International Expansion Strategy of Glaabsbraeu towards the Chinese Market

A Small Brewery's Market Entry Strategy


Term Paper, 2021

21 Pages, Grade: 1,7


Excerpt

Table of Contents

1. Introduction

2. Glaabsbräu Brewery

3. Chinese Market
3.1 PESTEL Analysis
3.2 Culture Map
3.3 Business Environment

4. Market Entry Strategy
4.1 Entry Mode
4.2 Four Ps

List of References

Table of Figures

Figure 2.1: Glaabsbräu’s Logo and Claim

Figure 2.2: Examples of Glaabsbräu’s New Product Design

Figure 3.1: Erin Meyer's Culture Map

Figure 3.2: Annual Growth Rate of Beer Import Volume in China 2019

Figure 4.1: Common Market Entry Strategies

1. Introduction

In this short paper the internationalization strategy of a small German brewery towards the Chinese market is presented. First the brewery and its products are introduced shortly. Afterwards, the target market is described. The discussion about the market entry mode follows and the marketing mix ends this report.

The chosen brewery is Glaabsbräu, founded in 1744 and located since in a small town in Hessen, Germany. Glaabsbräu recently went through a modernization process regarding its production, marketing, and products, which makes it a traditional but also a competitive and innovative brewery.

China as a target market was chosen because the task claimed not to thematizes a European country as European beer markets were discussed very detailed in the intensive prominence Erasmus+ program. Moreover, the European beer market is already saturated and aggressively competitive.1 Whilst the Chinese market, especially the alcohol-free beer and craft beer market is increasing. German products are highly valued in China and to drink foreign beers is considered as a status symbol and represents great taste.

2. Glaabsbräu Brewery

Abbildung in dieser Leseprobe nicht enthalten

Figure 2.1: Glaabsbräu’s Logo and Claim2

The family-owned brewery “Glaabsbräu GmbH & Co.KG” is located in Seligenstadt, a rather small town with approximately 23,000 inhabitants in Hessen, Germany.3 Its claim “Aufregend Anders” can be translated to “excitingly different”, see figure 2.1.

Founded in the year 1744, Glaabsbräu belongs to the oldest breweries in Hessen and celebrated its 275-year jubilee in 2019, whilst counting eighteen employees.4 Current CEO is Robert Glaab in 9th generation5 and Emmanuelle Bitton-Glaab.6

The brewery recently went through a modernization process, in order to be competitive in a decreasing market. Therefore, Glaabsbräu invested into a new brewery facility, which was put into operation in 2015.7 The new brewery is not only a production facility but also a touristic showplace. Glaabsbräu designed the brewery in order to demonstrate the brewing process to visitors, who can sit on grandstands, and offers different kind of tours.8 Moreover, in 2017 Glaabsbräu modernized its brand identity and switched to bottles with bottle caps. The total investment was more than €4.5 million, what plainly exceeds the yearly turnover.9

Through its products and production process Glaabsbräu wants to stand out from the competitors and mass production.10 Robert Glaab believes, that consumers are open for experimental sorts of craft beer and love regional products.11 Therefore, the brewery expanded the core range with craft beers.12 Many of Glaabsbräus old and new beers already won national and international awards.13 The German Food Society (DLG) honoured four traditional sorts in 2021.14 The Frankfurt International Beer Trophy also awarded two beers, one of them a craft pale ale.15 The World Beer Award also rewarded two of Glaabsbräus’ beers in 2020. “Glaab’s Grie Soß” as one of them is also one of Glaabsbräus new craft-beers and a local speciality.16

To Glaabsbräu’s product portfolio now count several alcohol free beers17, classic sorts like Export, Pilsener, Radler or Hefeweizen, craft-beers like “Vicky loves Pale Ale”, “Glaab’s Stöffche”, which combines beer with cider, or “Hopfenlust”18 and the traditional “Kellerbier 1744”, which is the only one that differs in outer appearance due to its link to the old brewery’s tradition,19 what one can perceive in figure 2.2.

The ingredients used are mainly regional and the beers are produced without chemical additives, according to the brewery’s website. The company claims, this makes their beer even more ambitious than the German purity law of brewery tradition demands, expect the craft-beers. Moreover, the process of production is allegedly Co2-nutral and resource-saving. Today, Glaabsbräu claims not only to be one of the oldest but also to be the most modern brewery in Hessen and one of the most innovative ones in Germany, due to the highly modern production facility and the innovative and awarded beer varieties.20 CEO Robert Glaab emphasizes that Glaabsbräu now can be viewed as a start-up with tradition.21

With a yearly production of 15,000 hl in its one and only facility in Seligenstadt and a yearly turnover of €3 million, Glaabsbräu is one of the smallest private breweries in the region.22 According to Meininger, Glaabsbräu made 10% more sales in 2019 than in the previous year 2018, whilst the beer market in general stagnated.23

Glaabsbräu is represented on several social media networks, such as Facebook, Instagram, and YouTube24. It is also member of a regional initiative called “Hessen à la carte” and founding member of the association “Freie Brauer” (Free Brewers).25

Abbildung in dieser Leseprobe nicht enthalten

Figure 2.2: Examples of Glaabsbräu’s New Product Design26

3. Chinese Market

China, formally known as “The People’s Republic of China”, is the world’s third biggest country and belongs to the Asian continent. With the help of the PESTEL analysis the target country China is elaborated in the following chapter. Consequential, the business environment with special regard to cultural differences is perused in order to understand the business customs and other country specific features to later on discuss the relevant variables in the marketing plan.

3.1 PESTEL Analysis

In this paragraph the political, economic, social, technological, environmental, and legal particularities of China are analysed. Due to the limited scope of this paper the PESTEL analysis focuses only on main objectives and is not elaborated in detail.

Political

Chinas is a Communist state. The country’s largest party, the CCP (Chinese Communist Party) controls all smaller parties. The current president XI Jinping is in office since 2013. He is also general secretary and central military commission chairman. In 2020 the government reinforced its political control internally and in terms of foreign policy. The biggest challenge today is the economic, social and public health impacts of the global COVID-19 pandemic.27 On the ranking of press freedom 2020 China ranks among the worst at rank 177 out of 180 nations.28 On the Freedom House index for political freedom, China is considered as “not free” and scores only 10 out of 100 points. The index evaluates factors like the electoral process, participation, freedom of expression and believe or functioning of government among others.29

Economic

China has the largest population globally and the world’s fastest growing economy for the last three decades with up to over 10% growth per year. Currently, it’s the world second largest economy with a GDP of $11.4 trillion in 2016.30 As the largest exporter China has one of the fastest growing GDPs globally. Due to the global COVID-19 pandemic, its economic growth was abruptly slowed. New sectors like online financial services or e-commerce in general are gaining dynamic. Public debt exceeds the gross domestic product 303% and accounts for about 15% of global debt.31

Social

China is a very old, ancient civilization, which can be back dated more than 3,000 years ago. Madarine is Chinas official language and the most spoken one worldwide. But there are many other languages and dialects spoken in the country.32 English is established as business language, if one of the parties does not speak Chinese. When it comes to religion, most Chinese are atheists. Nevertheless, Buddhism, Taoism and Confucianism influence older citizens and the culture as such.33 The global trend of urbanization also is true for China, as 300 million inhabitants moved from rural areas to cities in the last three decades. Accordingly, the nation’s public transportation is improving fast.34 There are six megacities within China and it also has 24 of the worldwide largest cities. A megacity is characterized by over 10 million inhabitants. More and more Chinese are able to afford privately held cars, as the middle class was prognosed to increase from 100 million to 700 million people by 2020. China is often regarded as a developing country in contrary to the already developed west. The living standards, healthcare system and education are issues, China addresses in order to ‘become developed’.35

Technological

Whilst being a developing country in regard of the mentioned aspects, China is leading when it comes to technology. 2014 every Chinese person has had a cell phone (on average), what made them the country with the most cell phones.36 Regarding technologies like electronics, machinery or automobiles China is catching up. Moreover, the country is a driving innovator when it comes to emerging areas such as renewable energy, telecommunication technologies, robotics, e-commerce or artificial intelligence.37 According to an article in the Wall Street Journal in 2014, “China’s technology sector is reaching a critical mass of expertise, talent and financial firepower that could realign the power structure of the global technology industry in the years ahead.”.38

Environmental

Beijing is Chinas capital but the largest city by population is Shanghai. The country boarders fourteen other countries such as Russia, India, and North Korea.39 Due to its wide territory, China offers different climatic zones. The temperature varies from -40C° in the northern winter to +40C° in the south during summer. With many historical and natural sites, like the great wall of China or the Terracotta Army China is a touristic magnet. With the second busiest airport worldwide and large (cargo) seaports, China is an active trading place.40 China ranks rather low on the Environmental Performance Index 2020 with 37.3 out of 100 points. The index measures environmental health issues like air quality or waste management and ecosystem vitality objectives like climate change issues, pollution emissions or biodiversity among other factors.41

Legal

China mainly adopted a legal code of Western type, similar to the German law after 1911. But since 1949 the system is also influenced by socialism. The first civil code dates from the early 1980s. Compared to Western laws, it is written rather incomplete, which enables arbitrary judgements. Encouraged by external and internal pressure, the law system is currently reformed.42

3.2 Culture Map

Erin Meyer’s culture map shows the cultural differences and distances among nations. In order to develop market entry strategies and a marketing plan it is crucial to take those differences into account. Generally, when doing business outside one’s home country, one must be aware of cultural caps, influencing international work and communication. As one can easily regard in figure 3.1, Germany and China are very distant from another on every given dimension. In this chapter these dimensions are further explained.

[...]


1 Vrontis, D. (1998)

2 Cf. Glaabsbräu (n.d.) a

3 Cf. Stadtverwaltung Seligenstadt (2019)

4 Cf. OP-Online (2019)

5 Cf. Klotz (2019)

6 Cf. Glaabsbräu (n.d.) b

7 Cf. Vogt (2019)

8 Cf. Glaabsbräu (n.d.) c

9 Cf. OP-Online (2019)

10 Cf. Glaabsbräu (n.d.) d

11 Cf. Seligenstädter Stadtpost (2018)

12 Cf. Glaabsbräu (n.d.) e

13 Cf. OP-Online (2019)

14 Cf. DLG (2021)

15 Cf. Glaabsbräu (n.d.) f

16 Cf. Glaabsbräu (n.d.) g

17 Cf. Glaabsbräu (n.d.) h

18 Cf. Frankfurt-Tipp (n.d.)

19 Cf. Glaabsbräu (n.d.) i

20 Cf. Glaabsbräu (n.d.) d

21 Cf. Vogt (2019)

22 Cf. Glaabsbräu (n.d.) d

23 Cf. Meininger (2019)

24 Cf. Glaabsbräu (n.d.) j

25 Cf. OP-Online (2019)

26 Cf. Glaabsbräu (n.d.) a

27 Cf. Santander (2021a)

28 Cf. Reporters Without Borders (2020)

29 Cf. Freedom House (2020)

30 Cf. Candice (2021)

31 Cf. Santander (2021a)

32 Cf. Candice (2021)

33 Cf. Santander (2021b)

34 Cf. Candice (2021)

35 Cf. Gavin (2021)

36 Cf. Garvin

37 Cf. Li (2018)

38 Cf. Mozur & Osawa (2014)

39 Cf. Candice (2021)

40 Cf. Candice (2021)

41 Cf. EPI (2020)

42 Cf. Santander (2021c)

Excerpt out of 21 pages

Details

Title
International Expansion Strategy of Glaabsbraeu towards the Chinese Market
Subtitle
A Small Brewery's Market Entry Strategy
College
University of Applied Sciences Aschaffenburg
Grade
1,7
Author
Year
2021
Pages
21
Catalog Number
V1003872
ISBN (eBook)
9783346382405
Language
English
Notes
The scope of the paper was limited to ten pages and therefore the analysis does not go into detail but gives a good overview.
Tags
Internationalization, Internationalisierung, Brauerei, Bier, Brewery, Beer, Market Entry, China, Market Entry Srategy, Expansion, Expansion Strategy, Markt, Markteintrittsstrategie, Glaabsbräu, Erasmus, International Management, Internationales Management, Chinese Market, PESTEL, PESTEL Analysis, PESTEL Analyse, Culture Map, Four Ps, 4 Ps, Marketing Mix, Vier Ps, Entry Mode, Einstiegsmodus, Franchising, Beer Market, Beer Market China, Bier Markt, Bier Markt China
Quote paper
Valentina Weiß (Author), 2021, International Expansion Strategy of Glaabsbraeu towards the Chinese Market, Munich, GRIN Verlag, https://www.grin.com/document/1003872

Comments

  • No comments yet.
Read the ebook
Title: International Expansion Strategy of Glaabsbraeu towards the Chinese Market



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free