Micro-brews and Micro-markets -- Developing a Global Brand Portfolio

Sorry I'm late with a new post.  Any baseball fans will appreciate the fact that I've been busy reveling in the monumental feat the Colorado Rockies have pulled off over the past 2 weeks, coming from nowhere to climb over 6 teams into the NL playoffs with a story book late season run.  Of course the Rocks play at Coors Field, which is as good a segue as any into the interview with Leo Kiely, CEO of Molson Coors Brewing Co. that appeared in yesterday's Wall Street Journal (note: This on-line link is actually to the article as it appears in a reprint in the Denver Post).

In addition to being the number 3 (by sales) purveyors of beer in the U.S., the company is itself an international amalgamation resulting from the 2005 merger of Colorado's Coors and Canada's Molson.  In terms of international scope, besides its position in the U.S. market, the company is the largest brewer in Canada, the second largest in the U.K. and the third largest in Brazil.  In a testament to the fluidity of international borders in a global market place, even though Canada's Molson was essentially the acquiring company, with Molson shareholders garnering 55% of the combined company and Eric Molson continuing as chairman, the company's world headquarters are in Golden, Colorado -- a nod to the fact that when your shareholders, employees and customers are spread across the globe it may not matter much which flag you fly over the head office.

All of which brings me to the point -- i.e., what does it take for a company to compete in a global marketplace.   A continuing exploration in this blog has been the strategic necessity for global companies to change from Ted Levitt's conception of a global corporation tirelessly pushing standardization across all markets to a need to respond to micro-markets of consumer demand made all the more numerous by a company's geographic reach.  The beer market is another perfect illustration of this phenomenon.

In the foggy days of yore, beer drinkers in the U.S. fancied either Bud if domestic or Heineken for a more worldly palate.  Now it depends whether you're in the mood for a lager or a pale ale or something darker or a seasonal brew.  Local micro-breweries are able to grow into larger successes and the major brewers look to compete in the upscale market with brands that have no visible association with the company flagship.  Rather than attempting to get the world to drink Bud (which was the Levittian approach to global marketing), Anheuser Busch has put together substantial shares in foreign companies such as Grupo Modelo in Mexico and Tsingtao in China to compete effectively for market share among local tastes and preferences.   

When asked by the WSJ what it takes to succeed in today's environment, Mr. Kiely responded:

I think to be a successful global brewer today, you have to be really good at portfolio selling.  Having a strong portfolio of local brands, augmented by a big potential global brand like Coors Light, is really the formula to success looking forward.

I can say from my own experience in industries very different from beer, having a portfolio of local brands that appeal to local tastes and preferences tied to a corporate brand that speaks of global presence and capabilities is indeed a good start on a winning formula.  As for standardization of product offerings, the beer market in the U.S. alone is becoming increasingly fractured as brewers both large and small offer a growing variety of boutique brews aimed at the many micro-markets of tastes and lifestyles.  If standardization no longer works as a strategy in a company's domestic market, it would seem that expanding to international markets would only compound the effect.         

Comments

[Audall]

Great blog post. I couldn't agree more that, in general, standardization across international markets does not seem to be a recipe for long term success. I can also say that I certainly appreciate the growth in the number of microbrewed beers over the last decade.

I recently blogged about an interesting article in Fast Company regarding growth in micromarkets, connoisseurship, and the possible result that we may eventually see offerings such as $300 socks in the marketplace. Scattered across the globe, there are probably enough people who fancy their feet being adorned with the finest of materials and designs--and a company may be able to use the internet to not only find these people, but create a small community that shares a common desire for the best in socks. The floodgates are opening for small companies to get in the game and hone their offerings to these small niche markets in a much more effective fashion than large companies. Successfully entering a foreign market and developing an appeal consistent with the local tastes and experiences, offers smaller companies an additional opportunity to elevate their competitive position.

If interested, my thoughts on the topic:

(http://productglobal.typepad.com/gss/2007/09/300-socks-to-go.html)

[Craig Maginness]

Audall:

Thanks for the comment. I agree with all your affirming points about the proliferation of micro-markets. $300 socks I would have a problem with if I were reviewing your business plan -- but who knows. Best of luck with the business and I hope some of the ideas in this blog are of use to you in that endeavor.

Craig

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