Market Feasibility Study For Tsingtao Beer

Market Feasibility Study For Tsingtao BeerTsingtao brewageery was founded in 1903 by German and British settlers in Qing Dao city, China. Until 1916, it was ingested by The Anglo-German Brewery Co. Ltd, after which it became nationalized as a state-owned encipherprise in 1949. The company was later privatized through a merger with 3 other breweries and was called Tsingtao Brewery Company Limited. Though the Tsingtao brand has the legacy of a German brewery, it is regarded as a symbol of Chinese heritage, and is soon the second largest brewer by volume in China with approximately 50 beer brings and three malting mills in 18 provinces and cities across China. Tsingtao is a laager beer brand that enjoys national statistical distribution coverage and is touted as the bailiwick Beer in China.Tsingtao beer is make from 100% natural ingredients with no artificial colourings, flavouring, or preservatives used in the beer. Its brand portfolio consists of the Tsingtao beer (flagship b rew), Tsingtao Pure Draft, Tsingtao Dark Beer, Tsingtao Green Beer, and Tsingtao Stout.Tsingtao adopts a bilateral business strategy, wherein it has been targeting Generation Y in order to manikin its brand aw areness and strengthen its brand associations. It has also been making efforts to puzzle transnationally through business agreements and acquisitions. Tsingtaos main target grocery is younker aged between 21-34, who are sporty and passionate about achieving their dreams. Tsingtao beers are known to throw off a light smooth taste and indeed open fire be appealing to the younger generation who mostly choose alcoholic beverages that can be consumed on the go.However, though a leadership beer brand in China, Tsingtao has low brand sentiency planetaryly, and in that respectfore, its yield in the international merchandise has been rather sluggish over the past a few(prenominal)er twelvemonths.capital of capital of capital of capital of capital of capital of capita l of Singapore Market OverviewSingapore is a leader in international tourism in Asia and is one of the fastest growing cities in the world. Thus, it is the endpoint with the maximum potentiality for ripening. Among the ASEAN countries, Singapore is strategically located and has a head-developed economy, an slack environment that encourages foreign investments, and a climate for beer habit throughout the year. Singapore is ranked as the top country for ease of doing business in. Singapore not only facilitates adept returns on investments, but also has good infrastructure provisions, thereby making the introduction of Tsingtao beer in Singapore a viable option for the company.Beer Industry in SingaporeThe increasing popularity of friendly drinking in Singapore has boosted the growth of beer products, which has resulted in a 7% volume growth of beer consumption. With the government easing the licensing policies to sell alcohol at pubs, bars, and restaurants, the beer consumptio n trend has increased over time. Also, the consumption of beer has increased at home gatherings and social events. The increasing number of tourists together with the unveiling of casinos and radical entertainment outlets has also boosted consumer spending on alcoholic drinks much(prenominal)(prenominal) as beer.A late(a) Euromonitor research chthonicwrite states that in the past few years, lager beer accounted for the book of beer sales in Singapore. Specifically, imported premium lager and imported standard lager continue to drive volume growth in beer. With increasing exitingness of Singaporeans to spend more than, consumers are spending on higher(prenominal) superior products, and therefore, there is a huge demand for premium lager beer. The outlets that serve premium lager beers are most practically frequented by tourists, who in turn are highly resemblingly to secure them.The report also states that the key consumers of beer in Singapore tend to be working adult s of different ages. However, it has also been observed that an increasing number of young adults and women are participating in social drinking and in the consumption of beer. This is specially true for lager, which is lighter than other alcoholic drinks and hence is more palatable. competitor in SingaporeSingapore beer market is dominated by Asia pacific Breweries (APB), mainly due to the overwhelming popularity of its brand, Tiger Beer. APB has a market luck of 68.7% with Tiger beer constituting nearly 40.9% market share of APB. Other major(ip) brands let in Carlsberg and Heineken.Tiger Beer Tiger beer is the market leader in Singapore. It is a topical anaesthetic brand with a very unfaltering brand presence. Its superior distribution network with retail outlets, convenience stores, supermarkets, and pubs, can prove to be problematic competition for Tsingtao.Carlsberg Carlsberg is the second most popular beer brand in Singapore and is operational under various brand labels . Carlsberg Green Label, the flagship product, is the leading international premium lager beer in Singapore. Being a European beer, Carlsberg has a positive brand image associated with it.Heineken Heineken is the flagship product of the company and is brewed locally in Singapore by APB. The key factors of competition with the Heineken brand include strong distribution network across food beverage, retail, and entertainment outlets in Singapore, a positive brand image as an international premium lager, and a superior brand presence and perception as a ball-shaped brand.Prospects in SingaporeWith the continuous expansion of the social drinking photo in Singapore, beer is projected to see steady growth in the future. The recent Euromonitor report estimates a total volume compound annual growth rate (CAGR) of 4% for beer in Singapore. However, the report also states that as the market is take a craping maturity, the forecast total volume growth is projected to windy down over the y ears.Due to its wider appeal, lager is expected to drive the bulk of beer sales in Singapore. In their purchasing of beer products, Singaporeans are largely dictated by brand image, and therefore current-fashioned product launches by major well-known brands are expected to do well. Investing in publicizing and promotions is predicted to improve the consumption of such products.Owing to the huge growth potential for beer consumption, especially for lager beer, it would be the right move for Tsingtao to enter the Singapore market. However, with Singaporeans perceiving Chinese products to be inferior, both in terms of quality and hygiene, there is a possibility of a negative brand perception world associated with Tsingtao. With proper promotion and advertising, this mindset of consumers can be changed.Critical achiever FactorsThe beer labor is changing constantly in the Singapore market. Mergers and acquisitions get decrease the number of brewers, but the varieties of beer hav e increased. The major brewers have the resources to compete in nearly all facets of the industry. Moreover, as beer is a substitutable product, customer consignment keeps shifting. With these dynamics, if Tsingtao has to enter the Singapore market, it must focus on the following factors oblation huge variety, both in terms of flavors and categoriesConsumers preferences have become more sophisticated and they look for unique tastes in beer, wine and other spirits. Books, internet, and magazines have contributed to the increasing popularity of beer as beer drinkers choose to find out and learn more about the brewing process. The beer hang onict is now aware of the type of beer that pairs well with a particular type of food. Seasonal flavors cater to the unique tastes and add to the charm of specialty beer.Building good descents with distributors and networkingWith so many brands and varieties of beer available today, the relationship with the distributor is very important to gain access to the market. The distributors have a good understanding of the products and know which products sell quickly, thus ensuring that such products are al ways available to the consumers. Therefore, their acceptance of the product is a searing factor in the products success. Once the relationship with the distributors is established, the sales representatives of Tsingtao should sustain the relationship by delivering superior quality products on time and ensuring that promised quantities are made available.Creating unique marketing and advertising strategiesCreative marketing strategies can uphold puff new customers while marketing directly to the consumer can abet create demand for the product, thus increasing the likelihood that distributors result purchase it. Therefore, it is important for Tsingtao to invest time and money in creating a perfect(a) marketing strategy.Also, by enticing youngsters with promotional offers during happy hours and by featuring nightlife places in advertisements, Tsingtaos brand image lead be established as a beer for the youth. Tsingtao can also browse events at pubs and nightclubs, thereby creating brand sentience and facilitating the trial of its beer for first-time consumers.Customer satisfactionCustomer satisfaction is driven by how well the products are sold. An essential factor for the success of Tsingtao is to ensure that customers are satisfied with the current offerings at the current prices.Tapping on tourismSingapore is Asias leading travel destination and welcomes one thousand thousands of tourists every year. With the increasing number of tourists, the consumption of beer is increasing over time. Therefore, it is very important for Tsingtao to create its brand awareness on a global platform so as to attract tourists.Market Entry Options and Key ConsiderationsGiven the potential of the beer market in Singapore, Tsingtao can be launched in Singapore in the following waysExporting to SingaporeTsingtao beer c an be exported to Singapore from its plant in China. The company can go about it as followsIndirect exporting, wherein Tsingtao uses a middleman based in its home market to handle the exporting. accommodative exporting, wherein Tsingtao enters into an agreement with a local or foreign company and the supply company will use its distribution network to sell the Tsingtao beer in Singapore.Direct exporting, wherein Tsingtao sets up its own export organization and relies on a middleman based in the Singapore market.The advantage of exporting Tsingtao to Singapore is that the product can be first tested in the market and if the product is successful, the company can look at other options, such as introducing more varieties. On the other hand, the primary disadvantage is the high export duties for alcohol.FranchisingAnother alternative to exports is to find a franchisee in Singapore who can sell under the Tsingtao brand. The advantage of such a scenario is that it would stand Tsingtao a temporary vehicle to conduct primary research without losing view of its brand. But since the capacity will be small, a spurt in demand cannot be met immediately.Joint Venture with APBTsingtao could form a interchangeable venture with APB, the largest brewery with maximum brand share in Singapore. The advantages of such a merger would be tapping into the established distribution channels of APB, while on the downside, Tsingtao will have to compete with other major brands including Tiger and Heineken brewed under license at APB.Wholly-owned PlantTsingtao could also set up its own full-fledged business plant in Singapore. This would help the company contact the increasing demand of beer in Singapore. However, in this scenario, Tsingtao will become a legal and financial entity in Singapore and will have to fulfill the local licensing and financial obligations. To set up a small plant with production capacity of less than 1.8 million litres of beer or stout, Tsingtao would have to baffle a fee of S$8,400 annually, whereas to set up a large-scale brewery, it would have to incur a fee of S$43,200 annually.Recommended ActionsBeer is expected to achieve a total volume CAGR of 4% to reach 130 million litres in 2016. It is evident that there is a huge growing market for beer in Singapore. Hence, the beer market in Singapore has the potential for the entry of new products like Tsingtao beer. Based on the current beer market scenario and the trends in the beer industry in Singapore, the following are the recommendations for Tsingtao to enter the Singapore market.It is advantageous for Tsingtao to enter the Singapore market as a wholly owned subsidiary company and initially set up a microbrewery in Singapore. This entry will give them brand exclusivity which they might not gain if they enter into a partnership with Asia Pacific Breweries which brews the big brands like Tiger Beer, Heineken, Anchor, Barons Strong Brew and Guinness. By setting up a microbrewery, they will have to consecrate a license fee of only S$8,400 annually as compared to S$43,200 annually for large scale breweries. Thus, the savings of S$34,800 per year can be used on RD to improve the performance and quality of their products.In Singapore, in the coming years, growth in on-trade volume sales (sales in pubs, clubs, bars, and restaurants) is forecast to be higher than that of off-trade volume sales (sales in corner shops, retailers, wholesalers, cash and carry). Thus, Tsingtao beer can partner with popular pubs, clubs, bars and restaurants, especially those targeting the youth, as the youth is the target market for Tsingtao beer. This channel of distribution will maximize its sales in Singapore.In order to create new demand for beer consumption in a market that has already reached saturation, Tsingtao can come out with a variety of products that appeal to local tastes and complement the local cuisine in Singapore. They can include local ingredients like Calamansi and Pan dan to flavour their beers.As Tsingtao is mainly targeted at the youth, it can partner with and sponsor youth events like the Singapore younker Festival and the Singapore Youth Olympics Festival to build its brand image and gain brand equity.As Tsingtao is a light lager beer, it can be positioned as a better choice for health conscious people, particularly women, who most often prefer light beer.Tsingtao should make its presence felt in the free-enterprise(a) Singapore beer market through advertisements and promotions in digital and social media. As it aims to target the youth, it can leverage on the internet and social media to reach out to a large youth population. It should also actively subscribe to in youth activities to promote its brand image.Through strong promotions, it will be able to build its brand equity, remove the perception of threepenny Chinese Beer, and be positioned as one of the leading beer brands in the country.