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VICTORIA BITTERSSituational Analysis

Name: Austin EavesStudent Number: s5056097Tutorial Time: Ms.Celeste Alcaraz, Thursdays 8:00 – 8:50pm

ContentsExecutive Summary.............................................................................................................................3

Introduction......................................................................................................................................4Company Background......................................................................................................................6

Situational Analysis..............................................................................................................................8Market Analysis...............................................................................................................................8

Alcohol consumption comparison graph – 53 years....................................................................9Consumer Wants..........................................................................................................................9....................................................................................................................................................10

Environmental Analysis.....................................................................................................................11Competitor Analysis: Most Threatening Labels................................................................................12Company Analysis.............................................................................................................................13References..........................................................................................................................................14

Executive Summary

Australia’s beer industry has been under constant strain throughout recent years due to a lower customer demand within the industry, this document will analyse how Victoria Bitters can compete within an industry that is declining. Whilst, simultaneously competing with superior labels that outrank VB in sales and design.Victoria Bitters has been a leading Australian brand in past years, however, due to its non-progressiveness and diminishing market, along with limited range and variety. It is proposed that VB undertake a brand repositioning in order to appeal to a larger target audience, maintain leverage on competitors, and meet 2016 societal standards.

Introduction Australia’s beer industry has been under constant strain throughout recent years due to a lower customer demand within the industry, with “Beer consumption down more than 15% over the last decade” (Couriermail.com, 2015). Additionally, mainstream brands are facing constant competition due to the uprising of Craft Beer, with an annual revenue growth of an estimated 10.1% (Couriermail.com, 2015), and cider with an 11% volume growth in 2014 (Trend Report, 2015).

Thomas Aitken, founder and head brewer of VB, produced the Australian classic back in 1854 (Victoriabitter.com, 2015). Since then, the beer hasn’t undertaken any major modifications to the taste or design. The only exception being an incident in 2012, where modifications were made to the taste, resulting in a huge outrage amongst brand loyalist (Victoriabitter.com, 2015). VB has also had failed attempts in introducing new product extensions, such as VB Raw which was removed from the market due to poor sales, “Raw wasn’t bad, just a bit forgettable, and it disappeared off the shelves without fanfare within a few months” (Philistinebrisbane, 2011).

Furthermore, Australian consumers are becoming more health oriented within recent years, this has sparked health initiated campaigns amongst mainstream markets. Lion, for example, has recently undertaken a movement against preservatives in beer with their new “Beer the Beautiful Truth” campaign (beerthebeautifultruth.com, 2016). Victoria Bitters has been a leading Australian brand in past years, however, due to its non-progressiveness and diminishing market, along with limited range and variety. It is proposed that VB undertake a brand repositioning in order to appeal to a larger target audience, maintain leverage on competitors, and meet 2016 societal standards.

0

VB’s current catalogue (excluding Raw)

A range of preservative free beers Undertaken by “Lion”.

Company BackgroundVictoria Bitters is under the jurisdiction SAB-Miller, of whom is currently dominating in the Australian beer market, consisting of 37.8% of all sales (in 2014) (euromonitor, 2016). Sab Miller is a highly affluent company, earning a net revenue of over $2.6 U.S billions in 2014 (SABMiller.com, 2015). Supporting 69,000 employees in over 80 different countries (SABMiller.com, 2015), SABMiller has undertaken a variety of environmentally friendly services in their beer production and remains “the world’s second-biggest brewer” to date (Greenblat.E, 2014)

In 2011 SABMiller bought Fosters for $12.3 Billion, since then the company has witnessed a “1% sales decline for its flagship brand VB while its wider Australian beer portfolio overshot volume falls posted by a weakened local market” (2014) (Greenblat.E, 2014). This fact, in collaboration with the decreasing beer consumption and demand in Australia, could result in a significant loss of money and a lower annual revenue for the company.

(See company shares next page)

Company Shares (Global - Historical Owner) | Historic | Total Volume | % breakdown (euromonitor.com, 2016)

Situational Analysis Market Analysis The alcohol industry, from an overall perspective is seeing a decrease, Abs.gov.au (2015) statistics reveal that “Australians are drinking less alcohol over than any time in the previous 50 years”. This can be seen evident in nearly every alcoholic category, except Cider, which within recent years has been growing at a rapid pace.

(Graph sourced from, abs.gov.au 2015)

Based off of the above graph, Australia’s alcohol consumption can be seen declining. However, Cider being a relatively new beverage within the alcoholic world, has been receiving a positive result within the market. With sales nearly doubling from 2009 – 2014 (abs.gov.au, 2015). This could be due to a limited supply of range in industry, whilst there are many different products available, it is possible that the Australian population seek new and exciting flavours. This could be the case in the beer market, an ‘IBIS World industry report, (2016)’, states that the “Per capita beer consumption has declined sharply as drinkers have given up traditional brands such as Victoria Bitter, in favour of premium and craft beers and other beverages like cider and wine”.

The overall beer industry has been seeing a constant decline in demand throughout recent years, with “consumption down more than 15% over the past decade” (abs.gov.au, 2012). Courier Mail (2015), states that “traditional brands forecast to lose market share to premium beers (including flavoured, dry, foreign-label and craft brands)”. Even despite the fact that craft beer and cider consist of a fairly small proportion of the market (an estimated “8.4% in 2015-2016” for craft beer (IbisWorldIndustryReport, 2015), and an estimated “11.4% in 2015-2016” for cider (IbisWorldIndustryReport, 2016)). The industry is growing at a fast rate, and is increasing in sales, rather than decreasing. This makes the cider, and especially the craft beer industry a valid competitor to Victoria Bitters sales.

Alcohol consumption comparison graph – 53 years

Graph sourced from (abs.gov.au, 2015)

This graph clearly illustrates the gradual decline in the alcohol industry, it also gives insight as to why relatively new products such as cider and craft beer, are succeeding. IBIS world (2015) states that “Drinkers have become increasingly discerning and more willing to try different brands and styles. As a result smaller brewers have emerged to fill this niche”. IBIS also stated that this is partly due to the increasingly “homogenous nature of traditional brews, and consumer demand for variety and quality”.

Consumer Wants All of the Following statistics found in the table below, were sourced via SurveyMonkey.com, Survey conducted by Brandon Barker. (Survey consists of 300 beer drinkers) –

63% of people prefer beers produced by small independent breweries over large, mainstream ones 85% of people said taste was the most important factor when choosing a beer 61% of people stated they care about the price of the beer in decision making 54% of people said that the style of the beer was important in their decision making 55% of people typically buy a 6-pack, rather than more 77% of people stated they prefer bottle to cans 47% drink more beer in the summer time

Understanding the wants of the public, consumer wise and environmentally, is important for any business if they want to appeal to a broader audience. It is recommended that Victoria Bitters appeals to these demands, in order to successfully reposition the product, and escape the decline phase of the product life cycle.

(Graph sourced from free-power-point-templates.com, 2016)

Environmental Analysis The macro environment provides great opportunity for Victoria Bitter’s product repositioning, through customer demands, to societal standards and environmental care. Perhaps the only limiting factors found would be the controversy regarding advertising that VB could potentially be guilty of; and lock out laws.

POLITICAL

(huffingtonpost.com, 2016)

(ro.uow.edu, 2005)

Lockout laws In Sydney and Proposed lockouts in QLD – Less consumption

Sugar Tax – Beer companies already pushing for preservative and sugar free beers (e.g. lion)

Advertising regulations – entails to whom the advertisement is aimed at, packaging, where. Also political correctness, nudity, exploitation of women etc.

ECONOMIC

(IbisWorldIndustryReport, 2015) & (2016)

The decrease in alcohol/beer demand The rise of Craft beer (8.4%), and cider sales (11.4%) [2015-

2016] Increase in foreign labels Expected increase in coarse grains in the years (2015-2016) –

this combined with low beer demand could be detrimental to sales

SOCIOCULTURAL

(SABMiller.com, reading report, 2015)

(news.com.au, 2015)

Public demand to know what companies do with resources Public demand for equal rights, (SABMiller lists that 29.6% of

their managers and executives are female) People don’t want sugar or preservatives in their beer, (8/10

Australians state they agree with sugar tax) ~ Australia becoming more health conscious

Environmental care – push for water saving and recyclable waste – SABMiller has enforced this agenda

TECHNOLOGICAL (ausfoodnews.com.au, 2014)

(craftbrewingbusiness.com, J. Dunphy, 2014)

Constant technological advances are being produced in the line of production. Coke AMITIL for example, is moving into the beer industry, due to their equipment advances, and optimization.

Mass discussion on changing the lid on beer cans to make more appealing. Lids are similar to cans found in supermarkets; proposed that this design effects the taste and “aroma” – Great marketing scheme

Competitor Analysis: Most Threatening LabelsAll prices and product ranges were sourced from (danmurphys.com.au, 2016) prices and range selection vary upon distributor.

nt XXXX GOLD Target Market: Similar to Victoria Bitter, male, working class. However, recent products such as ‘Summer Bright Lager’, and campaign such as XXXX Island, are appealing to a larger audience. (James Atkinson, the shout.com.au, 2012).

Range: Lager, Pale Ale, Summer Bright Lager, Bitter, Summer Bright Lager with Natural Lime, Origins Crip Lager

Price: Based off of Lager (VB’s predominant beer) 24 pack 6 pack Individual$36.95 $14.49 $3.09 (Lager stubbies)

Marketing TelevisionFacebook Instagram Twitter

Advantages: Great marketing techniques, online presence, more product range than VB, and appeals to a larger audience. Hence why XXXX Gold is Victoria Bitter’s highest mainstream competitor.

Disadvantages: Unfortunately XXXX Gold has absolute advantage over VB in marketing and price, disadvantages are inapplicable in comparison to the two brands.

5 SEEDS, CIDERTarget Market: 5 seeds particularly aim towards a younger audience, especially in their advertisements, predominately using humour as seen in their “delivery girl ads” (mUmBRELLA, 2013). This is consolidated through its increasing demand in pubs, bars, and nightclubs (ibisworldindustryreport, 2016).

Range: Crisp Apple Cider, Cloudy Apple Cider, Premium Cut Dry Apple Cider, Bright Apple Cider, Night Orchard Apple Cider with Vodka & Berries, Pear Cider.

Price: Based off of Crisp Apple CiderCase of 24 Pack of 6 Individual$51.99 $16.49 $3.49

(Bottles)

MarketingTelevision Facebook TwitterInstagram

Advantages: Huge range of product selection despite the limitations cider have. Leading brand in cider industry (ibisworldindustryreport, 2016). Large target market with a growing industry, similarly to Craft beer, except 5 seeds poses a genuine threat due to its predominant stance in the market.

Disadvantages: Product variation will eventually run out

Company Analysis

SWOT

STRENGTHS Loyal customer market Renowned Australian beer

(patriotic?) Very old – could be classified

as a classic, or vintage beer Lots of potential product

extensions due to low range

WEAKNESSES Becoming a forgotten beer Un-creative logo, design hasn’t

changed Advertisements limited to sport Only two beer types

OPPURTUNITIES Brand repositioning has great

potential Victoria Bitters has the

potential to gain mass attention by re-inventing itself as a modern beer that conforms to societal wants and demands

Essentially: change everything

THREATS Competitors and relatively new

industries taking over the market, e.g. Craft beer and cider

References Victoriabitter.com.au. (2015). The Brew | Victoria Bitter. [online] Available at: https://www.victoriabitter.com.au/the-brew [Accessed 22 Mar. 2016].

Couriermail.com.au. (2015). Australia's craft beer industry booming. [online] Available at: http://www.couriermail.com.au/business/breaking-news/australias-craft-beer-industry-booming/news-story/f10364bc35b3068243861e3ca76bbc2d?=WEEK [Accessed 22 Mar. 2016].

Portal.euromonitor.com.libraryproxy.griffith.edu.au. (2016). Statistics. [online] Available at: http://www.portal.euromonitor.com.libraryproxy.griffith.edu.au/portal/statistics/tab [Accessed 22 Mar. 2016].

Greenblat, E. (2014). VB sales down, SABMiller reports. [online] The Sydney Morning Herald. Available at: http://www.smh.com.au/business/vb-sales-down-sabmiller-reports-20140523-38ua1.html [Accessed 22 Mar. 2016].

Sabmiller.com. (2016). Sustainable Development Summary Report. [online] Available at: http://www.sabmiller.com/docs/default-source/sustainability-documents/sabmiller-sustainable-development-report-2015.pdf?sfvrsn=4 [Accessed 22 Mar. 2016].

Beerthebeautifultruth.com. (2016). The Nutrition Content of Beer. [online] Available at: http://www.beerthebeautifultruth.com/the-truth-about-nutrition/ [Accessed 22 Mar. 2016].

Philistinebrisbane.wordpress.com. (2011). Philistine. [online] Available at: https://philistinebrisbane.wordpress.com/tag/fail/ [Accessed 22 Mar. 2016].

IBIS World Industry Report: Cider Production in Australia. (2016). Retrieved from:http://www.ibisworld.com.au/industry/

IBIS World Industry Report: Beer Manufacturing in Australia. (2015). Retrieved from:http://www.ibisworld.com.au/industry/

Abs.gov.au. (2015). Longterm Trends - Apparent Consumption of Alcohol, Australia, 2013-14. [online] Available at: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/4307.0.55.001Main%20Features62013-14?opendocument&tabname=Summary&prodno=4307.0.55.001&issue=2013-14&num=&view= [Accessed 22 Mar. 2016].

Barker, B. (2014). Infographic: More People Drink Craft Beer vs. Big Beer – Do You? | SurveyMonkey Blog. [online] SurveyMonkey. Available at: https://www.surveymonkey.com/blog/2014/05/22/more-people-drink-craft-beer-vs-big-beer-do-you/ [Accessed 22 Mar. 2016].

Free-power-point-templates.com. (2016). Free Product Life Cycle PowerPoint Template | PowerPoint Presentation. [online] Available at: http://www.free-power-point-templates.com/articles/free-product-life-cycle-powerpoint-template/ [Accessed 23 Mar. 2016].

Butler, J. (2016). Queensland Has Just Passed New Sydney-Style Lockout Laws. [online] The Huffington Post. Available at: http://www.huffingtonpost.com.au/2016/02/16/queensland-lockout-sydney_n_9247578.html [Accessed 23 Mar. 2016].

Jones, Sandra. (2005). Beer, Boats and Breasts: Responses to a controversial alcohol advertising campaign. [online] Ro.uow.edu.au. Available at: http://ro.uow.edu.au/cgi/viewcontent.cgi?article=1074&context=hbspapers [Accessed 23 Mar. 2016].

Dunlevy, S. (2015). Tax sugary drinks and spend the $250 million raised on tackling childhood obesity say eight in ten Australians.. [online] NewsComAu. Available at: http://www.news.com.au/lifestyle/health/the-250-million-tax-eight-in-ten-australians-say-they-would-support/news-story/c98fa7972cfd2df50ad71552f66bc032 [Accessed 23 Mar. 2016].

Langley, S. (2014). Coca Cola Amatil launches beers and cider in Australia | Australian Food News. [online] Ausfoodnews.com.au. Available at: http://ausfoodnews.com.au/2014/01/13/coca-cola-amatil-launches-beers-and-cider-in-australia.html [Accessed 24 Mar. 2016].

Dunphy, J. (2014). 3 can technologies that could change the craft beer industry. [online] Craft Brewing Business. Available at: http://www.craftbrewingbusiness.com/packaging-distribution/craft-beer-can-technology/ [Accessed 24 Mar. 2016].

Atkinson, J. (2016). XXXX Island: The biggest beer campaign ever? - The Shout, Hotel News, Liquor News, Bar + Club News. [online] Theshout.com.au. Available at: http://www.theshout.com.au/2012/03/16/article/XXXX-Island-The-biggest-beer-campaign-ever/ADQYEKPBCA.html [Accessed 24 Mar. 2016].

Danmurphys.com.au. (2016). Dan Murphys. [online] Available at: https://www.danmurphys.com.au/dm/search/dm_search_results_gallery.jsp;jsessionid=8343DFBE6C521C4F320622F4451A48A1.ncdlmorasp1301?bmForm=search&bmFormID=lezbmjs%2F153a60d5cf7&bmUID=lezbmjt&bmIsForm=true&bmPrevTemplate=%2Fdm%2Fhome.jsp&bmEditable=searchterm&bmHidden=searchterm&searchterm=XXXX&bmEditable=search&bmHidden=search&search=XXXX&bmEditable=searchText&bmHidden=searchText&searchText=&bmEditable=attribute&bmHidden=attribute&attribute=&bmEditable=value&bmHidden=value&value=&bmHidden=searchSubmitted&searchSubmitted=true&bmEditable=giftLandingPrevPath&bmHidden=giftLandingPrevPath&giftLandingPrevPath=&bmText=searchInput&searchInput=XXXX&bmFields=bmText%2CbmEditable%2CbmPrevTemplate%2CbmForm%2CbmIsForm%2CbmUID%2CbmHidden%2CbmFormID&bmHash=7b8abf92944a4f8022db25b6572e80e50034a1ae [Accessed 24 Mar. 2016].

mUmBRELLA. (2013). 5 Seeds sells itself as 'not your ordinary cider' in new campaign from BMF - mUmBRELLA. [online] Available at: http://mumbrella.com.au/5-seeds-introduces-consumers-5-seeds-orchard-new-campaign-196968 [Accessed 24 Mar. 2016].