Market attractiveness evaluation
Emerging craft beer markets exhibit rapid growth and strong purchasing power, offering significant advantages for new brewers over saturated markets In these dynamic environments, consumers are enthusiastic about exploring new brands, making market growth rates and buying power crucial factors for evaluation.
- Besides, the larger the market size, the larger the quantity of consumers Prices in each market also show the cost that consumers are willing to pay for a product.
- Other external factors such as market access, competitive intensity, and Political/Economic risks are also important criteria that need to be evaluated to assess the attractiveness of the market.
Table 1 China craft beer market attractiveness evaluation
Table 2 The USA craft beer market attractiveness evaluation
Market Attractiveness 1 2 3 4 5 Weight Result (grading x h
Very Poor Poor Medium Good
Table 3 Brazil craft beer market attractiveness evaluation
Conclusion
Based on a market attractiveness evaluation, China, with a score of 4.1, has been identified as the primary target market for Ibiero The popularity of imported beer is on the rise in China, driven by increased access to international products As Chinese citizens grow wealthier, travel more frequently, and become more globally exposed, a notable trend shift is occurring in their consumption habits.
PESTEL analysis
China, covering an area of 9,571,300 km², ranks as the fourth largest country globally, with a population exceeding 1.3 billion It shares a nearly 1,300-kilometer border with Vietnam, featuring multiple entry points into China To enhance cross-border trade, China has implemented favorable policies for Vietnamese imports, particularly in its Yunnan, Guangdong, and Guangxi provinces.
Fitch Solutions' analysis reveals a rising trend in high-end consumption within the Chinese beer industry, as consumers increasingly prefer high-quality craft beers and imported brands This shift is driving a significant transformation in the sector, prompting major brewers to decrease traditional brand production while enhancing access to premium beers through investments in craft brewing and partnerships with export brands.
As a country, China has shown impressive economic growth Thus, making it an ideal location for business investment.
China's remarkably low labor costs make it an attractive destination for reputable companies seeking to hire skilled employees By sourcing experienced workers from China, businesses can significantly reduce their labor expenses compared to hiring from other countries.
China has a high GDP Thus, the purchasing power of the people of the country is also significantly higher Therefore, investors find a good market in China.
China's rising inflation rate and increasing property costs could hinder future economic growth, potentially impacting the country's overall economic development.
The Chinese market is significantly influenced by government regulations that can change abruptly, complicating long-term marketing strategies for both domestic and foreign businesses The dominance of the Communist Party necessitates that companies remain vigilant, as any product or service perceived as contrary to its ideals may face strict bans Consequently, advertisements and marketing approaches must be carefully tailored to align with these political sensitivities Additionally, while China maintains strong trade relations with many nations, ongoing disputes with the US and neighboring countries threaten political stability, potentially disrupting the business environment for investors.
China has proper strategies to maintain the low cost of the raw materials.
The government makes plans to promote businesses and subsidize companies For example, the Chinese government is currently promoting e-commerce businesses.
China's eating and drinking culture offers a rich and enjoyable experience, encouraging openness to trying new flavors from around the world This cultural appreciation creates opportunities for iBiero to thrive.
The Chinese tend to enjoy having dinner with a big group and drinking is mentioned as one of the indispensable parts between the meal.
Beer is immensely popular in China, predominantly featuring lower alcohol content of 3–5%, unlike the stronger and darker varieties found in the West The cultural significance of beer during meals presents a significant opportunity for iBiero in the Chinese beverage market iBiero caters to this demand by offering a diverse selection of craft beers with alcohol content ranging from 4% to 8%, allowing Chinese consumers to explore and find the perfect beer to complement their dining experience.
Chinese consumers are increasingly favoring lighter, less bitter beers and premium products for formal occasions, as highlighted by Euromonitor's May 2017 report This shift has led to a 4 percent decline in total beer sales in 2016 However, there is a rising interest in craft beer, particularly in major cities, presenting a significant opportunity for iBiero to tap into a growing market of evolving consumer preferences Despite this potential, iBiero faces challenges from both established and emerging domestic brands as competition intensifies in the craft beer sector.
China is emerging as a leader in global and domestic manufacturing, driven by innovative digital platforms and a surge in small financial transactions through new applications The country is leveraging technology to address societal challenges, reshaping traditional businesses with solutions like bike-sharing apps and unmanned convenience stores Additionally, significant advancements in basic science research and development are being made in critical areas such as computing and biotechnology.
New infrastructure, including 5G networks, extra-high voltage power grids, inter-city rail transit, new-energy vehicle charging stations, big data centers, artificial intelligence (AI), and the industrial Internet, enhances data transmission and operational efficiency The Chinese Government is significantly investing in this new infrastructure to foster the digital economy and stimulate economic growth This presents an opportunity for iBiero to enter the market by leveraging China's advanced network and information systems However, iBiero may encounter challenges due to the Chinese government's internet regulations, which require compliance with specific policies and controls.
China faces numerous natural hazards, including earthquakes, floods, typhoons, and volcanoes, leading to significant losses From 2000 to 2015, approximately 1.6 billion people were impacted by these natural disasters, resulting in damages estimated at around $300 billion.
China has long depended on high energy consumption and significant environmental pollution, prompting the government to prioritize industrial pollutant management and ecological protection in its five-year plans As a result, the nation is poised to emerge as a global leader in the transition to a low-carbon economy.
Ancient Chinese philosophy emphasizes the harmonious relationship between humanity and nature, highlighting the importance of respecting and adhering to natural laws This principle is fundamental to Chinese culture, reflecting a deep-rooted belief in the unification of human existence with the natural world.
- No proper legal protection from the government - business should take legal advice when moving into a country like this.
On March 15, 2019, China enacted a significant Foreign Investment Law (FIL) aimed at enhancing the business landscape for foreign investors while ensuring equal market competition for foreign-invested enterprises.
As a result, this should make it more appealing for companies to make business in China and invest there
In China, there are minimal liquor laws, allowing for the purchase of alcohol at convenience stores, supermarkets, restaurants, bars, hotels, and clubs seven days a week Additionally, individuals can consume alcohol in various public and private spaces without restrictions.
External factors
2.1 Sociocultural distance between the home country and host country
According to the data updated by Hofstede Insights, in general, Vietnam and China share nearly the same culture and society h
Chinese society, characterized by a high Power Distance score of 80, accepts significant inequalities among individuals, leading to a polarized subordinate-superior dynamic In this environment, there is a lack of safeguards against the abuse of authority by superiors Consequently, individuals are heavily influenced by official power and the potential for punishment, while also displaying a general enthusiasm for leadership and initiative among the populace.
China is characterized by a strong collectivist culture where individuals prioritize the group's interests over personal ones Additionally, it is recognized as a masculine society focused on achievement and success.
Low Uncertainty Avoidance Index (UAI) societies exhibit a flexible mindset, embracing deviations from the norm with tolerance and prioritizing practical application over rigid ideals In these cultures, individuals believe that unnecessary regulations should be eliminated, and any unclear or ineffective rules ought to be revised or discarded.
In pragmatic civilizations, individuals believe that truth is influenced by context, situation, and time They prioritize saving and investing money, demonstrating a strong adaptability to changing circumstances while maintaining a commitment to persistence and frugality in their endeavors.
Societies characterized by low indulgence scores often exhibit cynicism and pessimism Unlike their indulgent counterparts, restrained societies place less importance on leisure and actively regulate the fulfillment of their desires.
In China, government ownership accounts for over 76% of total assets, leaving individuals with less than a quarter of the assets Consequently, businesses seeking to operate in China must navigate extensive government involvement, which can lead to time-consuming negotiations due to bureaucratic processes Additionally, forming joint ventures poses challenges as they necessitate substantial government participation.
The Chinese government's frequent and sudden policy shifts create significant challenges for both domestic and international traders, making it nearly impossible to establish effective long-term marketing strategies in the country.
When engaging with the Chinese market, businesses must recognize the significant influence of the Communist Party Any product, service, or component that contradicts the Party's values is strictly prohibited Therefore, it is essential to ensure that all advertising and marketing strategies are appropriately aligned with these regulations.
Entering the Chinese market can be challenging due to local distribution networks, unique customer purchasing behaviors, and stringent regulatory constraints Additionally, the market operates independently from much of the global economy, complicating initial entry efforts Notably, research indicates that 37% of products that succeed in the US market ultimately fail in China.
In recent decades, China has experienced a notable shift in class dynamics, leading to a more diverse consumer landscape However, this market remains largely isolated from global trends, resulting in many businesses failing to thrive due to a lack of understanding of local consumer preferences.
China leads the global beer market, with a staggering consumption of 38.3 billion liters in 2019, significantly surpassing the United States at 21.9 billion liters and Germany at 8 billion liters By 2020, China's beer consumption is projected to exceed 35 million kiloliters, equivalent to filling 14,000 Olympic-sized swimming pools, representing 20.3% of worldwide beer consumption that year.
In 2020, China was the world's largest beer producer, generating 341.11 million hectolitres, nearly 1.6 times more than the United States The country boasted 346 beer enterprises, achieving sales revenue of 146.894 billion CNY and a profit of 13.391 billion CNY, reflecting a 0.47% increase from the previous year The imported beer market remains relatively open, lacking a dominant producing nation, while the craft beer segment is experiencing significant growth, with consumers eager to explore new brands at home, festivals, and bars.
2.4 Direct and indirect trade barriers
Since joining the World Trade Organization (WTO) on December 11, 2001, China has progressively reduced trade restrictions and liberalized its foreign trade system The revised Foreign Trade Law, effective July 2004, allows various companies, including private enterprises, to participate in international trade Additionally, Chinese citizens are now authorized to conduct personal business overseas.
In China, alcohol is subject to three distinct taxes: an import tariff, a value-added tax (VAT), and a consumption tax (CT) Notably, the import duty for beer brewed from malt, classified under HS code 2203.0000.00, is set at 0%.
VAT on imported beer is 13% CT is about $34 per ton if the price is less than or equal to
$370 per ton, and approximately $39 per ton if the price is more than $370 per ton.
The domestic beer market is predominantly controlled by five major producers: Snow Beer (China Resources Holdings), Tsingtao Beer (Tsingtao Brewery), Harbin Beer (Anheuser-Busch InBev), Budweiser (Anheuser-Busch InBev), and Yanjing Beer (Beijing Yanjing Brewery), which together account for over 50% of the market share.
China Imported Beer Market Share in 2020
Internal factors
Currently, Ibiero has 5 restaurants in Hanoi and Ho Chi Minh along with a brewery based in Hanoi and 19 agents & distribution system of Ibiero craft beer spread across regions in Vietnam.
Ibiero has no experience working with international customers and has no intention of entering foreign markets before.
Currently, Ibiero has five different product lines h
Craft ale encompasses a diverse range of craft beers, characterized by brewing with warm yeast and high-temperature fermentation The result is a sweet beverage featuring a robust beer flavor, complemented by distinct fruit and hop aromas.
India Pale Ale (IPA) is a craft beer known for its bold bitterness and elevated alcohol content, making it an ideal choice for enthusiasts seeking an authentic beer experience.
Lager, while less common in the craft beer scene, remains a favorite in the industrial beer market Characterized by subtle hops and malt flavors, lagers typically feature a moderate alcohol content, resulting in a relatively consistent taste across various brands.
- Stout: Is a dark beer, using roasted barley as the main ingredient Stout beer has a burnt flavor and a rich cocoa flavor.
- Specialty Beer (Fruit and Field Beer): Made or extracted from fruit, they can be added at any stage in the brewing process and provide a clear and harmonious fruit flavor.
- Local and international material source.
- High closed-line production technology.
- Ibiero has yet to experience working with international customers and has had no intention of entering foreign markets.
No Internal Factors Weight Rate Weighted Score
In conclusion, Ibiero's critical score of 2.7 exceeds the threshold of 2.5, indicating that the brand possesses significant strengths and advantages that align well with the Chinese market This suggests a promising potential for the successful export of Ibiero products to China.
Based on research and analytical models to assess the business environment in the Chinese beer market, we propose an entry mode: Indirect export.
iBiero will utilize indirect exporting by manufacturing its products in Vietnam and selling them to China via an Export Management Company This company will be responsible for distributing iBiero's products to retail systems in major cities across China.
iBiero's indirect export strategy allows the company to maintain control over its product while minimizing risks associated with limited market experience Although iBiero will share a portion of its profits with the Export Management Company, this approach requires minimal investment and leverages the intermediary's market knowledge and service quality Importantly, iBiero retains the authority to set its own pricing, sales conditions, and advertising strategies This method enables iBiero to gradually and safely penetrate the Chinese market as it introduces its products globally.
STP analysis
Geography - Direct: Customers are living, studying and working in big cities such as:
- Indirect: Customers in China have access to online shopping and are interested in products.
Psychology - Alcoholic consumers are concern about special and diverse aroma and taste
- People who are conscious of protecting their health and choose safe products that do not contain harmful chemicals.
- Income: Medium or medium-high (per month for beers from 400 - 600 Chinese Yuan)
- Shopping reason: Satisfying demand for alcoholic beverages at a reasonable cost
- Benefits sought: Beers with premium ingredients, diverse & better flavors, healthful
- Consumer Status: New/potential consumers
The market segment consisting of individuals aged 20 to 60 represents 31% of China's population, highlighting a significant potential market for alcoholic beverages This demographic, spanning from young adults to middle-aged consumers, is characterized by a high demand for alcohol products, making it an attractive target for businesses in the industry.
+ Growth potential of the market segment: Feasibility of expanding horizontally to neighboring provinces and focusing strongly on young and middle-aged customers with middle to high middle income.
The craft beer market in China is experiencing significant growth, driven by global trends and changing consumer behaviors The COVID-19 pandemic has accelerated the shift towards e-commerce, making online shopping more appealing With increasing demand and advancements in technology and the economy, China presents a promising opportunity for craft beer profitability.
The Chinese beer market is highly competitive, with major domestic producers such as Snow Beer, Tsingtao Beer, and Yanjing Beer dominating a significant share Additionally, the market has experienced an increase in imported beers, particularly from renowned brewing countries like Germany and Belgium.
iBiero employs a focused marketing strategy aimed at dominating the middle-class customer segment by addressing the diverse needs of this target group This approach not only helps the business build a strong reputation and trust among customers but also facilitates the development of new products tailored to loyal clientele.
Products with affordable prices from medium to high, meet a variety of customers in terms of taste, alcohol content…
Brand Value The brand was founded by a founder with a deep passion for craft beer, with constant creativity that easily sets itself apart from other beers on the market.
Marketing Mix strategy (4P)
iBiero beer features a unique blend of hops and barley, enhanced with various fruits to offer a rich diversity of flavors and alcohol content Crafted in small batches, this microbrew is meticulously stored in barrels, ensuring quality and taste The brewing process involves fermentation and natural pasteurization, with no preservatives added, resulting in a pure and authentic craft beer experience.
iBiero, a Vietnamese craft beer, ensures high quality and promotes health benefits for its consumers To increase awareness of this product, iBiero should leverage its commitment to food hygiene and safety standards through effective communication strategies, reaching a broader audience interested in quality craft beer.
Ibiero's product lines will remain the same with the following product lines: Craft ale, India Pale Ale (IPA), Lager, Stout, Specialty Beer (Fruit and Field Beer)
Entering the Chinese market, Craft Ale and Specialty Beer are set to capture significant attention due to their alignment with local tastes The Specialty Beer line introduces a unique flavor called xí muội, characterized by a sour profile, low alcohol content, and a subtle salty aftertaste, reflecting the essence of Chinese culture and enhancing the appeal of these new products.
Ibiero beer is carefully packaged in thick glass bottles to preserve its quality, with each bottle featuring a unique image representing a different Greek god To enhance customer convenience, six bottles are bundled together in a single pack, making it easier to purchase and handle.
The latest addition to the Specialty line features a design inspired by a deity from Chinese culture, showcasing the flavor name "Wumei" in its transliterated form.
Ibiero offers a diverse range of unique flavors to satisfy various customer preferences Featuring five distinct product lines with varying alcohol levels, each infused with an array of flavors and colors, Ibiero captivates diners' curiosity and encourages them to explore its exciting taste experiences.
Craft beers often have specific pairings, such as those that complement fruit or cheese, while some may not pair well with meat or fish However, Ibiero's flavors are designed to be easily enjoyable, even for those new to craft beer Additionally, craft beer is regarded as a pleasurable experience rather than just a beverage, ensuring that the unique taste of Ibiero will be maintained when exported to China.
Ibiero strategically positions its craft beer prices in the mid-range segment of the Chinese market, pricing each bottle at approximately RMB 50 (around VND 175,000) to appeal to the local population, particularly the middle class This pricing strategy not only attracts a broad customer base but also includes various beer sets offered at discounted rates compared to retail prices, enhancing its appeal to value-seeking consumers.
Use a product pricing strategy based on market penetration (Penetration Pricing Strategy)
Ibiero is entering the market with a focus on attracting customers from competitors by implementing a low pricing strategy This approach aims to encourage potential customers to discover the brand and experience its innovative products.
- Applying a short-term discount strategy combined with many chapter promotions and incentives to hit the customer's psychology, create a feeling of wanting to buy the product at a reasonable price.
- Apply price stabilization strategy to suit business activities of the business towards the goal of profit and expansion.
- To increase sales and attract public attention, implement a discount strategy on festivals and special days (Black Friday, Brand's Birthday, )
Given that iBiero is a small company, indirect export emerges as the optimal strategy for entering the Chinese market However, foreign companies often face challenges accessing social networks in China during their initial market entry.
To effectively penetrate the market, iBiero should initially target reputable retail outlets licensed to sell alcohol, such as RT-Mart, Walmart China, and Metro, along with specialized alcohol stores Once a solid customer base is established, the company can explore partnerships with pubs and restaurants to feature its craft beer on their menus Additionally, iBiero can capitalize on opportunities at duty-free shops and specialized stores in high-traffic areas like Beijing and Guangzhou international airports, where customer engagement potential is significantly elevated.
Navigating Chinese social networks presents challenges for foreign companies like iBiero, making it essential to explore effective online sales strategies Utilizing e-commerce platforms such as Tmall Global and Epermarket can facilitate product sales A promising approach for iBiero is to develop a dedicated website tailored for Chinese customers, fully in Chinese, to enhance user experience To ensure efficient delivery, iBiero should partner with local logistics companies, enabling direct control over the marketing process while leveraging shipping intermediaries within China This strategy not only streamlines operations but also strengthens customer engagement.
Ibiero, a newly established brand with minimal recognition, aims to enhance brand awareness while showcasing the unique values of its products To resonate with the local audience, Ibiero is set to introduce a new product line tailored specifically for the Chinese market, featuring a distinctive blend of wumei flavors infused with craft beer.
Exploring new types of beer, including imported and craft varieties, can be an exciting journey However, concerns about high alcohol content and the unique flavors of foreign beers may hold some back It's important to approach this exploration with an open mind, as many craft and imported beers offer a diverse range of tastes and alcohol levels that can cater to various preferences.
Successful foreign beer companies exporting to China, such as Brewdog and Anheuser-Busch InBev, primarily focus on marketing exotic Western beer flavors This approach often overlooks the rich tradition of Chinese spirits, creating an invisible barrier for craft beer to connect with Chinese consumers in a nation known for its strong national identity.
Big Idea EXPLORE CHINESE FLAVOUR IN FOREIGN CRAFT BEER
Functional role: Satisfying the demand of consumers for craft beer, which provides a more diverse, richer taste and healthier ingredients than industrial beer. h
Emotional role: Remind consumers of bold Chinese-identity flavors Bring back childhood memories with nostalgia.
品 味 Ibiero ， 畅 想 中 国 梦
(Taste Ibiero, Dive into the Chinese dream)
at supermarkets, bars, and stores that distribute Ibiero’s products
at net shop/game shop
Run ads on social media platforms that are the most used in China such as Sina Weibo, Wechat, Bilibili, QQ, Douyin…
Run ads on e-commerce platforms and online supermarket such as Tmall,
Provide free samples at supermarkets for consumers to taste so they can experience the flavor and the quality of Ibiero’s products.