Q: On a recent vacation I took to the Caribbean islands
and South America, I came across a local beer I thought would have
great potential for sale in the United States. I am not aware of
this product being imported into the United States, at least not on
any major scale in my region of the country. I am interested in
forming a partnership with this foreign brewery to set up a
distribution company that would import the product to the United
States.
I envision some sort of linkage with regional or local beer/ale
distributorships to get the product on the shelves. I have a few
friends and relatives interested in the idea and have a business
contact in the country where the brewery is located.
What should be my first step in formulating a business plan, and
what kind of investment would be required for the start-up?
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Ron N. Brandau
Mt. Airy, Maryland
A:Michael C. Bellas, contributing editor ofBeverage Worldmagazine, is founder and president
of Beverage Marketing Corp., a consulting and information services
firm for the $500 billion global beverage industry:
I must warn you that introducing a Caribbean or South American
beer to the U.S. market is one of the most difficult undertakings
in the beverage industry. This is true in spite of the fact that
sales of imported beers showed substantial growth in 1995, and also
despite the considerable advance made last year by the second
leading import: Corona beer from Mexico.
Today, there's at least 400 or 500 imported beers on the
U.S. market; the precise number is impossible to pinpoint because
these brands are extremely volatile, frequently entering and
disappearing from the market. We are seeing increased market
penetration among the leading imported beer brands, which are
strengthening their positions with substantial marketing and
promotional efforts. Their market share is growing, and in the
process, they are weeding out smaller brands.
At the same time, beer distributors (equivalent to wholesalers,
who provide the essential link to the retail market) are also
undergoing consolidation. There are only three effective nationwide
beer distribution networks today; two of these are very dominant
forces in the industry. The biggest is committed to the
Anheuser-Busch brands, headed by the Budweiser line; the second
strongest network distributes the Miller Brewing brands. The third,
considerably weaker, network represents the other nationally
distributed brands, such as Coors. All three of these networks
already carry full portfolios of imported brands and are
consequently not inclined to be receptive to others.
Latin American and Caribbean beers-Corona being the
exception-have not earned wide acceptance in the United States.
They tend to find their markets primarily among consumers who have
immigrated from their countries of origin and are thus both
familiar with the brands and favorably disposed to them.
All these conditions make the introduction of another such beer
a distinctly high-risk enterprise. Time after time, however, we
have seen that nothing can be considered impossible in the dynamic
beverage market. Therefore, if you are determined to press ahead,
we would advise a course of action calculated to minimize your risk
and maximize your prospects.
First, identify your target consumers. Presumably, they would be
people of Latin American or Caribbean origin who are familiar with
the product and would be more inclined to buy it in the United
States. Second, choose no more than two markets where you
anticipate the best chances of success. Third, formulate a complete
marketing plan.
Your fourth step is to choose the best distributors for your
beer. Start by identifying the on-premise accounts you would like
to sell to; that is, restaurants, diners, fast-food establishments
and the like where beer is served on site. Target a manageable
number of these accounts-say, between 50 and 200, and then locate
the local distributors who cater to them. You'll have to sell
these distributors on taking on your product; they'll want to
see your marketing program, including local advertising,
literature, signage, table-toppers and any other promotional
materials you plan to produce. (One saving grace: At this stage,
you don't need costly TV commercials!)
After you've persuaded the distributors to handle your
product, monitor your accounts closely to see how your product
performs. How readily is it accepted? Once placed, how does it
move? If the figures are good, matching or exceeding the realistic
estimates in your original marketing plan, you can start adding
other retail accounts in your target markets.
What investment capital will you need to accomplish this careful
introductory program? We estimate, conservatively, that $200,000
should do the job.
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