The ‘Brasseries Kronenbourg’ case study1 describes the strategy of the main company within the beer division of the Danone Group. In this case study analysis I will consider the resources, core competencies and sources of competitive advantage that have shaped Brasseries Kronenbourg’s international strategy.
The resources of Brasseries Kronenbourg are fundamental in shaping the company’s strategy. Their resources can be best outlined though a resource audit under the following categories:
Physical – domestically (France) the company has access to large breweries capable of producing upwards of 10 million hectolitres2 and in 1994 invested an additional FF292 million in industrial plant and equipment. Also has access to some international breweries through acquisitions including in Spain and Greece. On the distribution side domestically the company had acquired 60 warehouses.
Human – following a shift in focus to automation in the 1980s, the company entered a phase of restructuring. Levels of hierarchy were removed and 570 jobs were phased out. However, the company has sought to encourage professional development and to develop staff skills through personal training and apprenticeship schemes.
Financial – Brasseries Kronenbourg has a strong balance sheet3 showing significant profits year on year. The company is also has the benefit of being backed by its parent group Danone which is described as the third leading food marketer in Europe.
Intangible – the company has a product range of 28 brands, which includes a diverse portfolio of mass-market, high-end, specialty and niche (low alcohol/non-alcoholic).
These are the resources available to Brasseries Kronenbourg, but it is the way in which they are utilised that identifies the core competencies of the company. Core Competencies
The case study concentrates on the international strategy of the Brasseries Kronenbourg company and it is clear to see why the company chose the strategy it did when its core competencies are considered. I would suggest that the company’s core competencies are based around two main areas; the expertise involved in the manufacture and distribution of beer and the brand management of their product.
Expertise - the company clearly has an established expertise within its domestic market in producing and distributing its product. Research and development, staff restructuring, training programmes and the development of distribution channels have all led to a more efficient process. The company knows how to do what it does well and any international strategy would seek to take advantage of this fact and attempt to transpose this knowledge into a new market.
Brand Management – the company had a number of highly successful domestic brands that had even acquired a reputation internationally as premium brands. The company had also innovated with a diverse portfolio of brands which include upmarket beers (1664, Gold), non-alcoholic (Tourtel), and low alcohol (Kronenbourg Light). Presentation has been honed through the merchandising system ‘Pluton’, which tailors the presentation of beers dependant on retail chain, region and seasons. Brasseries Kronenbourg’s strategy would clearly have to take into consideration it’s well developed brand management when looking at international expansion.
The initial international strategy was to simply export the company’s premium products, which had a high enough margin to cover the high costs of distribution. However, the Danone Group has its stated goal as being the number 1 or 2 in each division it operates in, firstly in Europe and then the World. In order to achieve this aim it was clear that exports alone would not generate enough volume to take a significant market share in each country. As Brasseries Kronenbourg had the majority of its physical assets in France it would be extremely costly and time consuming to try and enter...