA. "We have a good understanding of the entry level drinker, and there are some good promotions out there. We need a steady stream of ideas to capture their imagination and make sure there's always excitement associated with our products. We have to personally connect with beer drinkers."
Young consumers aren't easy to reach. They are exposed to far more media advertising messages than previous generations. There is also considerable risk of backlash if beer companies market too aggressively to young consumers.
Innovation in advertising, promotion and packaging is a key part of successful beer marketing strategy that must also be acutely sensitive to public health and safety issues. Beer companies have little choice but to use advertising and promotion since it is usually to expensive to develop and introduce new products.
"Responsible consumption remains our single greatest concern," says August Busch. "Certain groups critical of our industry continue to advocate restrictions on the advertising and availability of our products”.
(Adams Beer Handbook 2003).
Beer Consumers
The following table outlines the demographics of beer drinkers by income level, marital status, race, and employment status.
(BeerProfitGuide.com)
This table outlines beer consumer demographics by education, age, sex, and family size.
Based on the tables above the following characteristics describe the typically Foster’s beer drinker.
- At least some college
- Age (25-34)
- Family of 4
- Blue Collar
- White
- Married
- Male
- Income over $65,000
Consumer Price Habits
Time of purchase:
(BeerProfitGuide.com)
Different dynamics by gender:
- Males … more spur of the moment
- Females … more longer term planning
A “different” kind of shopping … does not conform to typical “shopping” experience.
Positive experience … seen as part of drinking experience:
- The product is enjoyable
- The transaction is always “successful”
- The product is widely available
Shoppers have pre-determined they will purchase beer … but have an “acceptable set” of brands / packages
Where Consumers Buy Beer
Consumers typically buy Foster’s lager from either a grocery chain or a beer distributor. This place is chosen when consumers are planning to drink at home or friends. Consumers will also drink Foster’s on tap at bars and restaurants.
How Consumers Pay (Cash or Credit)
Consumers often purchase Foster’s along with other items when buying from distributors or at restaurants while eating out. The total cost of the purchase determines the payment method. Typically purchases of over $50 are paid with credit where purchases under $50 are paid with cash or check.
Consumer Use Habits
This table breaks down the population of beer drinkers in the United States by frequency of drinks.
(BeerProfitGuide.com)
This table outlines the frequency at which consumers purchase beer at distributors.
(BeerProfitGuide.com)
Foster’s Brewing International SWOT Analysis
Strengths
- Fast growing worldwide premium beer brand
- Exported to more than 150 countries
- Global marketing strategy of joint ventures and direct foreign investment
- Marketing partnership with SAB Miller
- Formula 1 sponsorship
- Global brand recognition
- Solid company financials & diversification
Weaknesses
- Currently # 7 brand in U.S. import market (3% share)
- Much smaller company than top three competitors
- Completely reliant on joint venture with SAB Miller
- Must rely on distributor to get product to consumer
- Consumer has one dimensional awareness of brand, ie. Australian beer
Opportunities
- U.S. market decline in domestic sub-premium and premium segments
- U.S. market growth in premium imports.
- Demographics show LDA consumers want a variety of drinks
- U.S. companies are looking to expand internationally vs. domestically
Threats
- Anheuser-Busch has market power to prevent Foster’s from beating Corona.
- Heineken will defend it’s number two position
- SAB Miller could end joint venture and leave Foster’s without manufacturing or distribution
- 3,400 Different beer brands in U.S.
- Malt alternatives
Alternatives
Do Nothing
Foster’s could continue on the present course of modest sales growth, profitability and enhancing a premium brand image in the U.S. market. Not doing anything new to further exploit the erosion of domestic beer sales in the U.S. would result in an opportunity cost of sales that will go to Corona, Heineken, Labatt’s and new import product entries. Further, Foster’s will continue to be a marginal player in the largest beer market today.
Pros:
- No additional expense.
- The international brewing unit is projected to continue growth and profitability without any significant changes.
- The emerging China market may be a better opportunity for growth.
Cons:
- Opportunity cost of not exploiting U.S. import market growth now.
- As a marginal player, Corona or Heineken could use their market power and exclude Foster’s from any meaningful sales growth in the U.S.
- SAB Miller may decide the 700,000 barrels it currently makes for Foster’s is not helping its own bottom line or that Foster’s costs them sales of their own import brands, ending the JV.
Focus On Increasing Sales in the U.S. Market Via SAB Miller
By continuing to leverage the SAB Miller JV, Foster’s can focus on entirely on promotion, placement, pricing, and product differentiation strategy to aggressively increase sales while maintaining margins for both Foster’s and SAB Miller. Continuing their JV with SAB Miller avoids the expense of setting up their own plant and distribution network. However they run the risk of depending on SAB which acquired Miller just last year. SAB will be putting tremendous pressure on Miller to improve sales of its own brands and deliver consistent profits. Would SAB continue a JV if Foster’s stated intention to become a dominant U.S. import brand? Or, would SAB be grateful that Foster’s strategy could increase profitable contract brewing revenue and make use of available capacity?
Pros:
- Sales growth of premium imports and specialty brews in the U.S. market is expected to continue, driven by consumer preferences and growth in the LDA population.
- The largest brewers are focused on emerging markets such as China vs. the U.S. market, where except for a few successful import brands, they are just trying to protect eroding sales.
- Foster’s has proven themselves as a global growth company through acquisition of Beringer’s Wine which propelled their international sales.
- The two growth engines for Foster’s are Beringer’s Wine and Foster’s Brewing International, investment in these engines would have a higher ROI than other projects.
- SAB’s number one strategy is to drive volume and productivity. By increasing sales volume, Foster’s will in turn increase SAB Millers contract brewing revenue and make further use of available capacity, helping SAB’s bottom line.
Cons:
- SAB Miller may not go along with Foster’s marketing plan, possibly ending the JV.
- Anheuser-Busch may not put up with Foster’s trying to go after significant market share and sales volume (taking on Corona). It may use it’s market power to squeeze Foster’s out.
- Foster’s may spend significant money and not get the results expected due to larger competitors matching price and counter marketing.
DIY Focus On Increasing Sales in U.S Market, Buyout SAB Miller JV and Buy or Build Plants & Distribution Network
This approach would require significant direct investment by Foster’s to buy or build brewing and distribution capabilities. It would also take a significant amount of time to complete, in affect, delaying benefits from increases sales in the U.S. market. The future for Foster’s in the U.S. will likely require such investment in order to produce enough volume and sales to seriously compete with larger companies such as Anheuser-Busch (Corona), Heineken, Interbrew (Labatt’s), and Diageo (Guinness). The risk with making such investment at this time is that the larger companies can still wield market power to make it very difficult for Foster’s to compete at this level.
Pros:
- Foster’s would not be reliant on the JV with SAB Miller for brewing and distribution.
- SAB Miller may not be able to produce the quantities needed to meet Foster’s sales projections if they complete a marketing plan that increases demand considerably over the next few years.
- Eventually Foster’s will have to acquire or invest in it’s own brewing and distribution capacity unless if wants to remain a marginal player in the U.S. market.
Cons:
- Significant investment required for this alternative.
- Lengthy payback period.
- Lengthy time required to bring brewing capacity online, may miss current market opportunity.
- Sales projections do not support expense of this project at this time.
- The Asian (China) market is much closer to Foster’s breweries and corporate headquarters, investment in this emerging market may have a higher long term ROI.
Recommendation
It is our recommendation that Foster’s International Brewing implement a strategic marketing plan that leverages current brand awareness and the joint venture relationship with SAB Miller to aggressively pursue growth in the U.S. import market.
Neville Fielke, V.P. Global Strategy & Business Development for Foster’s will be in charge of developing and implementing this strategy.
The cornerstone of this strategy is pushing distribution through multi-tiered promotions. Sponsorship of complimentary action sports events and stars, promotional tie-ins with action movies and action stars. Heavy promotion tie in with theme restaurant like Outback and family/fun restaurants like Applebees. Heavy promotion of give-aways and fun events at local bars. Increase sales commissions and distributor recognition in geographic regions with exception sales.
In addition to promotion, Foster’s should look for opportunities to acquire U.S. brewers and distribution networks that compliment their product line and enable a strategy of import market sales growth. Not so much brand acquisition as capacity acquisition to hedge the SAB Miller joint venture dependency. As Foster’s sales volume increases in the U.S. import market, capacity and dependence on SAB Miller will eventually become an inhibitor to growth.
Goals and Objectives
Foster’s Brewing International should set a goal of increasing sales volumes and revenue in the U.S. import market by 30% the first and second year and 20% the following three years. This will result in a 300% increase in sales volume and revenue over five years. The objectives for this plan are to achieve an 18% return on this investment over five years, to increase marketing expenses to 12% percent of sales, to enhance brand image and to increase brand market share in the U.S, import market from 7th to 3rd , jumping past Amstel, Guinness and Labatt’s Tecate.
Forecasted Income Statement
Pricing Strategy
Foster’s Lager and Foster’s Light Lager are positioned as premium beers. Foster’s should hold the line on pricing and price position in the U.S. import market.
The large brewers have been increasing prices on domestic brands, premium and sub-premium brands, to shore up profits in response to eroding sales. Heineken is the only large competitor to not raise prices, Corona, Labatt’s, Guinness and Foster’s all raised prices last year on their premium brands. Heineken’s position on holding pricing is surprising since they are positioned in the super-premium segment. Perhaps this stance is intended to trade down Heineken to go head to head in the premium segment and increase sales.
The following market breakdown by price point table illustrates the growth potential in the premium and import segments, which make up 43% of the U.S. market. Foster’s should continue to position brand, brand extention, brand acquisition and pricing to these segments.
Market Breakdown By Price Point (million barrels and %share) Table
SOURCE: Davenport & Company estimates
Promotion
A key element of Foster’s marketing strategy is increased promotion of Foster’s beer products to every potential premium beer consumer as well as at every potential place of purchase. Increased advertising spending is only part of the overall plan.
Foster’s already enjoys high consumer brand-awareness, it now needs to give consumers a reason to drink Foster’s over other imports or domestic brands. Foster’s must create demand through innovative promotions, sponsorship, and complimentary tie-ins.
First, Foster’s should forge a Hollywood connection by seeking product tie-ins with action stars and action movies. Product placement in successful movies can anchor promotional events and with high profile advertising.
Second, Foster’s should sponsor non-traditional action sports and sports figures, such as the X Games, Gravity Games and specialty sports entertainment. Foster’s could also leverage it’s Formula 1 racing association to sponsor Indy & Cart racing. Foster’s could also seek to sponsor sports teams and stars in not quite so mainstream sports franchises such as Major League Soccer, Arena Football, NHRA, Professional Bull Riding, Bicycling, Snowboarding and horse racing.
Finally, Foster’s should develop local promotions and sponsor fun events at neighborhood bars and restaurants. This would include tie-ins with theme restaurants.
Products
Foster’s Lager is the flagship brand in the U.S. import market. Foster’s has recently introduced a light brand as well. In order to increase sales, Foster’s may need to extend the brand further though introduction of a malt alternative or possibly a super-premium beer.
Foster’s focus should remain on the premium beer segment for Foster’s Lager & Foster’s Light. If the opportunity arises to purchase a brand, brewery or distribution network in the U.S., Foster’s should consider this option as it could bring product differentiation, sales, and alternative capacity to hedge the SAB Miller joint venture.
An opportunity to purchase a brand such as Mark Anthony’s Mike’s Hard Lemonade should not be overlooked.
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