E-Magazine
Robert Smith
It is now twenty years since Jeffrey Karrenbrock argued that internationalisation in the brewing industry was fragmented and an under developed aspect of business. Indeed, the brewing industry remains one characterised by the dominance of national brands and regionalism. A perusal of the literature suggests that the industry is in a consolidation phase and that the marketing strategies of choice seem to be those of national expansion to achieve market dominance (Lewis and Stubbs, 1999) and of aggressive mergers between industry giants to form regional conglomerates such as Canadian/ American Coors-Molson. It may be taking things too far to state that there are no truly global brands because of the existence of brands such as Guinness, Carlsberg, Heineken and Budweiser. Nevertheless, many of the established beer brands come from brewing dynasties where families have been in business for over two hundred years.
In Britain and Europe Larimo, Marinov and Marinova (2006) stress that there has been limited research into internationalisation strategies in the brewing industry and that European companies which adopt an aggressive internationalisation strategy, coupled with the development of strong brands and a creative use of marketing intelligence, tend to fare better than the more cautious, traditional breweries.
In 2010 the brewing industry appears to be in a renewed period of growth and consolidation with the focus on mergers, acquisitions, product diversification/ upgrading and brand innovation. There is also an emphasis on the preservation of individuated brewing heritage. Larimo, et al (2006) stress that worldwide, the leading brewing companies follow different internationalisation strategies. However, in the last decade, not much has changed and, according to Theuvsen and Ebneth (2005), globalization and internationalization in the brewing industry has lagged behind that in other industries. The general picture is one of fragmented strategies such as consolidation, volume growth, price reduction and saturation marketing. An area ripe for expansion is that of niche marketing by micro-breweries – as demonstrated by the case below.
In this case study we will examine the Fraseburgh based Company BrewDog PLC, founded in 2007 by two vibrant young entrepreneurs with limited experience of the brewing industry. These young entrepreneurs are brewing up a storm within the industry for their innovative practices and skill in entrepreneurial marketing. The company was started in 2007 by two childhood friends Martin Dickie and James Watt who had a vision to offer an alternative way in brewing by brewing world class progressive beer with a bite. From the outset these outspoken and controversial entrepreneurs set out to differentiate themselves in an otherwise staid industry by adopting a strategy of atypical positioning. From humble beginnings, and with help from family, friends and Scottish Enterprise, the company has seen rapid growth. From inception to PLC in two years is meteoric for what is basically still an SME.
Being from a small town in the North East corner of Scotland has not influenced their thinking. Internationalisation and not parochialism is their guiding business philosophy. In their own words, on their website Martin and James describe their company as being composed of “14 beer nuts….from six different countries” which provides them with a competitive advantage in terms of ideas and knowledge from around the globe. The company (named after James’s dog Bracken) brew a wide spectrum of alternative beers such as Trashy Blonde (4.1%); 77 Lager (4%); Punk IPA (6%); Hardcore IPA (9.2%); Paradox (an innovative blend of beer and whisky at 10%); Tokyo (18.2%); Tactical Nuclear Penguin (32%); and the world’s strongest beer - Sink the Bismarck (at 41%). Their beers are available in 13 different countries including America, Japan, Sweden, Norway, Italy and Finland. The company have won many awards in their short life and at present are the largest exporter of beer from the UK to Sweden. BrewDog acknowledge that they it had a little help from Scottish Enterprise and Scottish Development International in respect of its internationalisation strategy.
However, it is not only in entrepreneurial marketing that Brewdog excels, but also financial vision. In January 2010, the company raised £503,000 in shares sold on the internet via their ‘Business Equity for Punks’ scheme which is the first time this strategy has been used in Europe. BrewDog has also teamed up with American entrepreneurs Keith Greggor and Tony Foglio to target the American market.
For a young British company with grand plans for global expansion BrewDog are certainly ‘brewing up a storm’. In doing so they are flying in the face of industry convention and accepted strategies of market saturation and dominance. Instead they embrace internet based sales and blogging strategies to gain market share at home and abroad.
BrewDog are not everybody's 'cup of tea' and they do have their detractors. To read more about the BrewDog story see Smith, Moult, Burge and Turnbull (2010) in the International Journal of Entrepreneurship and Innovation or check out the company’s website on www.brewdog.com which presents their story in their own words. BrewDog is an ambitious and energetic company whose achievements have the potential to change the way we view the brewing industry. Advocates of Internationalisation would do well to study their aggressive modus operandi. We as academics should do the same.
Dr Robert Smith, Aberdeen Business School, The Robert Gordon University, r.smith-a@rgu.ac.uk
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