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Marketing Plan - Heineken Brazil

Working Paper · October 2012

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HEINEKEN BRAZIL
UNIVERSIDAD EUROPEA DE MADRID

Business Communication

Marketing Plan

Carolina Coy

Maria Cristina T. M. Paixão

Nathalia Braga

31/10/2012
 MARKETING PLAN

Company: Heineken – Open your World

Country/Market: Brazil

1. INTRODUCTION

Heineken has wide international presence through a global network of

distributors and breweries. It owns and manages one of the world’s leading
portfolios of beer brands and is one of the world’s leading brewers in terms of
sales volume and profitability.
The Brazilian beer market is experiencing a new moment. Despite of being
one of the world's largest markets for this product, the category still presents a
huge potential for development. Directly linked to factors such as increased
availability, product variety, and growth in consumer income, the market has
become increasingly competitive among companies. The search for attributes that
differentiate the brand in relation to its competitors has become crucial for
surviving in the market and gain new customers, and therefore the importance of a
well-defined position and development by firms.
It is in this context that Heineken, through the acquisition of another brewery
group already present in Brazil, landed in that market. Previously distributed only
through imports, the Dutch brewer now controls of one of the largest industrial
groups in the area, and has as main objective to consolidate itself as the second
largest brewer in the country, through investments in different marketing
strategies, new brands and new packaging, aiming to capture new customers -
being of both competing brands and people who currently do not buy any product
of this category.
2. EXTERNAL ANALYSIS

2.1 Macro Environment:

Political and Legal Factors Technological Factors

● Increase of taxes ● Improvement of equipment

● Governmental interventions ● Changes in the costs of technology
● “Lei Seca” (law that make the
supervision of drinking and driving more
efficient and serious).

Economic and Environmental Factors Social Factors

● Increase of sales on holidays (especially ● Young people don’t have financial potential
in Carnaval) to buy
● Brazil is the 4th in consumers of beer ● Concentration of buyers in bigger cities
● High price of the product ● Brazilian life style, traditional habits of
● Influence of seasons on the consume (in drinking beer to celebrate
the summer is higher) ● Increase of the leisure importance
● Recycle´s Law of packages ● Population with high purchasing power
● Rules in the communications
● GDP increasing
● Large scale events (world cup in 2014,
Olympics in 6)

2.1.1 Analysis of the Factors:

On June 19, 2008 the Law 11.705 was approved, modifying the Brazilian
Traffic Code. Called "Lei Seca" (Dry Law) prohibits the consumption of alcoholic
liquors exceeding 0.1 mg of alcohol per liter of air expelled in the breathalyzer test
(or 2 g of alcohol per liter of blood) by vehicle drivers. On November 16, 2011, the
law became harder. The bill stipulates that driving under the influence of any
alcohol level shall be considered a crime. In practice, both a person driving after
eating a liquor chocolate, as one that is really drunk will be committing a crime.
The price of the product also contributes to a low average consume: in
Brazil, the beer leaves the factory with one of the lowest costs in the world, but
until it reaches the final consumer, the beer earns a high tax burden, higher than
any other countries, causing their price to be much higher compared to other
producing areas. According to Sindicerv (National Union of Industries of Beer),
since 2007 the beer market in Brazil was the 4th largest in the world, just for the
volume for China, United States and Germany.
During summer, the consume of the drink becomes much higher, and in the
Carnaval period there is an explosion of consumers, reaching about 4% of annual
production. In November, with the proximity of the summer, the marketing
investment in the sector triples. Still, the consume of the product in Brazil is still
low compared to other major markets. The country has an average consume of
47.6 liters/year, ranking below countries with lower beer tradition, such as Mexico
(50 liters/year) and Japan (56 liters/year). One of the reasons of the low consume
is the fact that the Brazilian consumer market is predominantly formed by a young
population (61% are between 25 and 44 years) and with low purchasing power,
making the per capita consumption falls (classes C and D are responsible for 72%
of total sales of beer in Brazil).

2.2 Micro Environment:

Competitors

Lider in the beer market, ABInBev, announced new investments to increase

its production capacity in the South and Northeast, along with increasing the
incentive package "Litrão" (big bottle), initially offered only in the Skol brand and is
now found in almost all portfolios of brands, followed later by key competitors,
consolidating increasingly packing. The deputy leader in market share, Schincariol
recently have been moving the market with the launch of the brand Devassa,
result of gran investment in the development, distribution and communication
product, backed by an aggressive marketing campaign. Besides the strong
advertising strategy, the Devassa bet on point-of-sale in main bars, restaurants
and nightclubs, seeking to generate knowledge and experimentation, particularly
in the markets of São Paulo and Rio de Janeiro, which already begins to reflect
the market's South Region. Schincariol, like many brewery groups, has also
invested in Premium beers, with the acquisition of micro-breweries like Baden
Baden and Eisenbahn, besides launching of special versions of brand Devassa.
 This movement of the main Brazilian breweries investing in the segment
Premium demonstrates the strength that this niche is gaining. While the most
popular beer segment grows on average 3% per year, the premium segment
increased approximately 6% in volume over the same period.

Market
The majority of the market belongs to Antarctica, Bohemia, Skol and
AmBev, that became the largest brewer in Brazil in 1999 with the merger of the
two largest brands, Brahma and Antarctica. In 2004, Ambev joined with the
Belgian Interbrew to form the world's largest brewer, known as InBev. In 2009,
InBev joined with Anheuser-Busch and formed the AB-InBev.
In 2002, Molson Coors bought the second largest Brazilian brewer Kaiser.
In 2006, Mexico's FEMSA Cerveza acquired 68% of Kaiser's Molson Coors. In
2010, Heineken bought FEMSA, including the Brazilian unit.
The beer market in Brazil is largely oligopolistic, with the four major
manufacturers representing more than 95% market share. According to data from
consultancy AC Nielsen, the absolute leader in Brazil is ABInBev, which owns
brands Skol, Brahma and Antarctica, the most popular among Brazilian
consumers, besides Budweiser, Stella Artois, and Serramalte Bohemia, among
others, which together dominate 68.4% of the market. Then appears the
Schincariol Group, with 11.1% share, and Petropolis Brewery, with 10.6%.
Heineken Brazil is currently the fourth place, with 8.4% of the Brazilian market,
according to data from April 2011. All other manufacturers combined reach 1.5%,
including in this total brands imported and micro-breweries, which produce the
most varied styles.
The struggle for the preference of the consumer is increasingly difficult, as
each day new customers arrives and at the same time, there has never been so
many beer brands available in the market, not to mention other types of beverages
that also end up competing for the preference of the consumer, like wine,
sparkling, spirits and even non-alcoholic beverages, such as soft drinks, for
example.

Consumers

The Heineken brand, by having the position of putting itself as brand

Premium over the world, aims to target the consumer A that appreciates the finer
things in life, the status and quality. Within this concept, the main target audience
is for over 25 years of age, successful future professionals who will also be
appreciating the best in the choices they make, like choosing Heineken as their
favorite brand. It targets audience including both men and women, always with the
consumer class as the target. Heineken aims to show the public that they are a
global brand for people who want to be different and prefer different things, quality
and good taste, and that always make the best choices. Heineken values the
quality, purity and unique and standard taste anywhere in the world.
And it is in this space that Heineken seeks to consolidate, reaching
audiences of higher classes, where consumers seek higher quality products and
value-added. It is important to know that the consumer of this product is not only in
Class A, as many think. The companies have realized that much of the public with
high purchasing power has just given the choice for sophisticated beverages such
as wine, whiskey and champagne, among others. They also know that most of
their customers are in the middle class, curious about experimenting with new
flavors and types of beer that they still don’t known.
 3. INTERNAL ANALYSIS

4. SWOT ANALYSIS

4.1 External Analysis

4.1.1 Opportunities

The improvement of the equipment and changes in the costs of technology

increases the production with lowers prices and higher quality. Because of the
traditional habits of drinking beer to celebrate, on holidays and in the summertime
the number of consumers and sales are much higher than any other time of the
year. Also, the products are made of an easy recycling material, such as aluminum
cans and glass bottles that applies with the Recyclers Law of package. Another
factor is that with the GDP of the country increasing, the population has a higher
purchasing power, raising the money spent on leisure. These factors combined
with the upcoming events such as the World Cup and the Olympics will raise the
profits not only of the country, but also of the company.

4.1.2 Threats

The increase of taxes and the governmental intervention may influence in

the brand, increasing the price of the products that are already high for the
Brazilian consumers. The “Lei Seca” decreases the consume of the product in
bars and night clubs, because of the strong supervision.
The rules in the communication such as the warnings about drinking and
driving or drinking/selling alcoholic beverages to under ages (18 years old)
increases the cost and time spent on advertising. Also, Heineken focus on a young
public, but those consumers don’t have financial potential to buy the product.

4.2 Internal Analysis

4.2.1 Strengths

The Heineken products have a very a high quality and with a headquartered
in São Paulo, it has eight fabrics in seven states in only 2 years. It brought to the
country the tradition of sponsoring large events, including the music festivals
Lollapalooza and Rock in Rio. The Brazilian public has also become accustomed
to seeing the Heineken brand as an official sponsor of several major sporting
events in the world. It also invests in consolidating a growing sport in the country
as an official sponsor of the Brazilian Confederation of Rugby.
The advertising is a very strong point in the company and it has a
production capacity of 20 million hectoliters annually, having more than 2,300
employees in the country. Heineken Brazil is led by executive Chris Barrow, ex-
director of Heineken's operations in Poland, Grupa Zywiec, the second largest
brewery in the country with 35% market share. The first team of Heineken Brazil
will feature seven other directors.

4.1.2 Weaknesses

Heineken is currently on the 4th place of the Brazilian beer market. When
the product reaches the final consumer, it earns a high tax burden, higher than any
other countries, causing their price to be much higher compared to other
producing areas. Also, the focus of the company is a younger group that doesn’t
really have money to purchase their products. There’s also a lack of investment in
the women.
 5. GOALS AND STRATEGIES

1. Decrease the cost of production

2. Expand the selling and consume in new markets
3. Take profit of the loyal consumers
4. Sell directly to the consumers
5. Attract a new public

6. ACTIONS

1. COST LEADERSHIP - With the new improvement of the equipment and

changes in the costs of technology, it is possible to reduce the price of production
that will reflect on the final price for the consumers.
2. EXPANSION - Promote events in big cities that Heineken still doesn’t
have a strong market, like Salvador, Belo Horizonte and Porto Alegre. Also
sponsor the upcoming large scale events combined with the Brazilian tradition of
drinking beer in holidays. In order to increase the sales also in the winter time,
create events to incentive the consume.
3. CONSOLIDATION - Create a Heineken Club to the most loyal clients,
giving discount in event sponsored and made by the brand.
4. VERTICAL INTEGRATION FORWARD - Create a Heineken Bar in the
main streets of São Paulo and Rio de Janeiro to sell directly to the clients,
reducing the costs of distribution.
5. NICHE - Invest in publicity and advertising for women, not focusing too
much on the younger population.

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