Stella Artois Branding Case

QUESTION 1

The choice to develop a global brand has not a clear outcome as of previous attempts by competitors have showed; some of them were successful (i.e. Heineken and Carlsberg) while others turned out as a failure (brand x).

This uncertainty comes from the presence of both pros and cons.

Regarding the formers, the development of a flagship brand will allow Interbrew to exploit the international trend, towards a more favourable evaluation of global brands, in the beer industry. The presence of a flagship global brand will allow to fully exploit this trend and to gain the expertise to sustain other global launches in the future.

Secondly, the launch of a global brand will logically permit to interbrew to lower operating costs as they will be divided by larger units. In fact the global approach will allow the company to leverage on an unique marketing activities (advertising, promotion..) across different countries, decreasing the need of studying strategies for each single nation. This will make it possible for Interbrew to lighten the corporate structure, saving a lot of resources and to achieve synergies globally. Additionally, there will also be a decrease in terms of unitary production costs since the fixed costs will be shared among more products.

These economies of scale will allow Interbrew to make higher margins that could be used for other activities and to obtain, from low operating costs, a key competitive advantage over competitors. (parlare del fatto che oggi il vantaggio delle brewer è sui lower costs)

The development of a flagship brand will also enable Interbrew to achieve sustainable growth in the global market and, most importantly, to become an even stronger global player in the beer segment.

On the other hand, a global strategy entails some cons.

First of all, the trend of internationalization in the beer market has not fully burst; thus there will be the problem of dealing with local tastes that will be still present in first years. This issue will be a first possible source of risk in a global strategy. Furthermore there is the possibility that the trend of internationalization will invert its course creating a problem of consistency between a global brand and the market.

Another aspect to take into account is the chance of cannibalization between the global brand and the local brands sold by the company. However this is not stated in the case so we assume that this will not be a problem. Moreover, this risk could be overcome by a strategy of putting the global brand in a different segment in comparison to local brands (for example putting global brands in light beer segment and positioning local brands in premium segment).

The third aspect that Interbrew should take into account is the need to switch the company structure from a decentralized one to a centralized one. This will mean that all the local managers will have to follow the central strategies and will not have a full power on the brand anymore. The fact that the company has already started a process of centralization, moving from a completely decentralized structure to a structure based on regions, makes this threat less relevant.

Related to the last problem, Interbrew will need to have a total control over the global brand in order to be consistent in managing it. This becomes more difficult when, as in this case, your presence in some countries is based on licensing and joint ventures. Interbrew will have to carefully choose the partners to work with in order to have a full consistency in the management of the brand.

To sum up, in launching a global brand there are both positive and negative aspects that have to be considered. In this case pros, even if they seem to be less numerous than cons, are stronger, and thus make it feasible to launch a global brand. In our opinion, if the decision is to target the whole country and not singular cities, the flagship brand should be positioned in light beer segment; otherwise the risk is to lose heritage and lore related to the country of origin of the premium brand.

QUESTION 2

According to our considerations there are several pros and cons for Stella Artois to be the Interbrew's flagship brand around the world.

Regarding pros, the most relevant one is the already developed brand awareness of this beer: Stella Artois is well known in both mature markets (Belgium, France, UK,) and growth markets (Hungary, Romania etc.) as a premium lager beer, so there will be no need to build salience.

Another pro is the Belgian heritage of Stella Artois: the connection to strong brew traditions, to quality and sophistication (non so se ha senso visto che poi diciamo che sophistication fa schifo nel positioning) can be exploited to launch the brand globally and to evoke associations in the mind of customers. This sense of heritage can be transmitted or reinforced through the Belgian Beer Cafè, a concept that could enhance the possibilities of Stella Artois to be a successful global brand and the opportunities to fully exploit the trend towards premium beers.

If we consider the launch in an urban environment, this aspect will be even strengthen since in cities there are usually higher living standards, higher concentration of premium brands, with flagship stores and department store, and a stronger seek toward quality. Moreover, this quality can be a good strategy in order to differentiate Stella from other global beers that are positioned as value for money products. Furthermore, the premium associations of Stella could serve as a way to make high margins.

The concept of premium, on the other hand, might not mean success worldwide. In fact, it might be that, at a national level, emerging countries in the beer segment might ask for cheaper beers following the trend of seeking low prices instead of the trend towards premium products. Thus, a premium beer such Stella Artois cannot be launched on a nation wide base in these countries. Since the concept of premium cannot be changed (the brand is sold as a premium one in its most important markets such as UK, France etc.), Stella Artois might not be successful in these markets.

Even if growing countries would ask for premium products, may not be possible to leverage so easily the Belgian heritage since they may not know the Belgian beer tradition. Thus it would be necessary to firstly build such associations in customers minds and this, obviously, would carry risks and higher costs.

Finally, there is a more practical problem: Stella Artois is not produced and distributed in all countries directly by Interbrew. Thus, to the problems of coordination inside Interbrew, it