Virgin Cola Case

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Virgin Cola(

Shaking Up the Softdrinks Market

It was official. Hubert Tan was named Vice-President for Sales and Marketing of InterBev, the latest addition to the business empire of taipan Lucio Tan. Hubert’s choice was not a difficult decision to make. After all, being in his late twenties, he was a go-go type of person who had a passion for business. There was great expectation that his joining would contribute greatly to the Tan group of companies.

Hubert obtained his business and MBA degrees from one of the top educational institutions in China. His appointment was made barely a month before Mr. Lucio Tan signed a tie-up with Richard Branson, the world-renowned sportsman, billionaire, and owner of the Virgin Group of Companies. The tie-up would lead to the introduction of Virgin Cola to the Philippine market on April 2004.

”Congratulations Hubert,’ said Charlie Dy, Vice-President for Sales and Marketing of Asia Brewery Incorporated, also a member of the Lucio Tan group. “Any initial plans yet for our new product?”

“Thanks, Charlie. We have been working on it already. Our reports and studies pretty much give us valuable insights on what positions to take and which strategies to pursue,” was Hubert’s quick reply.

“In any case, won’t you have a celebration for the big event?”, asked Charlie, referring to Hubert’s appointment.

“Oh, not now, Charlie. I first have to smoothen things up at the office before I can even think of celebrating. How about lunch next week …. my treat! By then, I can discuss with you my proposal. I just have to clear up a few concerns in this area,” replied Hubert.

“Oh, well, we are very confident that it will be easy picking for you. Okay then … I’ll see you next week. In any case, you may give me a call anytime, if you need anything,” Charlie commented.

“I appreciate that very much. Thanks again,” said Hubert as he sauntered out of the room.

Company Background

InterBev

Dr. Lucio Tan was born in the Fujian province of China. From humble beginnings, he rose to become one of the most affluent tycoons in the Philippines. His extensive investments expanded to many countries, including China and Hong Kong.

Dr. Tan studied Chemistry at the Far Eastern University, but dropped out to venture into the tobacco business. InterBev was the latest addition to his conglomerate. Among the companies he owned were: Asia Brewery Incorporated (ABI), Fortune Tobacco Company, Tanduay Distillers, Philippine Airline (PAL), and Allied Banking Corporation.

Asia Brewery and Tanduay were into the beverage industry. ABI offered a variety of drinks that formed the non-alcoholic beverage portfolio of the Lucio Tan group of companies. InterBev was a division of Asia Brewery. It would remain under its ambit, until such time that it could become a significant market player, capable of running an independent profitable operation.

In the 1970’s, Tan obtained permission from the Marcos Administration to establish a brewing company. For the longest time, one company had monopolized the food and beverage industry in the country. Dr. Tan envisioned to raise the standards of the Filipino consumers by offering them an alternative. His vision was to give the Filipino consumer the best value for his money by offering him top quality products at prices he can afford.

On 27 January 1982, Asia Brewery was inaugurated. It was the only company allowed to challenge the supremacy of the giant conglomerate, San Miguel Corporation, in its practical monopoly of the domestic beer market. Dr. Tan’s vision was to make his company a world-class, diversified beverage company, highly respected by its consumers and business partners. The company’s mission was to provide consumers with top quality products sold at affordable prices, supported by outstanding service,...
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