Sample Law Paper on Saku Brewery Case

Saku Brewery Case

SWOT Analysis

            Saku Brewery Company provides the best example of an organization that has gone through a tremendous historical transformation since its establishment in 1820. The company has recorded massive changes in a wide range of factors that have played a critical role in its overall growth (Pierce and Mitchell 1). These factors are often summarized in the forms of a SWOT analysis, which include strengths, weaknesses, opportunities, and threats that impact its overall performance. Hence, the company’s SWOT analysis model is summarized below.

Table 1: Saku Brewery Company SWOT Analysis Model

Strengths

Ø  Enjoys a big market share in the domestic beer industry. More than 65% of beer drinkers had consumed its products over the last 6 months. Control approximately 42.5% of the market share.

Ø  Have a wide range and a broad variety of beverages to meet customer’s changing needs and preferences.

Ø  Enjoys a high brand loyalty with a positive association, including Carlsberg, Guinness, and Kilkenny.

Ø  High quality products

Weaknesses

Ø  Has a limited market share in the soft drinks industry as a result of numerous businesses and distraction from other products, especially the beer.

Ø  Has never gained global recognition as a result of failing to appeal to numerous younger drinkers.

Ø  Relies on limited products. Approximately 80% of its sales come from the domestic market.

Opportunities

Ø  Expand internationally by selling its products in new markets, including Finland.

Ø  Can drive and increase sales by targeting bars, hotels, and restaurants.

Ø  Introduction of energy drinks in the market.

Ø  Should develop a hard seltzer to reach the young consumers.

Threats

Ø  Stiff competition from big brands such as Tartu, which exclusively targets Saku clients.

Ø  Probability of cannibalization of sales as a result of targeting the Finish market.

Ø  Imported beers are increasingly gaining popularity.

 

An Examination of the Profit Margins and Financials of Every Saku Brewery Company’s Products in their Portfolio

            The following table offers a comprehensive outline of Saku Brewery Company’s products’ growth rate, relative market share, and their corresponding annual sales in Euros. Every product’s relative or comparative market share was determined by dividing their market share with that of competitors, as illustrated below.

Product’s Relative Market Share = Its Market Share/Competitor’s Market Share

 

 

Table 2: Saku Brewery Company Profit Margins and Financials

Type of Product

 

The Rate of Growth in the Market in % Relative/Comparative Market Share Annual Sales in 2002 Annual Sales in 2003  
Soft Drinks 5% 0.06 €1,138,000 €1,110,000
Imported Beer 12.5% 0.45 €688,000 €1,189,000
Cider 20% 1.20 €159,000 €943,000
Mineral Water 8% 0.65 €1,238,000 €1,381,000
Domestic Beer Less than 10% 1.22 €22, 581,000 €23,568,000
Long Drinks 30% 1.18 €690,000 €963,000

 

A comprehensive review of the case study revealed that Saku Brewery Company recorded a 4.8% growth in revenue between 2002 and 2003, which led to the realization of total revenue of 28,289,000 and 29,661,000 in the two year period, respectively (Pierce and Mitchell 3). The company’s gross margin for its domestic beers grew from 17.5% to 18.0% from 2002 to 2003 with a corresponding increase in its imported beers from 21.0% to 23.0% during the same period. Saku’s ciders gross margin and long drinks also recorded a collective improvement from 23.0% to 25.0% while that of the mineral water declined from 8.5% to 8.0%. The gross margin for the company’s soft drinks recorded a limited growth from 18.5% to 19.0% (Pierce and Mitchell 5). Hence, the company can retain its best selling brands and drop those performing dismally such as soft drinks and mineral water.

Saku Brewery Company BCG (Boston Consulting Group) Type Product Portfolio Analysis

The following figure illustrates the Saku Brewery Company’s BCG Matrix for its corresponding products. This approach plays a vital role in positioning every product sold by the company via the comparison of their corresponding market growth rate and the associated market share. This matrix is essential when planning and observing the overall potential growth opportunities of every product sold by the company (Pierce and Mitchell 5). Every product’s position on the matrix illustrates whether the company should invest, discontinue, or develop new ones.

Saku Brewery Company BCG Matrix

  High Low
High STARS

Ø  Long drinks

Ø  Kiss Cider

QUESTION MARKS

Ø  Imported Beer

Ø  Imported mineral water

Low CASH COWS

Ø  The company’s domestic beer

DOGS

Ø  Domestic Mineral water

Ø  Soft drinks

Relative Market Share

 

Recommendation

This section seeks to provide a comprehensive analysis of Saku Beverage Company’s performance in the industry and develop an evidence-based product portfolio plan that they should choose.

Products 

            A comprehensive analysis of Saku Beverage Company’s product portfolio played a vital role in helping the research team to identify specific products that the company should retain and those that ought to be dropped. Some of the products that should be retained include domestic beer, long drink, imported beer, and cider because they had a significant increase in their gross margins (Pierce and Mitchell 8). Conversely, Saku Beverage Company’s management should drop soft drinks and mineral water due to their decline in gross profit margin. This approach will be essential in helping the company to attain its long-term strategic and financial goals, as discussed in the case study.

Price

            Saku Beverage Company’s should devise appropriate pricing strategies to attract and retain more customers. A detailed review of the case study indicated that the company prices its products comparatively close to its rivals at approximately €1.28 and retails its can at around €1.02. Hence, the company should neither decrease nor increase these prices (Pierce and Mitchell 13). Decreasing the cost of products will compel customers to associate them with low quality while increasing them may inspire them to seek for alternative brands.

Advertisements and Promotions

            The management of Saku Beverage Company has a critical role to play in ensuring that their organization focuses exclusively on a wide range of promotional attributes of its products to attain market sustainability. Hence, the company should hire influencers during concerts, sporting events like soccer and hockey to promote their products (Pierce and Mitchell 15). Many consumers tend to utilize products as a result of associating them with their celebrities. Lastly, the company should use social media platforms, including Facebook and Instagram to attract more customers.

Target Market Selection (Including Possibly Exporting to Finland)

It is increasingly becoming crucial for the Saku Beverage Company to identify and target appropriate markets to grow its profitability and sales volume. Finland is one of the most vital markets that Saku Beverage Company’s sales team should target. Such markets have a wide range of new customers that can help grow the company’s profitability.

Differentiation

Saku Beverage Company’s leadership should focus exclusively on promoting its products across its target markets. Hence, identification of appropriate differentiation approaches can be an essential step towards ensuring that the company sells unique and distinct items to rule out all forms of competition in the market 9(Pierce and Mitchell 18).  First, Saku Beverage Company should focus on improving the quality, taste, and originality of its products as its main selling points. Second, the company should use a wide range of cans that are unique in sizes and shapes to attract customers. Lastly, Saku can focus exclusively on its tagline “brewing for you” to transform consumers’ perception and value for its products.

 

 

Works Cited

Pierce, Michael, R. and Mitchell, Jordan. Product portfolio planning at Estonia’s Saku Brewery.  Richard Ivey School of Business: The University of Western Ontario, London, Ontario, Canada. Harvard Business Review, October 17, 2005, https://store.hbr.org/product/product-portfolio-planning-at-estonia-s-saku-brewery/905A28 . Accessed on April 14, 2021.