Lion Nathan Limited
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Transcript Lion Nathan Limited
NATHAN LION
Limited
By Tosca Bonardi, Tom Sweeney,
Valerie Potts, and Lila Schwarzbach
NATHAN LION LTD
THE BEGINNING
The Formation 1988
Lion Corporation and L.D. Nathan and Co. merge
Hire and outside guy in 1999
Kevin Roberts
International experience
Australian and New Zealand markets
Hinder further growth potential
several evaluations on different breweries in China
LN entered China’s market two years later in April 1995
with a 60% joint venture Wuxi.
The first investment was made in Yangtze River Delta,
China’s fastest growing beer market.
NATHAN LION
THE BEGINNING
Increasing ownership
1996: increase to 80% with plans to build a new $378
million brewery.
Licensing agreement
After the construction of their new brewery
German brewer Brauerei Beck and Co. to brew the
premium beer, Beck’s.
Kirin Brewery Company
In 1998, KBC acquired a 45% share of LN
ownership structure changed significantly
By the end of 1998 LN’s growth potential was still
very promising.
CHINESE BEER
INDUSTRY
Beer is a beverage
Variety of flavors, colors and types.
Different tastes, price range, and quality.
Technology
Slow paced changes
Routine and automated process
Popularity- Attractive to international brewers
China’s population
Immense growth potential
In 1998, 600 brewers produced 17.8 tonnes of
beer
GROWTH
Capacity of breweries in China in 1998
Market Growth
80 hold over 50 million liters
Of those 80, 18 breweries could hold over 100 million
liters.
The 10 largest companies only held less than 20% of the
market.
Through the 80’s: growing at a rate of 20% a year.
Between 1992 and 1997: rate of 12.5%.
1998and 2001: Projected to continue dropping to 6%.
Comparisons by liter per capita
New Zealand - 87 liters
Australian - 95 liters
Asian market as a whole - 30-40 liters
MARKET SEGMENTS AND DEMAND
China’s beer industry has four segments
Imported premium
Premium
Mainstream
Low-end
Demand fluctuates
Levels of unemployment
Disposable income
Government rulings
Beer consumption
Analyzed by regions – many little markets
Urban and rural areas
RAW MATERIALS, CAPITAL
REQUIREMENTS AND
ENTRY/EXIT EASE
Hops
Capital Requirements: Small Companies
Not high for small businesses
Building breweries is costly
Developing brand identity
Capital Requirements: Big Companies
Companies buy raw materials
Easier for companies
Brewing plants in every region
Economies of scale
Extensive marketing
Exit
Hard for small businesses – no market
CHINESE ECONOMY
Entering Chinese Market
Downward trend
Advanced market
World’s largest consumer market
China’s market looked very promising
Size of market
Growth potential
Low barriers to entry
No established “big guy”
China’s consumer market
Exponentially growing consumer market
OTHER COUNTRIES
Presence in New Zealand and Australia
Lacked growth potential
Dominated by supply and demand
Differences between economies
Growth potential
Population
Economic growth
Growth rate
Promising market
NEGATIVES ASPECTS OF ENTERING
CHINA
Low GDP per capita
Australia and New Zealand’s higher GDP per capita
Infrastructure in China
Well developed on coast
Weak inland transportation
No public transportation system
Few private auto owners
Infrastructure in Australia and New Zealand
Well developed nationally
BEER MARKET
Chinese Economy in downward spiral
Competition in beer market intensifying
Premium beer market
Consumers buying habits
Willing to try new brands (low brand loyalty)
Daily “Mom and Pop” visits
Culture
Beer is a social beverage, like tea or soda
Accompanies a meal
Enjoyed warm
BEER MARKET
Consumption Habits
Lower in China than others
LN must pay close attention to distribution
Marketing
Customers under 30 are more responsive to advertising
YANGTZE RIVER DELTA
Five Regions
Shanghai
Suzhou
Wuxi
Nanjing
Changzhou
COMPETITORS
HUMAN RESOURCES AND
CORPORATE CULTURE
No problems finding qualified
employees
Previous retail experience
Under 30
2 years experience with MNC
Individual performance targets
Bonuses negotiated.
Status, reputation, reliability, and loyalty influence
position, promotion, relationships.
Personal goals,
Retention of staff
Employee training systems
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CHINA’S CULTURE
High-context culture emphasizes social
relationships between individuals
Trustworthiness is a key trait in business dealings.
Employee loyalty, building corporate expertise is
vital.
Chinese dislike individual pressure.
Occasionally LNC head office managers apply more
pressure than most Chinese workers are
accustomed to in order to meet financial targets.
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MARKETING STRATEGY
Lion Nathan regularly:
Measures the health of their brand
Examines the effectiveness of their advertising
Uses past experiences for positioning and promotion
Positioning in each market:
River Delta and Shanghai – locality = comfort, affiliation.
High-quality premium beers are marketed
differently
price, bottle design, position, label, and placement.
Ex: Beck’s and Steinlager
Affordable and acceptable pricing
Event sponsorships.
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MARKETING FOR THE FUTURE
15% market share in River Delta region, 8% in
Shanghai, 25% in Suzhou, 40% in Wuxi, 16% in
Nanjing.
Distribution is an issue
Sales are directly related to their distribution
coverage
Focus on expanding in River Delta region and
Shanghai.
Build for the future.
Already have superior brand recognition
Create more effective distribution channels
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