1. SINCE 1829

2. SINCE 1829
Market Characteristics

3. SINCE 1829
Market
Characteristics
▪ Largest country in South America (Area and
population) - 200 million people.
▪ World’s 7th fastest growing economy.
▪ Expanding middle class population.
▪ Majority population in age group of 15 – 45
years and has highest purchasing power.
▪ Major investments in education and R&D
across sectors.
Source: https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

4. SINCE 1829
Economic
Environment
▪ A4 level risk country – Medium Level
▪Favorable for domestic and foreign
companies to do business.
▪ A few of the country’s major enterprises are
under government control. Increasingly more
are privately owned.
▪ Mix of socialist and capitalist market
ideologies.
Source: http://globaledge.msu.edu/countries/brazil/government

5. SINCE 1829
Tax Structure
▪ Import Duty : Ranges between 10% and 35%. The
import duty rate for importing Beer into Brazil is
around 14%
▪ Industrialized Product Tax (IPI): Federal tax
levied on most domestic and imported manufactured
goods. Ranges between 0% and 15%.
▪ Merchandize and Service Circulation Tax : State
government value-added tax levied on both domestic
and imported products. Rate varies among states.
Source: http://fita.org/countries/brazil.html

6. SINCE 1829
Consumer
Profile
▪ Brazilian consumers spend some 70% of their
income on goods and services.
▪ Average gross income in Brazil increased by
124% between 2003 to 2007.
▪ Food, beverages and tobacco account for 16%
of household expenditure.
Source: http://globaledge.msu.edu/countries/brazil/government

7. SINCE 1829
Market Analysis

8. SINCE 1829
 Market Size  GDP and Population
6 largest
capitals,
$748 , 24%
Pop. 46M
Others,
$2,324 ,
76%
Pop. 153M
Craft,
$200 ,
0.97%
Regular,
$20,500 ,
99%
(US$billion)(US$million)
 Targeted niche: Craft Beer in Top 6 Capitals
Market Potential

9. SINCE 1829
Porter’s 5 Forces
Threat of new entrants
Moderate
•Low capital outlay required –for low-scale craft beer
microbreweries
•Access to supply chain and retail distribution
•Need economies of scale and local partnerships to distribute
widely
•Government regulations may impact ease of entry
Supplier Power
Moderate
•Vertical integration of microbreweries weakens supplier
power.
•Many independent hops growers.
•Independent barley growers can find alternative markets.
Threat of Substitutes
Moderate
•High penetration of cheaper economy/mass-market beer
brands
•Other alcoholic/ non-alcoholic beverages readily available
•Low switching costs for both consumers and distributers
•High distribution and storage costs than other alcoholic
beverages e.g. spirits
Buyer Power
Largely moderate
•Low switching costs
•Products compete on differentiation.
•High brand loyalty
•Retail outlets have more bargaining power with producers.
Industry Competition
Moderate to low
•Low penetration of premium beers (1% of market)
•No large players in the market
•Wide differentiated variety of products
•Downward pressure of prices from large-scale retailers and on-trade outlets.

10. SINCE 1829
Yuengling

11. SINCE 1829
Company
▪ Founded in 1829 by David
Yuengling
▪ Americas oldest existing
brewery
▪ 6 different lines of beers -
ales, lagers, porters and
premium tastes
▪ A private company - not
publically traded

12. SINCE 1829
Company
Performance
▪ In 2014, Yuengling surpassed Boston’s Samuel
Adams in annual sales volume to become the
country’s top craft beer brewery.
▪ Only available in a few states, including
Pennsylvania, New Jersey, Washington DC,
Delaware, Maryland, Florida and Alabama.
▪ Limited distribution has kept the company strong
against larger American distributors. Only 2
breweries, in Tampa Florida and Pottsville
Pennsylvania.

13. SINCE 1829
SWOT Analysis
Strengths
 High local demand for American
craft beer
 Craft beer perceived as an
“affordable luxury”
 Product differentiation (oldest)
Weaknesses
 Lack of brand recognition
 Premium pricing may deter
demand
 Poor access to local distribution
and supply channels
Opportunities
 Create strong brand recognition -
leveraging already existing
demand
 Build robust distribution
networks and local partnerships.
Threats
 Competition from highly
recognizable local and
international craft beer brands
 High saturation of cheaper
standard beer brands
 New local/international entrants

14. SINCE 1829
Market Entry Strategy

15. SINCE 1829
Entry Strategy
▪ Exporting – Directly from Yuengling breweries in USA.
▪ Licensing – License to a Brazilian Brewery to produce
and distribute Yuengling in the local market, in exchange
of royalties or fees.
▪ Contract Manufacturing – Hire a Brazilian Brewery
to produce and sometimes distribute.
▪ Joint Venture – Forming and alliance with a local
Brazilian brewery to carry out joint operations.

16. SINCE 1829
Entry Strategy
Criteria
Entry
Strategy
Effect
on U.S.
business
Initial
Investment
Profitability ROI
Total
Score
Exporting (-) (+) (-) (-) 2 (-)
Licensing (+) (+) (+) (+) 4 (+)
Contract
Manufacturing
(+) (-) (-) (-) 2 (-)
Joint
Venture
(+) (-) (-) (-) 2 (-)

17. SINCE 1829
Licensing
 Pros:
 Leverage Yeungling’s recognizable name brand
 Benefit of local business insights and knowledge of
supply chain and distribution
 Low investment and involvement
 High ROI
 Cons:
 Difficult to assure quality and manufacturing
standards
 Sharing margins with licencee

18. SINCE 1829
Segmentation &
Targeting
 Two key segments in
Brazil’s 6 major cities
 Young (21-40),
Metropolitan middle to
upperclass adults
 Women living in major
cities - growing segment

19. SINCE 1829
Positioning
 An “Afforable Luxury”
 Craft beer is viewed as an affordable luxury
 Positioning yuengling as a premium brand - people
can “treat themselves”
 Everyone’s Beer
 People from a variety of backgrounds
 Tailored to both men and women’s tastes and
aspirations.

20. SINCE 1829
Pricing Strategy & Sales
Forecasts

21. SINCE 1829
Pricing Strategy
▪ Average Brazilian Market Price = $11.78 / l
▪ Customer percieved value
▪ Proposed go-to-market price = $12.00 / l
Benefit
Value
Cost

22. SINCE 1829
Pricing Strategy
49%
40%
6%
5%
Manufacturer Taxes
Retailers Distributor
$12.00
$ 5.87
Production
$ 5.40
Profit
$ 0.47
(US average profit = $0.50 / liter)

23. SINCE 1829
Expected Results
 Steady Market (no growth considered)
 Initial licensing contract
 Small brewer
 500,000 l/month
 Start w/ 125,000
 Diverse beer line
 Royalties - 25%
of profits (KPMG)
 Sales revenue of
$ 72million/year
 3.6% market share

24. SINCE 1829
Expected Results
▪ Benchmark (Boston Beer Co. & Brooklyn)
▪ Yuengling doesn’t releases financial results
▪ Brooklyn: 300,000 liters exported in 2015
▪ Boston Beer Co.: Annual profits of $59 million
▪ Financial results expected
▪ Licensing revenues of $3 million/year
▪ Accounts for 5% increase in company’s net profit
▪ Extremely high Return on Investment

25. SINCE 1829
Post-Entry
Recommendations
▪ Gain strong foothold of the local market and the
distribution network.
▪ Open “Exclusive Yuengling Bars” in the
identified locations to provide the Yuengling
experience.
▪ Fresh / Mature / Bottled beer.
▪ Merchandise.
▪ “Get the consumer Yuengling-ed”.

26. SINCE 1829
Group 08
Adithya Nishanth
adinish1991@gmail.com