The Comparison of the Domestic and Overseas Marketing Strategy of the Holsten-Pilsener, Holsten-Brewery AG Hamburg, Germany

Table of Contents

List of Tables

Section 1 – Background Information on the company
1.1 Size
1.2 Number of years in existence
1.3 Product range / portfolio
1.4 Number of markets served; overseas countries
1.5 Sales breakdown between domestic market and overseas markets
1.6 Reasons why the company internationalized

Section 2 – The domestic market in brief
2.1 Target Market
2.2 Positioning
2.3 The 4 P`s
2.3.1 P1 – The product
2.3.1.1 Product and product classification
2.3.1.2 Branding
2.3.1.3 Packaging
2.3.1.4 Stage of product life cycle
2.3.2 P2 – The Price
2.3.3 P3 – The place
2.3.3.1 Market intermediaries
2.3.3.2 Distribution
2.3.3.3 Getting products into distribution
2.3.4 P4 – Promotion
2.3.4.1 Advertising
2.3.4.2 Sponsoring
2.3.4.3 Sales promotion
2.3.4.4 Public relations
2.3.4.5 Personal selling
2.3.4.6 Corporate Design
2.3.4.7 Fairs
2.3.4.8 Product Placement

Section 3 – The Company`s International Marketing Strategy
3.1 The overseas international business environment (UK)
3.1.1 Demographic Factors
3.1.2 Legal Factors
3.1.3 Political Factors
3.1.4 Economic Factors
3.1.5 Technological Factors
3.1.6 Cultural Factors
3.1.7 Competition Factors
3.1.8 Social Factors
3.1.9 Physical Factors
3.2 Entry modes
3.3 The marketing mix in the overseas market
3.3.1 The Target Market
3.3.2 Positioning
3.3.3 Product
3.3.4 Pricing
3.3.5 Promotions
3.3.6 Place
3.4 Organizational structure

Section 4 – Conclusion

List of References

Bibliography

List of Tables

Table 1.1 Portfolio Holsten-Group

Table 1.2 Sales-overview 1998/99

Table 1.3 Sales of beer in segments

Table 2.1 Number of Breweries in Germany

Table 2.2 Individual beer consume Germany

Table 2.3 Packaging of Holsten-Pilsener

Section 1 - Background Information on the Company

1.1 Size

In 1999 the Holsten-Group increased its turnover by 20.1% to DEM 1907 million. This total was made up of the following sales breakdowns - 63% beer sales and 37% of non-alcoholic beverages sales (Annual Report 1999, p.21). The number of employees of Holsten worldwide amounted to 3170 at the end of 1999. This has gone up by 11% compared to the previous year. 2408 people are employed in the beer segment and 762 people are employed in the production of non-alcoholics beverages. The Holsten-Brauerei AG employes 1165 personnel and Holsten (UK) employes 56 people (Annual Report 1999, p.37).

1.1. Number of Years in Existence

The Holsten-Brauerei AG was founded in Hamburg-Altona in 1879 (www.focus.de, 23.10.2000).

1.2. Product Range/ Portfolio

The portfolio of the Holsten-Brauerei AG consists of two different elements, which involves beer-manufacturing and non-alcoholic beverages production (Annual Report 1999, p.6 introduction). It is necessary to stress in the beginning, that the trade name „Holsten Pilsener“ in Germany and „Holsten Pils“ in United Kingdom are one and the same product.

Table 1.1.:Portfolio of the Holsten-Group (www.holsten.de, analyst-conference, Frankfurt)

illustration not visible in this excerpt

The Holsten beer-company also offers a wide range of different beer types. The main trademark is “Holsten-Pilsener“. Other examples are:

-Holsten-non-alcoholic
-Holsten-Edel
-Holsten-Light
-Holsten-Export
-Holsten-Diet
-Holsten-Maibock
-Holsten-Festbock

(www.holsten.de, 17.10.2000)

In 1998 the Holsten-Brauerei AG decided to change from a cut-price-seller beer to a seller of high-quality (Premium)-beer (www.welt.de, 16.10.2000). In the domestic market the top-management at Holsten continued their strategy of holding on to profitable and well-established brands (“stars“) which include:“Holsten-Pilsener“ and “Lübzer-Pils“ and new brands were added to the companies portifolio like “Licher-Pilsener“ and “König-Pilsener“ . In total Holsten-Brauerei AG has a 10% market-share of the beer-market in Germany and therefore are one of the main market leaders in Germany (www.holsten.de, A. Rost, CEO, General Meeting, Hamburg, 15.06.2000).

1.4. Numbers of Markets Served: Overseas Countries

The foreign-business of Holsten-Brauerei AG consists of exporting, international partnerships and licensing agreements (Annual Report 1999, p.20). The trademark “Holsten-Pilsener” is exported in more than 80 countries (www.focus.de, 23.10.2000).

1.5. Sales Breakdown between Domestic Market and Overseas Markets

illustration not visible in this excerpt

The following overview shows the world-wide sales-market of the Holsten-Brauerei AG in 1998, 1999 and its change (in percentage):

Table 1.2: Sales-overview 1998/99 (http://www.holsten.de, 17.10.2000)

The worldwide sales of beer reached a new maximum of 9.5 million-hl (+18.3%) in 1999. The volume of non-alcoholic drinks was up by 13.1% to 10.4 million hl in 1999 also. The Holsten-Group volume of production was 26.3 million hl in total. This was an increase of 21.4% (www.holsten.de, 17.10.200).

Dividing the sales of beer into regional segments you get the following overview:

illustration not visible in this excerpt

Table 1.3 Sales of beer (compare annual report Holsten-Group, 1999)

The Holsten Group foreign business rose by 7.8% to 2.1 million hl of beer in total (Annual Report 1999, p.20). In Germany Holsten sold 7.4 million hl of beer (+21.8%) in 1999. In the UK and Ireland only 0.483 million hl was sold (analyst-conference, Frankfurt 17.04.2000 & www.holsten.de, 17.10.2000). In 1999 the trademark “Holsten-Pilsener” recorded its increase of total volume by 14.5% to 1.6 million hl (Annual Report 1999, p.6).

1.6. Reasons why the Company Internationalised

It is predicted that the consumption of beer in Germany will shrink yearly by 2% in the future (www.wiwo.de, 23.10.2000). Reasons for this development are:

- Downward tendency by
- a falling consumption per capita (1992-1999: -10%) [-compare to 2.3. (4 p`s)]
- the population structure (growing number of older people)
- Great variety of different brands
- Process of concentration in trade
- Entries of potential european competitior[www.holsten.de; analyst-conference, Frankfurt, 17.04.2000]
- Overcapacities of breweries (25-30% of the german breweries) (www.holsten.de, A. Rost, CEO, General Meeting, Hamburg, 23.10.2000)

In Germany there are 1277 middle-sized breweries, who are confronted with competition from large companies from abroad on the international market. The main strategy of Holsten is to invest in shares of companies with strong and established brands in order to improve their competitive position [Annual Report 1999, p.14/18]. That´s why Holsten is looking for further takeover-candidates at home and abroad (www.wiwo.de, 23.10.2000).

Section 2 - Domestic Marketing Strategy in Brief

2.1. Target Market

Holsten`s strategy is based on the principle of “friendship”; it is the standard theme for all of Holsten Marketing-Mix [Annual Report 1999, p.9]. Therefore the company’s slogan is “for the friendship”. On the Holsten-homepage you can easily find a link to “forum of friendship ”, where you have the opportunity to register into a visitors` book, to “chat”, to contact new people, to send electronic postcards and finally to win some prizes. It is remarkable that the potential internet-user is addressed by his/hers first name, that is not always the case in Germany, but it demonstrates that young people are very important as a target-group to Holsten (www.holsten.de, 17.10.2000). The trademark of the Holsten beer-company, the “Holsten-Pilsener” is addressed to people, who prefer a high-quality beer and who are loyal to their brand (www.holsten.de Die Marken 18.10.2000). From July 2000 this type of beer is also obtainable in a new relockable PET non-returnable bottle. This new way of packing satisfies the requirements of the young, mobile consumer. It is obtainable at filling stations, convenience-shops and also at special events, where this target-group normally prefers to consume this product (Holsten Ritter Magazin 02/2000). Young people tend to change their buying -behaviour in favour of the internet, Holsten wants to take the chance to get in contact with the general public, who consume their product and also with journalists and investors by using the Internet (www.holsten.de, A. Rost, CEO, General Meeting, Hamburg, 15.06.2000).

2.2 Positioning

Due to the higher yield in the upper beer market sector Holsten repositioned Holsten Pilsener in 1998 (CEO A.Rost, 15.6.00). This was supported by retailers demands for brands, which have high profit margins, rather than lower positioned brands (Ritter-Magazin 3/2000). Holsten created an image for Holsten Pilsener as an up-market premium brand with a young and modern appearance, which is linked to the values of friendship (annual report 1999). Research has shown that customers are willing to pay high prices for beers, with an up market approach / image (Getraenkefachgrosshandel 7/98). The physiological price limit for a box of 20 0.5l bottles was considered to be 20 DEM in 1998 (Dr. D. Simon, www.sachon.de, 19.10.2000). Holsten positioned its product above 19 DEM. and reached a well-established positioning in the upper level of the market, which has a high commitment about quality and product-image (www.sachon.de, 19.10.2000).

2.3 The 4 P’s

illustration not visible in this excerpt

Due to high competition and declining markets Holsten (see table 2.1 & 2.2) decided to establish Holsten Pilsener as an up-market-product. The marketing strategy was redeveloped and re-launched in 1998 (Holsten annual report 1999).

Table 2.1, own table, based on www. Table 2.2, own table, based on www.

brauer-bund.de, 19.10.00 brauer-bund.de, 19.10.00

2.3.1 -The product

2.3.1.1 Product & Product Classification

Holsten Pilsener is a lager, but in Germany pils(ener) is a brewing technique with a generic brand, which is similar to lager. (www.bier.de, 27.10.2000). It is brewed under the regulations of the “Reinheitsgebot” which states that only water, malt, yeast and hops are the only ingredients allowed in the production of beer. The alcohol content of Holsten-Pilsener is 4,8%, which is 0.2% lower than the alcohol content of Holsten Pils in the UK. Even though imported beers that are not brewed under the “Reinheitsgebot” consumers have a great commitment to this regulation. Therefore domestic breweries have agreed not to change brewing procedures within Germany (www.brauer-bund.de, 19.10.2000) Holsten-Pilsener is a premium pils. The product is bottled and is available in kegs. Therefore it is regarded as a quality product which is allowed to call itself premium pils (“Bit-Magazin”, 4/98).

2.3.1.2 Branding

The trademark “Holsten” is a family brand. The Holsten-Pilsener brand is identified by adding the generic brands “Pilsener” and “premium”. In addition to this a visual logo, featuring a riding knight, is presented (www.holsten-gruppe.de, 27.10.2000).

2.3.1.3 Packaging

illustration not visible in this excerpt

Holsten-Pilsener is available in cans, kegs, glass-bottles and PET-plastic-bottles. Each packaging is promoted for different purposes (www.holsten-pilsener.de, 27.10.00).

Table 2.3, based on www.holsten-pilsener.de and Esser, H., Holsten-Brauerei AG,

Hamburg, 27.10.00

2.3.1.4 Stage of the product life cycle

Holsten-Pilsener could be considered as being in the maturity stage: it is well known and established brand on a highly competitive German market. Due to its re-launch in 1998 sales are still on the increase (Holsten’s annual report 1999; www.brauer-bund.de) and the increasing availability (annual report 1999, www.welt.de) of Holsten-Pilsener it would be more accurate to state that Holsten Pilsener its in the growing phase like a classical “star”.

2.3.2 The price

Holsten’s price strategy for Holsten-Pilsener is to sell it at a premium price (CEO, A. Rast) and pricing is orientated on high-level price stabilisation and profits. Price reduction, targeted on higher sales, would end up in price wars and there would be less differences between premium and regular beers. (Compare Dr. D. Simon, www.sachon.de, 19.10.2000). The approach of a consequent up-market strategy is more likely for reaching higher profits and to hold or improve market share (see positioning; www.sachon.de, 19.10.2000) within the premium market (CEO A. Rost 15.06.00, annual shareholders meeting).

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