East Asia Breweries Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

How do you expect the markets to develop?

In this case, the discussion must be about both the soft drink industry and the beer industry for each of the market segment of the world. Alexander is under consideration to expand into the Asian market with soft drinks, but it has an opportunity for a potential acquisition in Thailand. In Thailand, it can expand through acquisition of East Asia Beers that is a private company. It is better to discuss both the industries to take a suitable decision for its expansion plan.

Soft Drinks industry:

The soft drink industry is growing with a smaller number because the people with higher per capita income decline its purchases for the soft drinks. The individual goes for more affordable brands due to increase in their affordability to purchase high quality brands. The demand for sugared drinks (like soft drinks) is declining in European and North American regions due to the more affordability of these developed regions. The people in these regions are more health conscious; therefore they are switching toward low sugar drinks and sugar free drinks to avoid any future health consequences related to the sugar product usage. On the other hand, in Latin and Central America the usage of carbohydrate product is increasing for soft drinks and juices that taste sweet. The reason behind such change is the consumer preferences and values towards the drink and their cultural value changes the demand for soft drinks. However, the European and American region represents around 50% of the total World demand, but the decline in demand affects the diseconomies of scale for the manufacturers.

The strength includes that the economies of emerging markets has driven the grown for bottled water, soft drink and non-carbohydrate drinks in the Middle East, Asia and Africa. The growth is healthy in revenues, but the companies are facing a decline in its profitability due to increase in its cost of production. The increase in its cost of production is due to increase in the prices of the sugar, aluminum, plastic and corn syrup. The increase in these prices is also due to the increase in the transportation cost due to increase in the prices of crude oil. However, the industry growth in revenues in this region is expected to be 4.8% for 2014 and it is expected to grow in the future years. In this region, the demand for international brands is high, but the people in the Asian region are ready to accept local brands with quality. The demand for the soft drinks in any region is high for those people with age 15-34 years and the age demand are also increasing in the soft drink industry.

Beer industry:

The beer industry is growing globally; also in European and American region the demand has grown in the period of recession. The demand for beer industry is high in the developing countries. In last 5 year tenor, the industry went towards a significant consolidation to get the highest market share due to the growth in the industry. The growth is also expected to take place in the future years as well. The demand in the developing countries is increasing for high level crafted imported beers due to high increase in the per capita income of the developing country individuals. In the developing countries, the people are switching toward the drinking of beer from the traditional old drinks. The growth is also due to the higher priced of alcoholic wines therefore the alcoholic beer seems economical for them. The growth in the Asian region is high due to the higher number of developing countries over there that like to enjoy the imported beers.

East Asia Breweries Case Solution

There are certain factors those drives the demand for the beers, in the first place it is the distribution network. In the beer industry, the food distribution network can sell the products because in most of the cases, the manufactures do not sell the beer itself, but they require some intermediaries to deliver the beers to the consumers. The most consumers of the beer products are with age of 15-34 as same in the soft drink industry; however person with age of 18 years is allowed to drink alcohol in many of the counties. The cost of goods is expected to decline due to decline in the prices of wheat and future expected decline in the prices of aluminum. The beers are served in an aluminum bottle therefore the price of aluminum is largely going to affect the cost of goods. The emerging market is the major driver for the revenues as the markets like Japan, China is showing an increased propensity to purchase alcoholic drinks therefore the Asian region is attractive for alcoholic beers. The demand for the alcoholic beer seems to be declining in European region; therefore the demand satisfies through crafts beers to the developing economies..................

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