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Copy of Saku Beer Case Study

Some thoughts and answers for the Saku Beer case study (Strategic Marketing).
by

Ignacio Ezkati

on 9 February 2013

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Transcript of Copy of Saku Beer Case Study

Case Study:
Product Portfolio Planning at
Estonia's Saku Brewery
PT1 Objective of the Case Study -> Application of marketing planning tools
-> Discuss the case using these tools Saku's Situation Saku is Estonia's biggest brewery.
It has been rated best-known beer brand.
Its complete beer portfolio makes 42.5% of the market. Ansoff Matrix Application of Tools The Analysis BCG Matrix The Answer in Brief 1. Cider and long drinks are clearly stars.
-> Invest to tranform into cash cows! 5. Water is poor dog with little potential.
-> Divest! 2. Domestic beer is already cash cow.
-> Keep investment (increase ads expenditure)! 3. Import beer segment is question mark.
-> Divest Guinness/Kilkenny 4. Soft drinks are clear poor dogs.
-> Divest! Detailed Recommendations Current Markets Segments Domestic Beer: 43% (leader)
Import beer: 18%
With Carlsberg (4th)
Tiny share with Guinness/Kilkenny

Cider: 24% (leader)
Long Drinks: 13% (leader)
Water: 15% (3rd)
Soft drinks: 4% (3rd) The Problem Sales of domestic flagship beer brand were falling from 48% (2002) to 42.5% (2003). The Question How should the product porfolio be transformed to address these changes and allow sustainable market success ? Product Lifecycle Too many different product types.
Beer is the main driver of their business. Reason for Originaal’s decrease may lie in internal product cannibalisation. Saku’s total beer sales increased while Originaal decreased. Recommendation is to focus on selected segments and divest from others.

Get rid of some of the smaller domestic beers (Tume, Hele, Presidenti).

Invest more in Cider and Long drinks. Especially long drinks because more small brands, hence may be easier to increase dominant position. Comment on Ads Expenditure Product Lifecycle Domestic beer is Saku's biggest market.
Decrease in sales may be related to decrease in advertisement expenditure:
4% reduction for Originaal
3% reduction total domestic beer brands Divesting from Kilkenny, Guinness, Soft Drinks and Water would save 10% of the advertising costs.

This budget should be used to focus on key markets: Orginaal, Cider and Long Drinks (currently only 14.5%).
Could also be used to support the Finland campaign. 6. Minimal risk of cannibalising domestic beers by entering other geographical markets. Import beers segment grows with about 12% which is good.
But only Carlsberg performs well with 18% (3rd). Divest from Kilkenny/Guinness, which would result in shifting red bubble more to the left.

Get rid of soft drinks market. Grows slowly (5%) and coca cola is predominant with 66%. Saku has only 4%.

Divest from Water because it is slowly growing (8%) and Saku is only third. Better to concentrate forces on other segments. Entering other geographic markets like Finland will probably only have a minor effect on the domestic beer market because Fins will not make their holiday depending on beer brands available in their country. And the price advantage in Estonia over Finland (even if Saku sells Originaal in Finland) will exist.

Getting rid of Kilkenny, Guinness, Soft Drinks and Water would save 10% of the advertising costs. This budget should be used to advertise Cider and Long Drinks, which is currently only 14.5%. Some of it should be used to support the Finland campaign. Ansoff Matrix
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