Statement of the problem
The case describes the situation of Saku Olletehase AS on the moment that the management team is discussing their product portfolio plan. Lately the sales of their flagship brand, Saku, fell from 48 per cent to 42.5 per cent of market share. During this decline of beer consumption, they have made gains with other alcoholic and none alcoholic beverages. At this point the management team has to decide upon how to proceed with their product portfolio. * Start exporting Saku to Finland
* Shift focus to other alcoholic products with growing market demand, cider and long drinks * Shift focus more to bottled water or divest this product line (disappointing results) * Innovate and try to boost sales for their flagship brand again * Expand their function as distributor of imported beverages Analysis of the issues
If we analyze the Estonian beverages market we notice that the beer market tends to stabilize lately, this in combination with the fact that imported beers are growing with 12,5% results in an decline of consumption of domestic beer. On the other hand we see an increase of alternative beverages: cider, long drinks, bottled water and soft drinks. With the data from the exhibits we see that the total potential market of alcoholic beverages amounts to a little over one million people. A more in depth analysis through a SWOT matrix:
Strengths * Strong Flagship product Saku * Market leader in beer market (market share: 42%) * Promotion via concerts and events * Customer loyalty is high in beer market * Growth in cider and long drinks, which are high-margin products * Growth in alternative markets: the imported beer, bottled water and soft drinks * Price advantage with respect to Finland on alcoholic beverages| Weaknesses * Dissapointing performance in bottled water market (15%) * Decline in sales of flagship product * Not a global brand * Competing with domestic...