Sabmiller Marketing Plan- Group 1 1i3q65

GROUP 1 ADAEZE MBA, BASUMOH AKPAN, STEPHANIE ERIGHA, DANIEL UDO, AKINOLA OWOLABI, DIDI AGBAHOR

MARKETING PLAN

TABLE OF CONTENTS I. II.

Executive Summary Situation Analysis a. Internal environment i. Organization background (the Company, Mission) ii. Products/Offerings iii. Positioning iv. Historical results b. External environment i. Markets ii. Competitive environment (analysis of Current and Potential Competitors) iii. Economic environment iv. Demographic environment v. Social and cultural environment vi. Political and legal environment vii. Technological environment c. SWOT analysis: Analyze the business environment as follows: i. Strength and Weaknesses considering company’s internal attributes ii. Opportunities and Threats considering external factors d. Critical issues

III.

Marketing Objectives

IV.

Marketing Strategies a. Target markets b. Product strategies c. Pricing strategies d. Promotion strategies e. Distribution strategies

V.

Financial Projections a. Sales Volume Forecast b. Marketing and Service Provision costs c. Estimated Income.

VI.

Controls a. Implementation b. Marketing Organization c. Contingency Planning

I.

Executive Summary

II.

Situation Analysis P a g e 1 | 20

a. Internal Environment Organization Background SABMiller Plc is a multinational brewing and beverage company headquartered in Woking, England before it was acquired by Anhe-Busch InBev in October 2016. Before the acquisition, it was the world's second-largest brewer measured by revenues (after Anhe-Busch InBev) and was also a major bottler of Coca-Cola. Its brands included Fosters, Miller, and Pilsner Urquell. It operated in 80 countries worldwide and in 2009 sold around 21 billion litres of beverages. Since the acquisition, SABMiller has been a business division of Anhe-Busch InBev, a Belgian corporation with headquarters in Leuven. SABMiller operates three breweries in Nigeria; Pabod Breweries Ltd in Port Harcourt Rivers State, International Breweries Plc. in Ilesha in Osun State, Intafact Beverages Ltd in Onitsha Anambra State. The most recent of which is the brewery at Onitsha, Anambra State, this was a green-field brewery facility with an investment of US$100-million. The launch of this new brewery, was strategic in revamping Hero Lager, a regional brand whose performance has since caused an uproar in the Nigerian beer industry. By 2014 a decision was made to further invest US$110 million to increase the current annual capacity from 700 000 to 2.1 million hectoliters. Currently SABMiller has 15% market share in the Nigerian beer industry. Vision To become the most sought after beer manufacturing company in Nigeria, offering consumers great tasting quality beverages that deliver value for money. Product and Offerings SABMiller through its 3 breweries offers the following range of products: Stout  Castle Milk Stout  Castle Milk Stout Chocolate

Lager P a g e 2 | 20

    

Hero Trophy Redd’s Cider 1960 Rootz Eagle

Malt Drink  Beta Malt  Grand Malt Positioning Hero beer has an alcohol of 5.2% and is positioned as an economy brand with superior quality. It is sold both in 330ml can and in a 600ml bottle. Even though SABMiller did not fail to realise that eastern Nigerians are the top beer drinkers in Nigeria and by such designed Hero to be a regional brand, it is becoming a national brand by demand. Hero beer, is a south-eastern regional brand, that is strongly rooted to the beliefs and culture of the Anambra indigenes. Made with a mix of malt and local sorghum, it can be identified truly as a Nigerian beer. The richness of Hero larger is reflected in its distinct, satisfying and unique taste all infused in its rich golden colour. Due to the continuous increase in recession, consumers have become more price sensitive and are generally gearing towards economy larger. This has been to the good of Hero, which has become a strong brand and has over taken competition in the south-eastern region of Nigeria. It is important at this point for SABMiller to expand the brand to reach consumers in more regions of the country to gain more market share, whilst maintaining its quality and standards. Market Needs Hero lager offers value and benefit at an affordable price and as such is responding to the growth in the request for economy larger. The increase in the demand for economy larger is due to the decline in consumer purchasing power, which has led consumers to become price sensitive. The brand awareness of Hero is very high in the eastern regions and it should be positioned to reach a wider target audience. There is a need for Hero to consciously connect with consumers across the country.

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The Market Hero beer is perceived to be majorly an eastern beer, brewed in east and meant for easterner. Hero bottles bear the rising sun that appeared on the Biafran flag, thus it connects emotionally by tapping into the area’s nationalism. Hence it can be inferred that Hero was developed as a result of deep local consumer insight and positive associations with the Igbo tribe. Beer drinkers have christened Hero ‘Oh Mpa’ (Mpa means father in Igbo language). The key to the success of Hero is based on the level of loyalty, a lot of consumers can relate to the brand. The fact that it has great taste and offers superior quality at an affordable price is also a key factor. Market Demographics Most consumers of Hero are within the age group of 25- 50, (a customer once said, it is not the old that drink it but the young who did not experience Biafra and would like to know about it) 70% of which are males and the other 30% are females. Furthermore, the consumers fall within the low-income earners of between N45,000 -N150,000 per month. Hero is most popular amongst the people of Anambra and is very visible at every occasion, pub, road side t etc. Consumers’ can also be found scattered around the neighboring states and other states like Osun, Ibadan, Port-Harcourt and Lagos. Market Trends Due to the increasing recessions rates, most alcohol consumers have begun to migrate from the high end exotic drinks to beers which are more affordable, especially those in the economy tier. What we are witnessing in Nigeria currently is that 75% of Alcohol drinkers have migrated from Fine wine and spirit to Beer. The reduction in purchasing power has also impacted significantly in the beer industry with every brewer producing economy lager to stay relevant in that market. Also, there has been a growth in youthful population as Nigeria currently has a median age of 19 years and 55% of the population within the age bracket of 15 to 65 years, which s for over 80% of alcohol consumption. The growth trend in this age group is expected to drive beer consumption higher. Market Growth There has been a significant growth in the market by SABMiller. With the investment of over US$100 million in Nigeria, SABMiller has been able to P a g e 4 | 20

intensify its penetration into the Nigerian market through strategic regional approach. The most popular brands such has Hero and Trophy currently gain a lot of patronage with markets in the South Eastern and Western parts of the country. SABMiller has continued to grow over time with a 23% volume growth in its Trophy lager brand, while Hero lager volumes more than doubled with the increased capacity at its Onitsha brewery.

b. External Environment Markets The Nigerian beer market consists of three major players; Nigerian Breweries, Guinness Nigeria PLC, and SAB Miller. All three breweries produce beers that have a serious cult following in the segments they play in. Until the entrant of SAB Miller into the market the beer market was controlled by Nigerian Breweries, operating in the country since the 1960s. In Nigeria, the legal age of purchasing beer is 18 years of age, and this age falls within the largest distribution of Nigeria by age segment as at the last population census. Over 50million people are aged 18, this means that there is an availability of possible beer drinkers, and the market will keep growing as the 18year olds get older. This means the beer market has plenty prospects. Our beer intends to leverage on the local scene in the South East and South – South, and play as a beer in that region. We intend to connect on a personal level with the cultural heritage of the of this region by appealing to their emotionality. SAB Miller came into the country and strategically focused on reviving old known brands that had died away, they were hoping to leverage on the emotionality of these old brands. To date, they have successfully positioned Hero as the beer of note in the eastern part of Nigeria, they did this amidst fierce and intense competition in the market. Competitive environment Competitors)

(analysis

of

Current

and

Potential

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As at February 2016, the Nigerian beer market was worth an astonishing $2.6BN, despite the recession, proving that the market is recession proof. The beer industry in Nigeria is an Oligopoly with two top beer brands in Nigeria as at 2015; Guinness Stout (Diageo) and Star Lager Beer (Nigerian Breweries), leading the pack in sales and popularity. Over the years, they have built strong distribution systems and thus penetrated the Nigerian market with Guinness enjoying a 23% share of the market, Star Lager enjoying 67% of the market, and other brands sharing what is left. The number 1 beer brand in the country as at 2015, Star Lager, was launched in 1940s. It is the beer of Nigeria for Nigerians. It was created because Heineken was sceptical about giving out the license to brew Heineken beer in Nigeria in the 1960s. It went from being a local brand to being a top brand in Africa and it is consumed in Neighbouring African countries. Guinness Nigeria was incorporated in 1950 and listed on the stock exchange in 1965. It produces a strong, dark beer, and has been able to use outstanding ments to push this brand. The beer environment in Nigeria is highly competitive, there is a struggle amongst distributors of these brands to push their products in the very viable Nigerian beer market. The barriers to entry are very high because the business is this very capital intensive and quite challenging. However, to make it in this industry, one must concentrate on segments that have been left out by the major brewing companies. This is the strategic direction our brand is hoping to leverage on. We are also going to work on creating a distribution unit that would help us move our brand in a market that is so intense. Economic environment The economy is currently facing a recession, inflation rates are high and rising and the unemployment level is on the rise. This makes the country in P a g e 6 | 20

theory quite unattractive for new businesses and investments. The continued increase in the population of the people also leads to more strain on the available economic resources. Also, due to the continued reduction in the price of a barrel of oil, the available foreign exchange has reduced causing a scarcity and throwing our very import dependent economy into chaos. The economic environment in the east consists of businesses run by families, most of these businesses are not taxed, this signifies an availability of cash in the region amongst the business men and women. Our strategic direction is to use more locally sourced raw materials for brewing our beer thus reducing our cost of production and allowing us play in the cost and price wars. This we hope will help give us an edge. Demographic Environment The demography in question is the Eastern region, however we are expanding to the south-south region in Nigeria. This region comprises of male and female who are spread into different segments of drinkers; , mid-tier and low segments, but consists majorly of beer drinkers in the mid to low tier segments. They also consist of the upwardly mobile male who work in banks, politicians, Night club owners, as well as business men, etc. The language mostly spoken is Igbo language as this region majorly consist of Igbo people who are attached to their roots. The Igbos pride themselves to be ambitious, hardworking, industrious people who will do anything to make it in life. This region is also characterized by men and women who regularly visit their country homes from major cities all over Lagos for village meetings, traditional weddings, chieftaincy title ceremonies, festivals, etc. Occasions like these call for a lot of drinking. The south-south region also has the same demographic characteristics of individuals, and in addition consists of oil workers who have very high discretionary spending at their disposal.

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Social and cultural environment The region consists of people who mostly practise Christianity as a religion. They are more disposed to drinking unlike their Muslim counterparts. The of this region are known for being very committed to grass root politics and are loyal to their leaders. They have a very strong cultural affinity and will readily connect with a product that represents this part of their life. Political and Legal Environment The country is under the democratic dispensation and it has been this way since May 29, 1999. With the recently concluded election that saw the swearing into office of General Muhammadu Buhari, there has been a lot if shaking up of industries and political offices. Technological Environment The technological development in the country is growing steadily, although at a slower rate when compared to other more technically advanced countries like the USA. The world is more a global village than ever before and so there are more digital interconnections to Nigeria from any place in the world at any time. Technologically, the country is at a point where it is open to even more technological growth, we see that there a whole lot of start-up companies that exists in places like Lagos State. Also, top tech companies such as Uber, Google and Facebook have made their way into the country.The introduction of more technology strides means we can deliver services better and even more efficiently now in Nigeria.

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Nigeria Brewry Industry Market Share 10% 24%

7%

Heineken NV Diageo Plc SABMiller Plc

60%

Others

c. SWOT Analysis Strengths 1. Strong brand position- SABMiller Breweries has established its brands in different regions of the country. The Hero beer has warmed its way into the hearts of beer drinkers in the South-Eastern part of the country. They have accepted and identified with the brand as ‘their own’ possibly because its logo bears resemblance to that of the Biafran flag and also due to the fact that they regarded the pioneer leader of Biafran state, Late Emeka Ojukwu, as a hero. In most places where the beer is sold and served, beer drinkers pay some sort of homage before settling to drink the beer. Also, most of the competing brands who were market leaders in the region have now been edged out since the beer (Hero) was introduced in August 2012. 2. Economies of Scale- SABMiller which is headquartered in England acquired four breweries in Nigeria, which include: International Breweries Plc, who had previously acquired three breweries to add to its portfolio namely: Intafact Beverages Ltd.(original producers of Hero), Onitsha, Pabod Breweries Ltd., Port Harcourt and Beverage Management Solutions Ltd., Surulere, Lagos. 3. International Affiliation- International breweries, is a subsidiary of SAB Miller Finance BV and SAB-Miller Plc Holding Company, a well-established brewery with several breweries around the world including Australia, P a g e 9 | 20

North America, Latin America, and Asia. SABMiller has now been acquired by the largest brewery company in the world, Anhe- Busch InBev. 4. Wide Range of Products- The company has a wide range of alcoholic beverages such as Trophy Lager, Trophy Black, Castle Lager, Castle Milk Stout, Redds, e.t.c, each of which appeal to different segments and consumer income brackets of the industry. They have recently expanded the product line to include Eagle larger, 1960 Rootz and Miller Genuine Draft, all of which have been well received by consumers. 5. Access to Capital- The breweries enjoys access to huge capital outlay from its parent company which has helped it in developing and launching new products and capacity expansion such as acquisitions of other breweries. Weaknesses 1. While turnover, profits and Earnings per share increased in 2016 from 2015, dividends reduced by 22% from 32kobo/share to 25kobo/share. This could lead to low investors’ and shareholders’ confidence in the business. 2. The Hero larger beer which is targeted to the South-Eastern region of the country is a weakness on its own since it had been restricted to the South-Eastern region from the on-set. 3. Competition has also posed as a weakness to the industry because of the segmentation and differentiation, SABMiller have been unable compete effectively and efficiently with other beer products that the competitors offer. 4. The product is not different from other competitor’s product. i.e. the threat of substituting the product is very high. 5. There is also a low penetration of the product to other regions of the country which may limit the credibility and brand awareness of the product.

Opportunities The company is yet to explore many underserved parts of the country as the current beer consumption in Nigeria is still under 10 litres per annum, compared to the global consumption of 27 litres per annum. Also, there seems to be an emerging market for health conscious non-beer drinkers, who like the taste of beer but not too strong. SABMiller Nigeria is yet to P a g e 10 | 20

explore this market by bringing out a beer that will cater for this group of drinkers. In addition, there are opportunities on how to reach the non-consumers of your product. There is a huge potential in reaching non-beer drinkers via online (social media) or through digital marketing. SABMiller is yet to explore this medium of advertising.

Threats The economic environment in Nigeria in which the company operates is very challenging due to the current economic recession, rising inflation, high input and finance costs, naira devaluation and depressed consumers’ purchasing power. Also, As at May 2016, there was an existing ban on beer importation into Nigeria. (Euromonitor International, 2016). This is a threat to the importation of any beer from its parent company. Another threat is competition. Nigeria is still an emerging market in the alcoholic drinks industry, particularly the beer segment. Any new player in the industry may capitalize on this opportunity and cause a major threat to those already in the business- thus reduce market share and profitability.

d. Critical Issues There are several issues critical to the brewery industry which should be given utmost consideration: 1. The distribution strategy for any brewing company in the industry is a critical success factor. Nigerian Breweries Plc is dominating the market currently due to its extensive distribution network system, especially in the rural areas. SABMiller Nigeria to gain market share must create a more effective distribution strategy to remain highly competitive. Bigger breweries can acquire smaller, regional breweries to leverage on their existing distribution networks. 2. There is a shift towards economy lager due to price considerations and the prevailing economic situation. SABMiller has shaken up the market with the introduction of Hero and Trophy, which are in the economy lager segment and other breweries have begun to follow suit. This segment continues to grow despite the prevailing economic condition. 3. Due to a growing population of the country becoming increasingly health conscious, it is pertinent that alcoholic beverage companies appeal to the P a g e 11 | 20

emotions of its consumers in marketing their products. This can be seen as some brewery companies have positioned their beers as ‘regional’ so that they can be well received in different communities around the country. 4. Several breweries around the country have been acquired by larger indigenous breweries, and even larger breweries being acquired by even larger foreign breweries. SABMiller Plc, the parent company of SABMiller Nigeria was recently acquired by the world’s largest beverage and brewery company, Anhe- Busch InBev (AB InBev), which has its headquarters in Belgium.

III.

Marketing Objectives With the marketing plan, we hope to achieve the following in the coming year:     

IV.

Achieve 20% increase in sales Increase brand awareness by 30% Grow market share by 15% Increase new customers base by 25% Improve stakeholder relations by 10%

Marketing Strategies Target Markets Even though we have launched nationwide, research has shown that there is still an underserved market in the South-South and South-Eastern Nigeria. There is a rapid emergence of an aspirational middle class who are price sensitive, fun-loving, with a predisposition to want more for less and are social drinkers. Information deduced from these insights has led us to segment a target market Hero will serve based on the following criteria: Demography - Gender: Male and Female - Age: 18yrs – 25yrs New drinkers and people who don’t have a preference 26yrs- 40yrs Regular drinkers 45yrs - 60yrs Brand loyalist 60yrs and above Brand loyalist P a g e 12 | 20

-

Income range: 18yrs – 25yrs (discretionary spending depending on allowance) 26yrs – 40 years ( N600,000 – N5,000,000 per annum net of tax) 45yrs – 60yrs (N600,000 – N5,000,000 per annum net of tax) 60yrs – above (pensioners)

Geographic location - South-South and South-Eastern regions of Nigeria comprising of the following States (Abia, Akwa Ibom, Anambra, Bayelsa, Cross River, Delta, Ebonyi, Enugu, Rivers, Imo, Edo*.) Psychographic or Lifestyle - Value driven - Fun-lovers - Aspirational - Adventurous - Habitual drinkers - Football enthusiasts - Technology savvy and social media active Specific Needs of Category With a population of over 170million people and with the majority of the populace living in the low income to mid-tier segments of the economy, the need for a tasting quality beer for an ever-growing market, sold at affordable prices and available in every nook and cranny of their geographic locations can be categorized as a ready market. The need for emotional connection to products where we can use our ecology friendliness and our economy booming policy of sourcing raw materials from within thereby providing jobs and bettering lives. While also leveraging on the heritage status the brand carries as well as its quality elements. Segment Potential There has been a shift in the choice of beer due to reduction in buying power and this has led to an increase in the sale of low priced beer. The two biggest players in the industry were not quick to respond to the change, thus creating a large underserved market. SABMiller was quick to respond with Hero for the Eastern region but there is a limited range or variety of beer product offerings in this sector. There is potential for us to expand beyond our present geographical location to gain more market share. We can leverage on our brand reputation as a quality brewer in Africa and the biggest in Nigeria while taking advantage of our wide distribution network to wade off competition. Hero is currently a fierce competition to other value beer. P a g e 13 | 20

Positioning - Economy lager with quality made from home grown barley and sorghum - Tagline – “Be the hero” - Value Proposition: Our bottom line focuses on our People, our Planet our Profits Product - Description: Lager beer, produced using locally sourced Sorghum and barley, with 5.2% alc with a blend that makes it not so strong nor too bitter for the average beer consumer. - Design: Green transparent bottle with Gold and Red cork and 2 labels (one 0.5cm X 0.5cm foil wrapper at top end of bottle to cork and one 2.5cm round label from the mid-point of the bottle to the bottom) Packaging: All product packages will be branded to specification a. 330ml Can b. 600ml Bottle c. 300ml Bottle d. Draught beer: served from a cask or pressurized keg rather than the conventional bottle or cans - Product Quality: Made from fresh refined Nigerian grown sorghum, refined and brewed to meet taste standards as set to compete in the economy lager sector of the beer industry - Benefit: affordability, availability, heritage and good quality, made with Nigerian products and planet friendly beer. - Product Range: Hero will stretch our product range in the economy lager segment giving us more market share as we meet the needs of more Nigerians. - Product Life Cycle: Hero is in the growth stage in the product life cycle Pricing Strategies - Pricing strategy is neutral N 250 at par with other economy lager Distribution - Convert sub-distributors of other brands to become major distributors of Hero, hence according them the same benefits as the competitor’s major distributors - Competitive margin (----%) for distributors as incentive to push sales of Hero P a g e 14 | 20

-

-

Exclusive draught beer dispensing partnerships with popular regular bars and pubs in strategic cities in these regions. These will serve as experiential centres, where people are compelled to consume the product at point of purchase hence potential for instant repeat purchase should the product connect with his yearnings and make a good impression. 4 regional distributors, 8 major distributors per State and over 100 retailers per State in the 1 st year, there will be a 30% increase in actions to expand the distribution network year on year. Retail outlets will include bars, restaurants, clubs, hotels and leisure centres etc.

Promotion Strategies: In the execution of this product launch in the South-South, we will adopt an integrated marketing strategy to create awareness through communication of the unique brand elements and product features. Hence influencing buying behaviour and making sales in a cost efficient and effective process. a. Above the line(ATL): - Invest in billboards per city to enhance brand awareness - Conventional media or Radio and TV should receive a tangible lump of the budget as sponsoring, sports, music and entertainment related programs on this media’s will reach our target market as statistics show that they are inclined to watching and listening to this genre of programmes. - Sponsors a reality TV show or big showbiz event who target the same market e.g Big Brother Nigeria, West African Idols, Akwa Ibom Anniversary Festival, Calabar Carnival etc. - Print can have a meagre 15% of the advertising spend - Sales promos

-

-

b. Below the line(BTL) Road shows and activations where experiential marketing tactics such as “play and win a beer tasting” can be done, and consumers will experience the brand alongside the product. Sponsorship of festivals and youth entertaining events for in-kind benefit of publicity and product sampling Branded promotional materials that includes (fliers, posters, banners, branding materials for retailers and distributors) Branded memorabilia for distributors, retailers and or winners of interactive games.

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Digital Marketing and Search Engine Optimization(SEO) -

V.

The technology savvy world of today have resulted in the dependence of our target demography on social media and the internet for their information needs, we will have an extensive social media campaign aimed at reaching out to our specific target market using data analytic tools.

Financial Projections Actual Projections

2012

201 3

201 4

201 5

2016

2017

201 8

201 9

1758 .5 1,846

1,92 8

2,00 1

% Share

1,53 1,59 1,66 1,510 6 9 6 1.2 0% % 3.5% 5.6%

6.5%

7.5%

7.5%

Hero Litres

-

114

145

150

Million Litres

VI.

18

56

93

7.5% 138

Controls P a g e 16 | 20

Hero beer entered the market as an economy lager beer, leading the pace in the segment. As a popular brand in the South-Eastern region of Nigeria, it is pertinent that some controls are put in place to maintain our position as number one in that segment and continually increase sales. The following controls are necessary to achieve this:  Customer - we recognize that we continuously need to engage our loyal customers to know how we can continue to cater to their needs and also how we can serve non-customers.  Periodic monitoring and evaluation of our distribution strategies – to identify which of our strategies need to be reviewed, changed or improved  Continuous research on process improvement- through market surveys  Sales Strategy reviews and evaluation- periodic review of actual sales vs. projected sales Implementation We will implement the strategies outlined to achieve set objectives.  Target new customer segments- (young drinkers, non- consumers which dislike strong tasting beer but like the taste of beer nevertheless)  Push sales by increased distribution through on-trade channels – which is the leading channel for alcoholic drinks  Expand distribution network through acquisitions  Review and create a new marketing budget to accommodate all strategies Contingency Our contingency plan will be to align our strategies and plans with those of the parent company

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References  International Breweries Plc. (n.d.). Retrieved April 19, 2017, from https://beverageindustrynews.com.ng/index.php/tag/internationalbreweries-plc/  NewCo. (n.d.). Retrieved April 19, 2017, from http://www.ab-inbev.com/  2016 Annual Reports & Financial Statements. (2016, May 5). Http://www.internationalbreweriesplc.com/documents/International _Breweries_Annual_Report_2016.pdf. Retrieved April 19, 2017.  Mbachu, D. (2014, April 10). SABMiller's Hero Taps into Biafra Nostalgia in Nigeria. Retrieved April 19, 2017, from https://www.bloomberg.com/news/articles/2014-04-09/sabmiller-s-herobeer-taps-into-nostalgia-for-biafra-in-nigeria  Lin, C, (2014, January 22). Business Environment Analysis: NigeriaRetrieved April 20, 2017, from http://www.cliffordlin.com/businessenvironment-analysis-nigeria  Itnewsafrica Follow. (2013, September 19). Technology in Nigeria. Prospects & challenges for development. Retrieved April 20, 2017, from https://www.slideshare.net/itnewsafrica/technology-in-nigeriaprospects-challenges-for-development

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 Ekanem, S., & Etiowo, J. (n.d.). Literacy and Technological Development in Nigeria: A Philosophical Diagnosis. Retrieved April 20, 2017, from https://www.ajol.info/index.php/Iwati/article/view/57654

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