Why Did Grolsch Globalize and How Well Has It Performed Internationally?
Why did Grolsch globalize and how well has it performed internationally?
In its presentation to investors, Grolsch emphasized that it targeted a premium, and differentiated position in the markets in which it competed. It also highlighted adaptation around its core products as its key strategy for international growth. But why after years of being domestic, did Grolsch chose to globalize with SABMiller?
One reason Grolsch went global was to reduce the company's reliance on local and national markets. In the 1960s-70s, the domestic market in the Netherlands began to shrink as Heineken and Amstel merged and took ownership of 50% of the Dutch market. Total consumption in the Netherlands decreased from 2000 to 2005. In 2007, Grolsch’s home market of the Netherlands accounted for only half of its total volume and 65% of its revenue. Grolsch only owned 13% of the volume in the Netherlands alongside Bavaria (17%), Heineken/Amstel (46%), and Interbrew (14%) in 2007.
The management team of Grolsch noticed that declines in consumer demand at home could be offset by increases in consumer demand in international markets. The Grolsch brand was considered a premium lager and was differentiated and was recognizable by the crown cork bottles in international markets. Premium lagers also have been in demand globally. Management saw significant additional potential for the Grolsch brand across Africa and Latin America in particular, where the premium segment was and is still in its early stages.
Another reason for expansion was Grolsch saw they could reduce costs and increase economies of scale by setting up distribution and licensing agreements with foreign competitors to increase volume and to extend their reach. Larger markets also mean the potential for greater profit, so companies go global to seek new business opportunities. They will also benefit from efficiency of new facilities and brewing processes, decrease cost in procurement prices, decreases in overhead
In its presentation to investors, Grolsch emphasized that it targeted a premium, and differentiated position in the markets in which it competed. It also highlighted adaptation around its core products as its key strategy for international growth. But why after years of being domestic, did Grolsch chose to globalize with SABMiller?
One reason Grolsch went global was to reduce the company's reliance on local and national markets. In the 1960s-70s, the domestic market in the Netherlands began to shrink as Heineken and Amstel merged and took ownership of 50% of the Dutch market. Total consumption in the Netherlands decreased from 2000 to 2005. In 2007, Grolsch’s home market of the Netherlands accounted for only half of its total volume and 65% of its revenue. Grolsch only owned 13% of the volume in the Netherlands alongside Bavaria (17%), Heineken/Amstel (46%), and Interbrew (14%) in 2007.
The management team of Grolsch noticed that declines in consumer demand at home could be offset by increases in consumer demand in international markets. The Grolsch brand was considered a premium lager and was differentiated and was recognizable by the crown cork bottles in international markets. Premium lagers also have been in demand globally. Management saw significant additional potential for the Grolsch brand across Africa and Latin America in particular, where the premium segment was and is still in its early stages.
Another reason for expansion was Grolsch saw they could reduce costs and increase economies of scale by setting up distribution and licensing agreements with foreign competitors to increase volume and to extend their reach. Larger markets also mean the potential for greater profit, so companies go global to seek new business opportunities. They will also benefit from efficiency of new facilities and brewing processes, decrease cost in procurement prices, decreases in overhead