Business Problem Description.
JSC Olivaria Brewery as a part of
Since currently I’m unemployed, I would like to contribute my essay to one of challenges which my previous employer had been facing on multiple occasions. But first, let me introduce myself. I’ve obtained Bachelor's degree in Economics at Yanka Kupala State University of Grodno in 2013. During my last semester at the university I was working at a distribution and logistics company in Grodno as a merchandiser. My product was “Baltica” beer. After a half year of hard work at NP-service I was promoted to the position of sales representative, and in another two months my team was transferred to another company - Olivaria Brewery.
The Olivaria Brewery in Minsk was established in 1864. It has 580 employees and a brewing capacity of 940 000 hl. The company's main brand - 'Alivaria' - is one of the most recognized brands in Belarus with a market
Reconstruction and Development had been a major shareholder in Olivaria since 2005 and was looking for an international partner to help develop the business. It now holds 21% of the shares, while the Carlsberg Group holds 67.8% of sharesi. Thus nowadays JSC Olivaria is a part of an international brewery company working on the Belarusian market for 150 years. But as MNE Olivaria started its activity only in 2006. So why Calsberg Group has decided to enter the Belorussian market through the acquisition of an existing market player rather than developing its own local presence from scratch? The answer is specific and challenging condition of the Belorussian market.
To start with, apart for the employees and some journalists nobody knows that Olivaria Brewery is a part of Carlsberg Group. How it is
possible? When I was working as sales representative in Grodno I have asked regional manager why we don’t use promo materials and Ads with Carlsberg logos even on the shelves with Carlsberg and Tuborg products. It looked like these beers were placed on wrong shelves with red POSMs of Alivaria. But the invisibility of Carlsberg’s POSMs and Ads in the Belarusian market has a deep strategic reason. Nowadays Olivaria Brewery has only 18,6% of the domestic market shareii. If Carlsberg Group makes the decision to strengthen positions of its global brand in the Belarusian market it has the flexibility to do so by decreasing the positions of Alivaria brand (since Carlsberg's brand recognition is much stronger than the ones of Alivaria). However, at the moment the Group gives a chance to a native brand to strengthen its positions in the domestic market. Probably it will still take some time to make Alivaria's brand the number one brand in every region of the country because of tough rivalry with two other largest domestic brewery firms. But Carlsberg Group is using variety of promotion tools such as sponsoring open-air festivals (Global Gathering in Minsk and Mayday with Armin Van Buuren as headlineriii) and nurturing an amicable team ready to work in tough conditions in the beer market.
Recently I was on the excursion in Olivaria museum of their history and products. An old lady guide who was working at Olivaria for 40 years told us one interesting phrase: ‘Belarusians don’t have a culture of drinking beer because they only drink it when they are thirsty’. If we look at the statistics we’ll see that deference between Belarusian market and markets of western countries in consumption of beer is lesser on 30-40%. Average index of beer consumption in Belarus is 51liter per capita while in neighbor Poland it reaches 96 litersiv. I see it as a big challenge for Carlsberg Group to develop a culture of drinking beer as a product for pleasure and not only for thirst quenching in summer time among Belarusians.
On my opinion this quest partly could be solved by investing in small cafes and trade points next to places of youth gathering during summer...
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