Heineken Case Summary
Heineken:
1) The customers in the beer industry have many choices, as there are plenty of beers to choose. Together with the availability of different beers the customers also developed some particular taste and preferences. This will increase the choice of the customers therefore the threat of bargaining power of customers is high.
2) The world beer market is led by three main players and Heineken is on the second position. It is present in several markets, 179 counties, and is the market leader for premium beer. Beer market is growing but on the other hand, beer’s margins are very low. Heineken developed efficient economies of scale that allow them to produce high quality at low cost and it has a very efficient distribution system.
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Together with the availability of different beers, the customers also developed some particular taste and preferences. The advantage of AB InBev over Heineken is the extensive portfolio with cheaper beers. On one side yes it will increase the choice of the customer and hence the threat for power of buyers, but the threat is medium low as most likely there will be a Ab InBev brands.
2) AB InBev is the giant beer brewery and it has a higher market premium compare to his direct competitors Heineken and Carlsberg, elevated by a margin that is comfortably ahead of rivals (Felsted, 2017). This leading position follows a M&A strategy of the last years, i.e. acquisition of Sab Miller, in fact there are very few players with such a significant presence in market share. The market segment of AB InBev is not expensive beers compare to Heineken, therefore in this respect the treats of new entrants are lower.
3) Microbreweries are entering the market everyday but AB InBev with its extensive portfolio presents somehow limits their shelve space and could overshadowed this phenomenon. In fact on one side it is easy to enter the market but it is hard to get establish. The barriers are
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In principle larger are the volumes and more leverage it has on the price. Most of suppliers would decrease the prices to get a contract with Ab InBev.
5) AB in Bev has a strategy of low cost beer and in a market that is moving to more expensive beer (craft) it might represent a threat. Customers are moving to a segment where they are willing to pay more for certain features. In this respect AB InBev developed already a best buy consumer label. In addition the substitution of wine and alcohol in general is also seen as possible
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