Asia Pacific Breweries' Anchor Beer in Singapore (A) : a Repositioning Decision

This document is downloaded from DR‑NTU (https://dr.ntu.edu.sg) Nanyang Technological University, Singapore. Asia Pacific Breweries' anchor beer in Singapore (A) : a repositioning decision Chung, Cindy Mann Yien; Tan, Shirley 2003 Chung, C. M. Y., & Tan, S. (2003). Asia Pacific Breweries' Anchor Beer in Singapore (A): A Repositioning Decision. Singapore: The Asian Business Case Centre, Nanyang Technological University https://hdl.handle.net/10356/100075 © 2003 Nanyang Technological University, Singapore. Downloaded on 02 Oct 2021 01:08:07 SGT AsiaCase.com the Asian Business Case Centre ASIA PACIFIC BREWERIES' ANCHOR BEER IN Publication No: ABCC-2003-012A SINGAPORE (A): A REPOSITIONING DECISION Print copy version: 7 Oct 2003 Chung Mann Yien, Cindy and Shirley Tan In August 2001, Dorit Grueber, Assistant General Manager (Marketing) and Melvyn Ng, Senior Brand Manager (Specialty Brands), were discussing Anchor’s future and examining the remaining three options available to them. Asia Pacific Breweries was the largest brewery in Singapore with operations in several countries, including Malaysia, Cambodia, Thailand, Vietnam, China, and New Zealand. Anchor beer was a mainstream value label that had been in the market for more than 70 years. The brand suffered ten years of continuous decline in the 1990s and its market share had fallen to less than 6 percent. At this time some drastic decisions were clearly needed to either reposition or retire the non-performing brand. The two marketers were charged with the responsibility to evaluate the potential of Anchor beer and to define a new strategic role if possible. Melvyn Ng believed that repositioning was the best option but must now convince Dr. Les Buckley, General Manager, who had suspended all future expenditure on Anchor, that repositioning would return the sagging brand to profitability. Assistant Professor Chung Mann Yien, Cindy and Research Associate Shirley Tan prepared this case. The case is based on internal company sources and interviews with key personnel from Asia Pacific Breweries (Singapore) Pte. Ltd. The authors would like to acknowledge the support from Asia Pacific Breweries (Singapore) Pte. Ltd. As the case is not intended to illustrate either effective or ineffective practices or policies, the information presented reflects the authors' interpretation of events and serves merely to provide opportunities for class discussion. COPYRIGHT © 2003 Nanyang Technological University, Singapore. All rights reserved. Not to be reproduced, stored, transmitted or altered in any way without the written consent of Nanyang Technological University. For copies, please write to The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University, Nanyang Avenue, Singapore 639798 Phone: +65-6790-4864/6790-5706, Fax: +65-6791-6207, E-mail: [email protected] Page 2 AsiaCase.com ABCC-2003-012A the Asian Business Case Centre INTRODUCTION Melvyn Ng replied: Anchor is consistently declining at a rate The more popular opinion is to of 20 percent annually. The brand owner discontinue the brand. But, I really tried to re-position the brand several wonder if we can reposition Anchor to times in the past, which did not stop the target at the "20-25" segment. continuous decline. The brand has reached the end of its life cycle. The At this stage it was apparent to the two marketers question is how much residual value that many of the future discussions would revolve would the brand have with the current around why the previous campaigns failed and consumers and how long would they still should Anchor be repositioned or removed? At consider to buy Anchor. It is more or first the company had only two brands but now less only a question of time when there were fourteen others including foreign Anchor would not achieve any more labels. One concern arising from this was whether substantial volume and profit. The Anchor could capture the new segment with a problem is that the brand has no clear relevant positioning without cannibalising the positioning in the portfolio; it is only used other brands of the company? If yes, how should as an economy brand in the this be done in a credible way? Melvyn Ng was supermarkets, traditional coffee shops expected to present his recommendations to Dr. and hawker centres. The question is to Les Buckley, General Manager, who was a beer either discontinue the brand or give it a industry veteran at the helm of the company for new life, if this is possible at this stage. many years. Dr. Les Buckley had earlier suspended all future expenditures on Anchor. If This was the challenge facing Dorit Grueber, the two marketers were to propose repositioning, Assistant General Manager (Marketing) of Asia Melvyn Ng would need to present a cogent case Pacific Breweries Singapore (APBS) and Melvyn to convince him that taking this new direction Ng, Senior Brand Manager (Specialty Brands) in would return the sagging brand to profitability. 2001. Melvyn Ng wondered what he himself would recommend. BACKGROUND THE HISTORY OF ASIA PACIFIC BREWERIES One morning in August 2001, Dorit Grueber and Melvyn Ng were discussing Anchor's future and the The Asia Pacific Breweries (APB) was established remaining options available to them in her spacious on April 15, 1931 in Singapore. At that time, office at the brewery in Tuas, Singapore. Anchor Singapore with 557,000 residents was a thriving beer was a mainstream value label that had been entreport and one of the three British Straits in the market for over 70 years. Since the early Settlements; the other two were Malacca and 1930s, Anchor had reigned as a market leader but Penang. Formerly known as Malayan Breweries this glorious position was fast becoming history.After Limited, APB was a joint venture between ten years of continuous brand decline, Anchor's Netherlands' beer conglomerate Heineken N.V. and market share had fallen to less than 6 percent in Singapore's largest soft drink manufacturer, Fraser 2000. Although in the past decade several and Neave. They owned 42.5 percent and 37.9 nationwide marketing campaigns were launched to percent of the company respectively. Tiger, the turn around the flagging brand, none of them company's flagship brand, was launched in October succeeded in recovering lost ground. At this time 1932. some drastic decisions were clearly needed to either reposition or retire the non-performing brand. From the time of its founding, the Malayan Breweries was a small rival in the Singapore Dorit Grueber said to Melvyn Ng: market for a few years, while German Beck's1 Archipelago Brewery selling Anchor beer was the The senior management has given us more dominant player. An ephemeral Singapore the exciting taks to evaluate the potential beer war thus began but ended as soon as the of Anchor and to define a vision for the Malayan Breweries acquired its arch rival to brand. I think this is a great opportunity consolidate its market position and also to expand for us to develop a great marketing its operations into Malaya. The management stategy for the brand. buyout was finalised in 1941. AsiaCase.com Page 3 the Asian Business Case Centre ABCC-2003-012A From 1988 to 1996, APB embarked on rapid eightfold from around S$4,000 to over S$32,000, regionalisation through acquisitions and joint surpassing that of China, Taiwan, Korea and all ventures. The company's first landmark joint venture Southeast Asian countries. Both of these trends had agreement was signed with Shanghai's Mila Brewery positive impacts on industrial expansion and growth. in 1988. After the change of name in 1990 to reflect its new focus to build a regional presence, the Until the late 1980s, the beer business in Singapore, company expanded its operations to Cambodia, as well as in other parts of Asia, was highly localised. Thailand, Vietnam, China and New Zealand, and Driven by domestic market saturation, western beer built a network of fourteen breweries in these giants began to expand globally in the pursuit of countries. In 1989, the company sold 68 percent of new growth opportunities. Many penetrated Asian its beers in the Singaporean market; by 1999, markets, in particular those with rising income levels geographic diversification had substantially reduced and low beer consumption. When globalisation of the figure to 30 percent. beer companies gathered momentum, the result was a heightening competition for the Asian markets. The company's early commitment to quality Attempting to build an international presence for management was well rewarded with ISO 9002 their flagship brands, some companies began to certification by Lloyd's of London and it was the first develop global networks to support distribution. The Asian brewery to receive this award. Successful most aggressive ones scaled up their investments brand building had also won the company a string to build local brewing facilities. One example was of well-deserved accolades both locally and Carlsberg Breweries A/S, a Danish beer giant, whose regionally. A recent survey by the Far Eastern unswerving commitment to Asia led to the Economic Review named APB a leading Asian establishment of Carlsberg Asia, a joint venture with multinational corporation and ranked it fourth among Chang Beverages, the producer of Thailand's best the 25 Singaporean firms selected from thousands selling beer.2 of others. In the inaugural Singapore Brand Award, APB's Tiger was named the second strongest, after In 1997, Asia became the world's largest beer Singapore Airlines. continent, surpassing the North American market. Industrial growth rates were, however, lackluster he company generated annual revenues of S$1.009 from 1997 to 2000, due to the outbreak of a regional billion, $123.7 million of which was profit before financial crisis. Despite the downturn, global brewing interest and tax and it employed about 2,650 people companies continued to be positive about the throughout the region.

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