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Hypothesis
Hypothesis
The need for volumes, the competitive landscape, an aged
position and the need for reinvigoration are driving changes to Namibia
Breweries brewing brand portfolio.
Introduction
Namibia Breweries (NBL) developed an initial
philosophy, beer brand portfolios and a rigid value based on the
Reinheitsgebot, a set of traditional German purity laws. However, the
Reinheitsgebot is exacting and reduces volumes due to time to brew, cost and
availability of suitable ingredients. This led to changes and additions in the beer
brand portfolios, ultimately driven by the need to grow and satisfy investors
as well as to continue sustainable growth, which may point to a shift away from the Reinheitsgebot.
A Windhoek Lager advertisement promotes the Reinheitsgebot but sends an inconsistent message to Tafel Radler drinkers which does not adhere to the Reinheitsgebot. This also creates the risk of cannibalisation.
Recent history and competitive landscape
NBL traditionally had one primary competitor, CastleBrewing (CBN). CBN had a minor presence in the Namibian beer market (Castle
and Carling). In the 1990s NBL embarked on penetration of the South African
market. It soon discontinued three brands, Windhoek Special and Windhoek Export, followed by closing its coastal Hansa Brewery in 2005. This left it
with the Windhoek and Tafel (9) portfolios and the Hansa Draft brand, production of which was moved to Windhoek.
CBN signaled its intention to compete which would restrict
NBL. NBL received protection from the Namibian government however CBN was eventually permitted
to open a plant. CBN competes locally and for the Angola market, especially
among youth segments with Castle Lite.
NBL brands and consumer accountability
The mark of the Reinheitsgebot, used on NBL brands that adhere to the Reinheitsgebot.
Advertising emphasises purity according to the Reinheitsgebot.
NBL has been consistent in its insistence on the
Reinheitsgebot. This limited the range of product forms and the company was
partially outflanked by innovative products such as ciders, craft beers, alcohol free beer and radlers such as Flying Fish (which has youth appeal)
and Schoffenhofer.
NBL’s primary accountability is to its consumers.
In the past, NBL was held accountable for delivery of the
Reinheitsgebot, however the proliferation of new local brands and new imported
forms has eroded the credibility and popularity of NBL’s Reinheitsgebot position,
albeit not its authenticity.
NBL is accountable to a brand-chauvinistic segment of
older consumers, but also has to be accountable to younger consumers as the
source of future brand equity and revenue. Accountability among older consumers
has to take the form of the Reinheitsgebot standard in its brews. Accountability
to its younger segments has to take the form of brands within brand portfolios
that suite the lifestyle needs of the younger consumers.
A younger generation of consumers are choosing beer-based beverages that don't adhere to the Reinheitsgebot.
It also has to be accountable to its investors by
consistently producing the combination of revenue and growth, with the
underpinning of volumes.
NBL portfolio management
NBL is protecting its volumes with a wide spectrum of
portfolio management and other tactics.
Reinheitsgebot flank
NBL protects its flanks from challengers by maintaining
the core Reinheitsgebot outliers, Windhoek, Tafel and Hansa, however when
challengers have emerged it has either acquired them, as in the case of the
Camelthorn acquisition and its addition as a brand portfolio or threat of
legal action in the case of Desert Lager. The Reinheitsgebot arguably seems
to have shifted from the core to the flanks
Emulation, addition of brands and volume enhancements to
brand portfolios
Where a competitor product is successful, NBL emulates it
as a brand within the context of one of its brand portfolios, not just
restricting the imported competition, but also supporting the new brand with
the existing brand, as is the case with radlers which have been added to theTafel Lager portfolio and alcohol free beer added to the Windhoek portfolio. In the case of the radlers, the addition of lemon stretches the volumes.
The brands have been extremely successful although the addition of citrus means the brands cannot be classified as Reinheitsgebot.
International brands
A Heineken branded bar in Namibia. NBL is growing its volumes and creating barriers to market entry with international brands.
NBL has added Heineken as a product brand and Amstel
as a small brand portfolio. These act as a buffer to the success of other
entrants and fragment CBN’s market but may come at the cost of cannibalization
of NBL’s existing brands. Neither of the brands make strong claims to
Reinheitsgebot standards.
Portfolio rationalization
Breweries is quick to rationalize when a brand does not
serve a role either in a portfolio or as a driver of volumes. This was the case
with Windhoek Special (5) and Windhoek Export (6) as well as a brief flirtation
with Guinness.
Retreat from the Reinheitsgebot position
King Lager is the first Namibian mainstream lager not brewed according to the Reinheitsgebot. This, together with Tafel Radler, points to a possible shift away from the Reinheitsgebot, which may favour improved corporate sustainability through volumes.
Although potentially controversial, NBL appears to be
retreating from the Reinheitsgebot. This is evident in the addition of
non-Reinheitsgebot brews and its reduced appearance in planned IMC. Notably,
NBL now brews King Lager from local barley. The brand is a bridge to offtakelocal barley production but due to poor economies of scale a barley maltingplant has not yet been developed, and the barley is not malted in accordance
with Reinheitsgebot standards. Once a barley malting plant is established, it
is likely that NBL will discontinue the brand. Very little budget and IMC
effort has been allocated to it.
Quality of portfolio and brand management
NBL operates in an agile manner, rapidly adding and
discontinuing brands. However, with the exception of King Lager, there is very
little innovation, rather reactive portfolio management. Emulating other
entrants, however, reduces the risks in managing its portfolios.
Quality of the corporate brand
The corporate brand engages with routine issues, such as
DUI, responsible consumption, age limits and, in the Namibian context, water
consumption. The brand primarily acts as an endorser for its local portfolios but doesn’t
use its own planned communication to endorse its international portfolios, rather the international brand communication executed locally.
Challenge ahead and conclusion
Although NBL successfully manages its brands and portfolios
on a reactive basis, it will need to become more proactive. It will need to gradually
shift away from the Reinheitsgebot to push volumes. This needs to be done in a
manner which does not alienate its traditional market which insists on the
Reinheitsgebot standard to preserve existing volumes.
NBL also limits its financial risks with low budget
allocations to IMC for new brands, particularly King Lager which has to offtake
barley preparatory to a local malting plant which is needed to preserve the
Reinheitsgebot through local economies of scale. (The King Lager market does not lend itself easily to social media as it is targeted at lower LSM rural markets.) It needs to become more
confident of its new brands or committed to backing them with marketing
capacity and budget. This can be done by assessing portfolio roles with a long-term
view.
Images © Namibia Breweries.
Images © Namibia Breweries.
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