CASE STUDY: AUSTRALIAN BEVERAGES LTD (ABL)
WHAT TYPE OF ORGANISATION IS ABL?
Company Type: Australian Public Company, Limited by Shares
* ABL is a listed company on the ASX (1996)
* Commenced operations in 1937
* Moved into Non-CSD’s in 1984 starting with fruit drinks (acquisition of fruit juice manufacturer in VIC) * Entered milk market in 1990 (acquisition of manufacturing facilities from a dairy co-operative) * Entered snack food and complimentary foods market
* Operates on a multi beverage strategy (product range has been expanded to cover all categories of the non-alcoholic beverage market. * IS NOT INVOLVED IN BOTTLED WATER SEGMENT OF INDUSTRY!
* In 2011, ABL was the second largest supplier of non-alcoholic beverages
Strategy: To satisfy Australia’s thirst by being a manufacturer of non-alcoholic beverages for every occasion in every location. Aim: ABL intends to further reduce dependence on CSD’s by 2017 and increase market share of non-CSD so that CSDs will represent less than 40% of company revenue as part of its multi-beverage strategy.
CSD (carbonated soft drinks) is expected to decline.
Carbonation is the process of dissolving carbon dioxide in water. The only major non-alcoholic beverage not produced by the company now is bottled water. Bottled water was the fastest growing category in the non-alcoholic beverage market in Australia. Consumers are becoming more health conscious and changing their drinking habits away from CSDs to healthier beverages. Hydrate Water and Fountain Springs are potential acquisition targets for review!
MODULE 2 ANAYLSIS (EXTERNAL ENVIRONMENT)
How would you define the industry: Non-alcoholic beverage industry (industry – as a group of organisations or business units producing close substitutes) ABL
* Operates in the Australian non-alcoholic beverage industry * Currently second largest competitor in non-alcoholic beverage market behind Butlers Corporation * Specific industry segments include:
* CSD’s (in decline stage)
* Diet CSDs
* Bottled water (Still & Water)
* Milk drinks
* Fruit drinks
* Sports drinks
* Ready to drink tea/coffee
* Energy drinks
* IS NOT INVOLVED IN BOTTLED WATER SEGMENT OF INDUSTRY!
* Also expanded into related market of snack foods
* ABL supplies through the supermarket, convenience store and hospitality distribution channels * Operates in the processing and bottling components of the value chain, and not in retailing ABL has an alliance with a US based food and beverage conglomerates is in place to monitor trends in the US as Australia usually follows US trends.
Bottled Water Industry
* Australian bottled water manufacturing industry (in 2011 fastest growing category) * Industry currently in growth stage
* Major segments are
* still water holds 76% of consumption in 2011
* sparkling water is 24% of consumption in 2011
* Low value and high volume nature of product
* Consumption of bottled water in Australia is significantly lower as compared with total consumption of top 10 global bottled water consuming countries (fashion, climate, poor drinking water) Potential for growth in Australian Market
Key costs: Water supplies, labels, other packaging material, glass and plastic resin (generally purchased on 5 year contract) Is it Global? Industry is Global.
Is the organisation Australian or based overseas?
ABL is based in Australia
* Major manufacturing plant capable of processing over one-billion drinks per year was built in New South Wales (in 2010) * State-of-the-art automated warehouse system in its Victorian distribution centre. * Modern warehouses are also located in Perth & Brisbane Can you make any inferences (conclusions) about the industry value chain from the text? * ABL is a manufacturer of non-alcoholic beverages