Russia: Positions of Brewing CompaniesThe review contains an analysis of interim performance of brewers in the first half of 2019. There are rather dynamic changes behind a modest industry growth. Baltika is again experiencing a stage of volumes and market share slid due to competition with AB InBev Efes. Because of the price competition and presence expansion in the modern trade company #2. has come close to the leading position. At the same time sales of Heineken Russia have continued growing which makes the premium part of the portfolio heavier. The market premiumization trend had been also confirmed by import brands. MBC and Zavod Trekhsosenskiy have been the most successful among federal market players. The market share of independent regional brewers and Ochakovo have continued falling as they are being squeezed out by the market leaders at their competitive fields.
Ukrainian beer market 2019: companies and brandsIn 2019 beer production and market have been still fluctuating about zero point. However, the past season was successful for brewers judging by the sales profitability. The price mix has improved due to rapid general market premiumization, as well as its particular aspect, the growth of import beer sales. By the season end AB InBev Efes improved its positions considerably. It turned out that consumers had not forgot Efes brands that had to leave the market, but started to recover rapidly. Against the stagnating market that meant sales decline of other companies, in the first place Carlsberg Group that most of all beneficiated from Efes exiting the market. PPB turned out to be stable to branding activity of its competitor and Obolon kept the same volumes and at the moment it is the absolute leader of the economy segment. The share growth of independent producers took place thanks to leading craft breweries, that so far do not have a big market weight, but they are rapidly gaining it.
Brewing industry in Kazakhstan 2019During the first half of 2019, the majority of Kazakh brewers made their contribution into positive dynamics. Yet it was companies of the lower division, not the two transnational leaders that raised their production and sales. The shares of draft beer and aluminum can which is rapidly squeezing glass bottle out of the market, have been growing. The price segmentation has remained stable despite the substantial rise of retail prices and fluctuations of brand market shares, while the borders between segments have become blurred. The main events in the industry have been: the announced revision of the beer excise policy, launch of BeerKhan brand in the strong beer segment, and most important – purchasing assets of Shymkentbeer by Arasan.
The trend of complication of Russian beer market is going on and in several directions at the same time. The range has got wider, the import and small segments are growing, namely craft beer, alcohol-free beer and special flavor beer. At the same time, all ex-mega brands and light lagers by Russian brewers are experiencing a decline of their shares. AB InBev Efes, Heineken, MBC and Pivzavod Trekhsosenskiy have exceeded the market, Carlsberg was developing slower than the market and Ochakovo as well as some other mid-sized breweries have been cutting down their volumes. To a big extent brewers’ performance was connected to their ability to reach agreement with networks, sacrifice their margin and enter new markets. Craft brewers are facing a serious danger of producers’ registration introduction – de facto licensing. ...
The global outlooks of the legal market of cannabis are excellent. It is possible to simultaneously imagine dry law repeal and craft brewing boom but not in one but in several consumer categories. For alcohol is contained in liquids and cannabis derivatives can be in three physical forms.The value of legal market of cannabis and its products can reach 10% of the world beer market in five years, and in 2030-2040 even reach the same scope provided the current rates of legalization and development of market infrastructure remain at the same level. Cannabinoids are actively integrating into the food industry from chewing gum to beverages deforming the pharmaceutical and alcohol markets, they influence the trends of healthy lifestyle and beauty. ...
Ukraine: upswing of beer brandbuilding
In 2012 the palette of Ukrainian beer market became much more colorful and interesting. New products «piloted» in Russian beer market were rapidly gaining their market weight at the expense of the old brands. Among the brands launched in 2012 licensed brands, or brands alluding to foreign origin prevailed. Due to them there was a considerable widening of the product range in the upper mainstream and premium segments. By October 2012 the market share of the new brands in the largest Ukrainian cities exceeded 4%, which is not bad at all for a term of one year.
Launching of «Zhiguli Barnoye» was supported by one of the quietest marketing activities, but at the same time it was one the most successful in Ukrainian market. The rapid gaining of the brand weight had no correlation either to the distribution level or to the zero brand awareness or to the comparatively high price of this beer.
The consumer, on spotting a bottle of «Zhiguli Barnoye», which by the way was not at the foreground, preferred it to famous brands. Maybe Ukrainian consumers knew this brand already? Practically, no. Until recently brands by Oasis CIS were not represented in Ukrainian retail, as the company’s distribution could not even cover all territory of Russia. The answer lies on the surface – «Zhiguli Barnoye» owes its success to continuity and toponymy of «Zhiguliovskoye».
As one remembers, when «Obolon» company launched its version of the people’s brand, which virtually replicated the design of the 80s, the brand sales were growing at the same rate as «Zhiguli». Neither of these two projects had advertisement.
Although there were actions to support Ukrainian launch, they were not likely to exert any considerable influence on the brand promotion. For example «Zhiguli» presentation took place not on the most popular TV channels, but at one of Kiev restaurants with 220 seats. Besides, it is very illustrative that the distribution and market share growth of «Zhiguli» and «Zhiguliovskoye» was practically synchronous if we take the moment of their market entering as the benchmark.
Yet, launching of «Zhiguli Barnoye» has a substantial difference which does not permit to equal its starting positions to the product by «Obolon», that is, the retail price of «Zhiguli Barnoye» is 40% higher than that of «Zhiguliovskoye». However, we cannot say that the price is absolutely prevailing, and that «Zhiguliovskoye» cannot bear added value. Though there are cheaper popular brand marks, the brand’s power saved sales of «Zhiguliovskoye» from falling even when its price grew substantially although Obolon kept it within the economy segment. It was necessary to raise the price as «Zhiguliovskoye» not only wedged into the competitors’ brand range but also won the position on the fridge shelf over the discount brand of the company itself, namely, over beer ««Zibert»».
Obviously, using name «Zhiguliovskoye» which belongs to nobody but is popular should be considered as an opportunity to fully utilize off-line production capacities. However, there is a high risk of cannibalization on the part of the cooler neighbours and promotion of those competitors who also produce «Zhiguliovskoye».
Obviously, the idea of new brand «Zhiguli Barnoye» was a development of the conception «beer for civilized rest from Moscow of the 60s», which had been already well utilized when promoting sort «Mospivo» popular in Russian capital. «Zhiguli» was a more successful brand essence, as it got attributes which better outline these ideas. By the way, for the same reason «Zhiguli Barnoye» could not be produced by beer giants who are unable to rapidly capture the local market strategy. One had to possess more flexibility and will power to launch a more successful brand by attacking already existing one of his own.
As there were no plans for mass advertising campaigns of «Zhiguli Barnoye» because of its limited scale, it was necessary for packing elements to effectively demonstrate all advantages of the brand. Thus, early at the stage of designing of «Zhiguli Barnoye» not only all negative aspects of brand «Zhiguliovskoye» which bore most risks were successfully neutralized but also all positive aspects were enforced. (see pic.)
Thus, high spontaneous consumer awareness of «Zhiguliovskoye» was easily transmitted due to similarity of graphic design of the brand name. It was not much different from the look of many Soviet labels. At the same time «Zhiguli» got under patent protection in the category «beer». This name by itself a rather interesting idea as it allows advertising a brand without promoting competitors’ production. However one cannot say that the protection proved to be very effective – competitors quickly got similar variants of «Zhiguliovskoye». AB InBev has become the object of judgment proceedings in Russia and possibly the came will happen in Ukraine as it launched the same brand. The representatives of «MBC» say that the competitor used elements of «Zhiguli» package design and now consumers confuse the beer brands.
While nostalgic image plays into the hands of «Zhiguli Barnoye» sales, the aging problem of «Zhiguliovskoye» which is associated with it, was solved by appealing to material and cultural values of the 60s. That is, trade mark «Zhiguli» can be considered by young beer consumers as a sort in «retro» style. Besides, some of consumers know about Moscow restaurant «Zhiguli» (or will read about it on the package).
Due to the alliance with restaurants, the new sort by «MBC» can also distance itself from economy «people’s» sort. «Zhiguli Barnoye» reflects the popular in beer marketing focus on the flavour originality. Besides, the brand got a history and claims to be premium; it received the right to be referred to as «bar» or «specialty». These attributes and Moscow residence, outlined on the package, allowed beer «Zhiguli» organically fit into the premium segment of Ukrainian market, containing by the way other Russian licensed brands. At the same time, positioning of «Zhiguli» differs from other Oasis CIS brands, namely, by higher price.
Notably, other Russian brands, in particular, «Baltika», «Zolotaya Bochka» and «Stariy Melnik» immediately received positive reaction from Ukrainian consumers. The level of their popularity was directly-proportional to the price and distribution. However, it would be incorrect to compare growth rates of «Zhiguli Barnoye» to those of «Baltika» or «Zolotaya Bochka» as these brands had been exported from Russia by the moment of the licensed production and had been well known having substantial market share.
But if we speak of the current results, then, for example by June 2012 the indicates of distribution and market share of «Zhiguli Barnoye» and «Zolotaya Bochka» practically levelled. But the market share of «Zolotaya Bochka» was approaching its maximum level from spring 2009 to January 2012, that is, within two years, and brand «Zhiguli Barnoye» attained similar results in 7 months. By the end of 2012 the market share of the brand in the city retail amounted to about ...% by volume, but if we do not consider the period of rapid growth, one can speak of ...% of the market by volume and of ...% by value.
Five years after merging of companies Anheuser-Busch and InBev and two years after launch in Russia, brand Bud entered Ukrainian market. Local launch of world beer #1 was a part of the international program of brand expansion. In order to evaluate the importance of this event for Ukrainian market one should take a look at the global marketing policy of the company.
In the course of merging there were substantial changes in the team of AB InBev leading brands, which later reached Ukraine too. If we consider AB InBev to be a successor of Interbrew then the only unshakable global brand in their portfolio is still Stella Artois. The company must stake much on this brand judging by the sales growth which mostly results from the deliveries to the USA.
Emerging of InBev due to merging of Belgium company and Brazilian AmBev led to an attempt to include beer Brahma to the global portfolio. The experiment claimed great marketing budgets for spectacular advertising campaigns. In particular, the peak figures of the market share of the brand in Ukraine and Russia were observed in 2006-2006. But the idea of Brazilian lifestyle and original beer did not find new roots among its consumers and the economical recession made them sceptical of careless lifestyle propagated by Brahma.
After InBev and Anheuser-Busch merging the positions of beer Beck’s weakened considerably. Despite the start of local production, Beck’s reduced sales in the USA, and in other markets for example in Russia and Ukraine it quickly lost its market share, having been left without marketing support and was bought «by inertia». Besides, as the AB InBev emerged, the weight of brand Staropramen declined, this trade mark being even more «European» than Beck’s. It probably did not have good potential in the foreseeable future in the USA market, so it was not included in the global portfolio either. Local divisions of AB InBev were responsible for Staropramen marketing and changed its image depending on tactic consideration.
Since 2008, Budweiser, being the world biggest brand, has taken the central position in AB InBev portfolio. The sales of Budweiser outside the USA in 2011 grew by 20% pursuant to the program of international expansion. According to the article in Bloomberg, in 2011 44% of Budweiser sales was made abroad, while three years ago 28% of this beer was sold outside the USA. The redistribution of sales is also much effected by considerable weakening of Budweiser positions, but is not important for the global expansion any more.
Budweiser promotion in European markets is more difficult due to problems with Czech state company Budejovicky Budvar, which owns this brand rights too. That is why we can read the short version of the brand name on the label, namely, Bud. The point is, international campaigns require adaptation and can not be the same in the USA and Europe. However, Anheuser-Busch has been several years trying to get the rights for trademark Budweiser by bringing lawsuits.
The third key brand of the global portfolio of AB InBev is beer Corona which belongs to Grupo Modelo. On organization AB InBev got 50% of shares of the Mexican producer, which belonged to Anheuser-Busch, and in July 2012 Grupo Modelo completely came under AB InBev control.
In 2009 Carlsberg and Modelo concluded a contract for Corona beer distribution in Eastern Europe. We can not say that this brand is very important for Carlsberg as in Ukraine the share of Corona Extra amounted a tenth of percent in the middle of 2012, and it started falling by the season end. But Carlsberg remained the exclusive importer of the brand. "We have a contract for more than one year concerning Corona and Negra Modelo. Grupo Modelo cannot break it in one way fashion, if we fulfil all our obligations, so nothing changes for us so far", - Peter Chernyshov, General Director of Carlsberg Ukraine told to «Kommersant».
Certainly, the transit of Corona distribution under the control of AB InBev divisions will take some time. Obviously, in the future Corona will occupy the top price segment in the range of AB InBev (that is, will not cut its price) and will considerably increase its market share. Stella Artois will remain one of the best sold brands in the superpremium segment. Beer Bud will get the role of mass brand in the premium segment.
The launch of beer Bud on Ukrainian market was supported by one of the most expensive advertising campaigns entitled «Bud. King of beers». The advertising agency which worked out the advertising strategy had a goal to claim Bud’s ambitions for leadership in the segment. The press release of the company said that AB InBev intends to take all necessary steps to make Bud a maximally popular drink in all markets where it is represented, and to make a cult brand out this trade mark.
Bud market share was rapidly growing following the brand distribution expansion and the snowballing budget growth of advertising campaign. The expenses on Bud advertising amounted to about 30 mln hrn according to Oksana Stekhina, director of agency AMM/Viseum.
April launch of Bud was supported by a teaser advert on the internet. In May pretentious commercial «Great times are coming» with the camera moving up the bottle appeared. In one month numerical distribution reached nearly 50% of the retail and the brand market share sky rocketed to ...% in the biggest cities of Ukraine.
June saw the start of a large scale of outdoor campaign. Standard adverts were embodied in small and medium scale advertising installations. They were followed by extenders and branded transport stops and many big Ukrainian cities got huge brandmauers. In addition to the outdoor advertisement all kinds of public transport and all Kiev underground stations were branded. The numerical distribution of Bud grew to ...% and the market share reached ...%. The growth of the brand representativeness in retail slowed down only in August when Bud nearly reached the level of Stella Artois or Tuborg, having exceeded ...%. By that time the brand market share slowed down too, having stabilized at the level of nearly ...%.
By the way, Bud sales growth could make an impact in the decline of Tuborg market share and influence the sale dynamics of other competing brands in the premium segment. There is no need to focus on any particular brand as the segment is small and for this reason alone appearance of new trade marks affects the others.
Some More «Czech Beer»
As far back as three years ago, in Ukraine there was no such segment as «Czech beer». At least there was no point to make a group out of the only licensed Staropramen and minor import from Czech Republic. Even now grouping sorts according to «Czech» attribute is not very reliable as it is not consumers’ characteristic but a starting point for creative explorations and the basis for higher than the average price. It is unlikely that consumers choose a particular «Czech» sort of Ukrainian production because they like Czech beer. But the fact that there are a lot of such brands is interesting by itself.
Democratic price as well as a wide and untouched by marketing experts field of «Czech production» allowed beer Staropramen to become the key licensed trade mark and achieve the level of nearly ...% of the market by 2010. It would be false to say that the brand positions have been unshakable, but creative and active advertisement steadily brought it back to that level.
On the fast sales rise Staropramen was actively using Czech images and underlined its origin. But in 2007 the focus was made on «mild taste» which was featured in commercials. Though many viewers must have liked comic mini-films, and they promoted the Staropramen positions, in the course of time, the sales of competing licensed brands led to its lower market weight.
Czech Velkopopovicky Kozel which was launched in 2009 made its own contribution into this process. But this influence was not very significant, the more especially as the retail price of this brand was much higher than that of Staropramen. Consumers gave neutral reaction to the new brand; its sales grew but stabilized at not a high level. In our view, when promoting unusual premium international brand, one has to show much higher media activity. Velkopopovicky Kozel simply occupied its place in SABMiller portfolio, not claiming for big popularity so far.
However the situation changed considerably in June 2011 when two «Czech» brands by big companies entered the market. To our mind, Carlsberg Group and «Obolon» decided that by occupying a promising segment, namely, upper mainstream, it would be reasonable to attack more expensive licensed brands of the competitors. Both «Zatecky Gus» and «Zlata Praha»» alluded to their Czech origin using comic characters, namely trained goose from Zatec and brave soldier Schweik.
The growth of these brands sales affected the market positions of Staropramen. One cannot say that they took a share only from their expensive «countryman», at this time many old brands began yielding their positions to new ones. But by September Staropramen had not ... but ...% of the market and there was no market share growth for a long time.
«Zatecky Gus» before launching into Ukrainian market had already spread its wings in Russia where it attacked, judging by the name, Czech Velkopopovicky Kozel, and Slovak Zlaty Bazant. Besides, if desired one can notice some similarity between labels of «Zatecky Gus» and Staropramen that is, similar colours and typefaces were used.
One should also mention that «Zatecky Gus» was even more beneficial for Ukrainian brand portfolio of Carlsberg Group than for Russian one. In Russia Carlsberg Group is the market leader, with the sales bulk in the mainstream segment. In Ukraine the situation is quite different that is until recently the company was rapidly losing its positions in the mainstream segment and gaining weight in the growing premium and economy segments. This strategy gave it the second place in the market and the share growth which was much greater than that of the competitors. However, later it turned out that weakened brand «Slavutitch» (particularly its main sort) was not able any more to fill the gap between premium «Baltika» and economy «Lvovskoye». From this point of view it was rather logical to launch a new mainstream brand with western image.
However, sole using of European image can be beneficial only for cheap beer. Such brand will attract only those beer consumers who do not want pay much for beer, but at the same time they are not willing to reckon themselves to low quality product consumers. A good example here is «Zibert» sales dynamics which was meteoric even without an advertising campaign. However, for successful sales of middle priced beer it is not enough to give the beer a name in Latinic alphabet. Why would a consumer overpay for a brand name in a foreign language, with no well known historical roots, especially as there are cheaper analogues in the market?
The idea of using hop as the main advantage of «Zatecky Gus» was successful in many respects. In the first place, because the hop allowed to convincingly speak about quality and create European image for the brand. Marketing experts had a lot of European cities to choose from as hop is produced in many regions of Czech Republic and Germany. Besides, hop is not expensive at all (as compared to other prime cost items).
Certainly, from a brewer’s point of view, using Zatec hop cannot be considered a competitive advantage as many producers also use it as well other famous sorts. But the brand appeared as marketing experts managed not to think about brewing details and even lose sight of the right Czech spelling of the words «Zatecky Gus» but looked at beer as an average consumer and treated their brand accordingly.
By the end of 2012, the effect of the first encounter has already run out of steam. The brand market share stopped growing and then started falling. Probably, the active TV promotion over the whole previous year allowed keeping the brand positions at the level of a little more than ...%. Steady distribution growth also made its impact into it. In the future positive sales dynamics of the brand «Zatecky Gus» could be dependent not only on light but on dark and unfiltered sorts too.
The month «Zatecky Gus» entered the market, company «Obolon» launched new brand «Zlata Praha». Though this launching has several differences. Originally Obolon strived to balance its portfolio by more marginal sorts so the new beer was positioned at the boarder of mainstream and premium segments. The average retail price of beer «Zlata Praha» was considerably higher not only than that of «Obolon» brand but also than «Zatecky Gus». However it was substantially lower than Staropramen. This segment seemed and still seems rather promising especially in view of the current tendency of market polarization.
In the economy segment «Zibert» and «Zhiguliovskoye» had to do without advertisement but the brands were rapidly gaining shares even having comparatively not high level of distribution. Beer «Zlata Praha» did not experience the same thing; its sales were growing much slower. In September 2011, when the distribution level was practically the same, the sales of «Zatecky Gus» promoted by active advertisement were more than twice higher than the volumes of «Zlata Praha».
To our mind, substantial «premium» which the consumers paid for «Zlata Praha» was from the beginning not well grounded. The beer was distanced from mainstream brands on the basis of richer taste and original modest label. But the main problem was insufficient media activity at the stage of the brand launching. Probably, slow market weight gaining made Obolon start an active advertising campaign in autumn.
Funny stories featuring events of life of Europeans in the 20-th century made as «short films» several years ago were the advertising peculiarity of brands Stella Artois and Staropramen. However in 2011, when promoting Stella Artois the focus was laid on promo actions and events connected to cinema.
The commercials of Obolon company were also made at rather high level. There were not so many differences between them and the advertisement of Stella Artois to our mind. The events take place not in Belgium but in Czech Republic, besides, all videos feature the same character, namely, brave soldier Schweik. This image probably works well for consumers aged 30+, who know books by Yaroslav Gashek as well as for some tourists who have been to Czech Republic. Perhaps it is not a very big group as nobody of brewers in Russia has ventured to employ Schweik for their beer promotion, but the commercials about «Zlata Praha» are self sufficient and do not require awareness of who the character is.
As the advertising campaign started, «Zlata Praha» got a double impetus for growing. Brand market positions were enforced by gradual reduction of the retail price beside its newness. Obolon had to reduce the price due to the market situation change. Firstly, cheaper «Zatecky Gus» continued growing. Secondly, AB InBev concerned by Staropramen share decreasing, lowered its retail price, and in May 2012 this brand started being bottled in PET. Thirdly, Obolon itself introduced licensed Carling in the same segment where «Zlata Praha» was. As a result, due to «Zlata Praha» price reduction and a rather fast growth of price for «Zatecky Gus» these two brands practically levelled in their retail price. «Zlata Praha» moved from the boarder premium/mainstream to the mainstream segment of the beer market.
Over last several years the distribution system of Obolon has become notably worse than those of its two main competitors. The positions of beer «Zlata Praha» fully depend on the distribution level and fluctuate together with it. That is why, in spite of the advertising campaign and flexible marketing policy, the market share of «Zlata Praha» amounted to 0.5% by the year end. It is not bad for a young brand, but it could have been much higher with wider retail coverage.
At last, we should mention one more recent launch of inexpensive «Czech» beer, namely brand Cervena Selka by Oasis CIS. According to the company’s marketing tradition, new for Ukraine sort has a «selling» label featuring an animated girl and an original name. In Russia this trade mark has been produced for 4 years already, and it appeared as a reaction to the tendency of companies' launching own «contract» sorts by major importers mainly – beer Prazacka. Absence of media activity and strong associations (as in case with «Zhiguli Barnoye») promises slow growth of Cervena Selka market share in the course of distribution growth and its wider awareness. So far the novelty’s market share amounts to about ...%. Ukrainian consumer has not appreciated the taste of this beer yet.
Long-term market domination of Staropramen, launches of Velkopopovicky Kozel and new local brands resulted in blurring of «Czech» beer image and using of this geographic attribute is not beneficial any more. In our opinion further widening of the range of licensed and local «Czech» beer would be reasonable only in case of launching «German» «Zibert» analogue. However, each of the five leading players already has more expensive Czech brand, that is why they are not likely to take such step.
On the contrary, beer import from Czech Republic seems quite prospective, especially due to Oasis CIS entering Ukrainian market. Using the existing distribution system of brands by «First Private Brewery», Oasis is most likely to sign profitable contracts with big European importers it works with in Russia.
The market dynamics of brand Carling, during its presence in Ukrainian market, in the first place reflected the dynamics of its retail price. The creative commercials and the support in promoting Carling «Obolon» got from the brand owner, company Molson Coors, did not seem to have much effect. English brand showed generally good results and has already found its consumers, but the partners still have to put many efforts into further enforcement of Carling positions.
In May 2011 there suddenly appeared new licensed brand Carling on the retail shelves and in coolers of Obolon company. Good representativeness in retail and affordable price immediately made it clear that unlike the experiment with Bitburger the company’s ambitions were high. Announcing cooperation start with Obolon Ukrainian representative of Molson Coors, spoke about the plans to produce 20 thousand hl. of beer by the end of 2011.
The portfolio enrichment by margin brands beyond «Obolon» brand umbrella was very important for the company and it made such steps from time to time. The experience with Bitburger was taken into consideration, as the brand having high retail price, comparable to import brands and no ads, got a tepid reception from Ukrainian consumers. This time the expenses on marketing as well as income were divided among Obolon and Molson Coors, which enabled the company to rely on an experienced partner, who was interested in its beer promotion.
Interestingly, two brands with similar price positioning, Carling and «Zlata Praha», entered the market practically simultaneously. Till November 2011, their retail prices were almost the same, and by September 2011 the distributions of the two brands levelled too, having reached their local maximum, and then for a long time remained nearly the same. Due to the advertising campaign carried out in July and earlier start, by November one could expect the share of Carling to be higher than that of «Zlata Praha». However, the market shares of the two brands as well as the market parameters were nearly at the level. The commercial which appeared at the time of the brand launching had no immediate influence on its sales.
However, both summer and autumn commercials of Carling were made quite professionally as compared to Ukrainian beer advertisement as a whole. This was not an adaptation and the brand launching based on British images as it is seen by Ukrainians. It was taken into consideration that though Great Britain is a beer country, our consumers do not know that. In spite of the stereotypes and symbols, the commercial underlined that Carling is an alternative but tasty beer (like alternative but popular British voiceover music).
The second advertising campaign was made in the same style and started as early as in November. It was connected to higher retail price of Carling and its transition into premium segment. At the same time, the retail price of beer «Zlata Praha» was undergoing serious reduction. Thus, «Obolon» moved the two sorts on the already existing floors of the market and stopped margin positioning. And this time we again can say that not TV advertisement, but price policy drove the sales. While «Zlata Praha» which also had TV promotion started raising its market weight, the increase of brand Carling slowed down for a long time.
New impetus was given to Carling by wider distribution of Obolon brands, but this process started as early as in spring 2012. Interestingly, Carling representativeness became in the course of time much higher than «Zlata Praha» distribution.
In September Carling got a more expensive subbrand, namely, Royal, which probably means serious intentions concerning the brand development. It was announced that its sales reached 1 mln dal since its launching (which took place in May 2011). If we base on this volume and on the data of the trade balance, the market share of Carling will equal about ...% (according to audit data it is much higher). This figure means that, though Carling addressed its consumers, the partners have to work on loyalty to enforce their market positions.
Junior in the «Che» family
Light youth brand by company AB InBev has almost left «Chernigovskoye» umbrella. The company took advantage of its main competing brand’s weakening to launch a new product into the market. Young consumers paid some interest to beer «Chezz», but one should not lot upon loyalty of this target audience.
In July 2011 Ukrainian subdivision of AB InBev announced launching of new youth brand «Chezz». Its name, according to press release, was made up on the basis of parent company «Chernigovskoye» and double «Z’ in order to focus on «refreshing essence of Chezz».
But why was «Chezz» called a brand, not a sort? It was done on purpose; on the company’s site it is located separately between «Chernigovskoye» and «Rogan». The company strived to distance the new brand from the sales leader, but at the same time its awareness was used.
In order to assess «Chezz» prospects, one should compare the brand dynamics in the category «youth» and «light». The novelty by AB InBev competes with two brands which have the both characteristics but cost more, namely «Slavutich ICE» and «hike». Premium Tuborg is the biggest and most popular brand orienting at youth audience only. Besides, several years ago the market got licensed but rather affordable Amsterdam.
«Slavutich ICE» has been present in the market for a long time. Its package differs from its parent brand and competing sorts by shape and colour (or, better, its absence). The retail price of «Slavutich ICE» is a little higher than the middle priced brands, as it is positioned as a niche product. «Slavutich ICE» though not claiming for a big market share but is directly associated with light beer by consumers and proved to be more stable than parent brand «Slavutich». However, to some extent the subbrand had to repeat its fate – the launch and active TV advertisement of a lot of fruit mixes blurred the image of the light but «tasteless» beer.
Against this background the launch of «Chezz» looks a successful step, it gives the chance to «pick up» the target audience of the competitors. In the first commercial dedicated to the start of retail sales, «Chezz» beer was three times announced light and four times fresh. Blue colour of «slantways» label somewhat reminded of the rhombic label of «Slavutich ICE». In our opinion «Chezz» has not only entered its territory but also had immediate influence on the competitor’s sales. At least, gaining market weight by the new sort coincided with the reduction of «Slavutich ICE» share.
«Chezz» could be called a competitor for one more brand, namely, «hike». But it is unlikely that AB InBev market experts aimed at attacking the youth brand by Obolon and take its share due to its small scale. Though one can note that hike share reduction continued as «Chezz» sales were growing dynamically, and the subsequent period of stabilization coincided with deterioration of «Chezz» market positions. Here as in case with freshness territory entering, one can speak of an attempt to offer a brand to the little-developed territory of youth audience, where «hike» feels at home.
Youth format as it is can be a basis for not large sales volumes. Though beer Amsterdam formally belongs to the licensed segment, its retail price is not high and even lower than that of local «Chezz». We should say that Amsterdam launch took place during the low season and was not followed by any advertisement. The beer was sold due to democratic price, its name suggesting something «spicy» and unusual package. Besides, as late as in summer 2011 there appeared a very modest commercial. By that time the brand had already won ...% of the market, having comparatively low level of distribution. Since then its market share remained stable and even coming out of a new commercial in April 2012 did not change its positions considerably.
But is it possible to win the loyalty of youth audience by active advertising? Action Nchkai for Tuborg was niche and large scale. The creative level and the communication quality obviously exceeded abilities of Ukrainian agencies as the advertisement was made for a global campaign. However, neither the novel advertising conception nor its catching realization could substantially influence the reduction of brand market share. That is, at the moment of the campaign launch it seemed to change the negative trend, but as early as in a month the dynamics became negative again. We can say that it is more and more difficult for Tuborg to ground its premium essence.
One cannot be sure whether the launch of youth light beer in mass segment was reasonable. Pro arguments are: beer «Chezz» managed to generate rather big sales volume in 2012 and to benefit from weakening of loyalty to competitors’ brands. On the other hand «Chezz» sales are rather modest for such big retail representativeness. They depend on formal parameters such as distribution level, price and steady promotion, which means that the brand value is not high.
But if the market share of Tuborg, «Slavutich ICE» and «hike» was decreasing over the previous years, then why did the new brand fail to take their place? Weakening of competitors positions resulted from not unsuccessful conceptions, but from objective reasons. In the first place because young consumers are the least loyal audience. Today the category of consumers under 25 are people who have been surrounded by advertisement since childhood and developed immunity against it.
The assessment of how advertising campaigns for youth brands effect their sales leads to deplorable for marketing experts conclusions. Though young consumers are not very rational, they are very «invincible» for commercials of the western type, even rather witty and creative. Certainly, eye-catching commercial can support brand sales, if it has an adequate retail price, but not for long – a little longer than the period of its translation. Active advertising plays an important role at the stage of brand launching when there is an effect of the first encounter. Besides, it is sometimes viable to remind the consumers of the brand positioning as it is done for brand Amsterdam.
In view of the above, one can say that the market share of «Chezz» beer has already got over its peak in autumn 2011 and considering the current tendencies it is unlikely to grow. Price growing of «Chezz» and falling of media weight due to focusing on Internet advertising (even though it is popular in Facebook) took its toll on the sales. But if the company’s goal is to control «half a per cent» of the market which has already become standard for youth brand, then it seems quite possible having such a high distribution level.
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24 Янв. 2013