HEINEKEN BRAZIL

UNIVERSIDAD EUROPEA DE MADRID Business Communication

Marketing Plan Carolina Coy Maria Cristina T. M. Paixo 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 worlds leading portfolios of beer brands and is one of the worlds 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 Governmental interventions Lei Seca (law that make the
supervision of drinking and driving more efficient and serious). Economic and Environmental Factors

Improvement of equipment Changes in the costs of technology

Social Factors Young people dont have financial potential to buy Concentration of buyers in bigger cities Brazilian life style, traditional habits of drinking beer to celebrate Increase of the leisure importance Population with high purchasing power

Increase of sales on holidays (especially

in Carnaval) Brazil is the 4th in consumers of beer High price of the product Influence of seasons on the consume (in the summer is higher) Recycles Law of packages 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 "Litro" (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 So 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 dont 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 dont 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 So 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, exdirector 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 doesnt really have money to purchase their products. Theres 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 doesnt 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 So 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.